Foreign Exchange Management Act, 1999
Foreign Direct Investment(FDI)
Presented By-

Akanksshi, Gaurav, Rohit, Sarthak,
Sub...
Scope : Foreign

Direct Investment : Definition
Forms in which foreign companies can conduct business
Procedure for ent...
Foreign Direct Investment : Definition

FDI means investment by non-resident
entity/person resident outside India in the c...
Forms in which Business can be conducted by a Foreign Company in India

A foreign company planning to set up business
oper...
Procedure for receiving Foreign Direct Investment in an Indian Company

Automatic
Route
Government
Route
Eligibility for Investment in India

Resident Outside India (Except
Pakistan)

NRIs , Residents in Nepal and
Bhutan
Overse...
Instruments for receiving FDI in an Indian Company

Equity Shares
Fully and mandatorily
convertible preference shares.

Fu...
Sectors where FDI is not allowed in India

Atomic Energy
Lottery Business
Gambling and Betting
Business of Chit Fund
Nidhi...
SHARE OF TOP INVESTING COUNTRIES : FDI EQUITY INFLOWS
40

37
35

% of Total Inflows

30

25

20

15
11
9

10

7

6

5

5

...
SECTORS ATTRACTING HIGHEST FDI EQUITY INFLOWS

5

CHEMICALS (OTHER THAN FERTILIZERS)

6

COMPUTER SOFTWARE & SOFTWARE

6

...
FDI CAP IN DIFFERENT SECTORS
Sector

A.

FDI Cap/Equity

Entry Route

Agriculture

1.
Floriculture, Horticulture,
Developm...
B. Industry
1. Mining covering
exploration and mining
of diamonds & precious 100%
stones; gold, silver and
minerals.

Auto...
C.

Manufacturing

Automatic

1. Alcohol- Distillation &
Brewing
2. Coffee & Rubber
processing &
Warehousing.

100%

100%
...
D. Services
1. Civilaviation (Greenfield
projects and Existing projects)

100%

Automatic

2. Asset Reconstruction
compani...
Thank You. . .
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FDI under FEMA

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The presentation focuses on the FDI in INDIA as under FEMA. It does not involve many rules but does give an understanding about the structure of FDI in India.

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FDI under FEMA

  1. 1. Foreign Exchange Management Act, 1999 Foreign Direct Investment(FDI) Presented By- Akanksshi, Gaurav, Rohit, Sarthak, Subhash, Sunil, Sumbul, Saima, Somveer, Vineet
  2. 2. Scope : Foreign Direct Investment : Definition Forms in which foreign companies can conduct business Procedure for entry : FDI Eligibility for Investment in India Instruments of Investment in India Sectors where FDI is not allowed Share of Countries Sector-wise Contribution in FDI FDI Cap limit for different sectors
  3. 3. Foreign Direct Investment : Definition FDI means investment by non-resident entity/person resident outside India in the capital of an Indian company under Schedule 1 of Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations 2000 . Source : http://rbi.org.in/Scripts/BS_FemaNotifications.aspx?Id=174.
  4. 4. Forms in which Business can be conducted by a Foreign Company in India A foreign company planning to set up business operations in India may: • Incorporate a company under the Companies Act, 1956, as a Joint Venture or a Wholly Owned Subsidiary. •Set up a Liaison Office / Representative Office or a Project Office or a Branch Office of the foreign company which can undertake activities permitted under the Foreign Exchange Management (Establishment in India of Branch Office or Other Place of Business) Regulations, 2000.
  5. 5. Procedure for receiving Foreign Direct Investment in an Indian Company Automatic Route Government Route
  6. 6. Eligibility for Investment in India Resident Outside India (Except Pakistan) NRIs , Residents in Nepal and Bhutan Overseas Corporate Bodies (Derecognized with effect from 2003)
  7. 7. Instruments for receiving FDI in an Indian Company Equity Shares Fully and mandatorily convertible preference shares. Fully and mandatorily convertible debentures
  8. 8. Sectors where FDI is not allowed in India Atomic Energy Lottery Business Gambling and Betting Business of Chit Fund Nidhi Company Agricultural Housing and Real Estate Business Trading in Transferable Development Rights (TDRs) Manufacture of tobacco or of tobacco substitutes.
  9. 9. SHARE OF TOP INVESTING COUNTRIES : FDI EQUITY INFLOWS 40 37 35 % of Total Inflows 30 25 20 15 11 9 10 7 6 5 5 4 0 Mauritius Singapore UK Japan Country USA Netherlands Cyprus
  10. 10. SECTORS ATTRACTING HIGHEST FDI EQUITY INFLOWS 5 CHEMICALS (OTHER THAN FERTILIZERS) 6 COMPUTER SOFTWARE & SOFTWARE 6 TELECOMMUNICATIONS 6 Sector DRUGS & PHARMACEUTICALS 11 CONSTRUCTION DEVELOPMENT 19 SERVICES SECTOR 0 2 4 6 8 10 12 % of Total Inflows 14 16 18 20
  11. 11. FDI CAP IN DIFFERENT SECTORS Sector A. FDI Cap/Equity Entry Route Agriculture 1. Floriculture, Horticulture, Development of 100% Seeds, Animal Husbandry, Pisciculture, A quaculture, Cultivation of vegetables & mushrooms and services related to agro and allied sectors. 2. Tea sector, including 100% plantation Automatic FIPB (FDI is not allowed in any other agricultural sector /activity) Other Conditions
  12. 12. B. Industry 1. Mining covering exploration and mining of diamonds & precious 100% stones; gold, silver and minerals. Automatic 2. Coal and lignite mining for captive consumption by power 100% projects, and iron & steel, cement production. Automatic 3. Mining and mineral separation of 100% titanium bearing minerals FIPB
  13. 13. C. Manufacturing Automatic 1. Alcohol- Distillation & Brewing 2. Coffee & Rubber processing & Warehousing. 100% 100% Automatic 3. Defence production 26% FIPB 4. Hazardous chemicals and isocyanates 100% Automatic 5. Industrial explosives Manufacture 100% Automatic 6. Drugs and Pharmaceuticals 100% Automatic 7. Power including generation (except Atomic energy); transmission, 100% distribution and power trading. Automatic (FDI is not permitted for generation, transmission & distribution of electricity produced in atomic power plant/atomic energy since private investment in this activity is prohibited and reserved for public sector.)
  14. 14. D. Services 1. Civilaviation (Greenfield projects and Existing projects) 100% Automatic 2. Asset Reconstruction companies 49% FIPB 3. Banking (private) sector 74% (FDI+FII). FII not to exceed 49% Automatic 4. Broadcasting a. FM Radio b. Cable network; c. Direct to home 20% 49% (FDI+FII) FIPB 6. Insurance 49% (FDI+FII) (FDI 26 % FII 23%) 26% 7. Petroleum and natural gas : a. Refining 49% (PSUs). 100% (Pvt. Companies) FIPB (for PSUs). Automatic (Pvt.) 26% FIPB 100% FIPB 5. Commodity Exchanges 8. Print Media a. Publishing of newspaper and periodicals 9. Telecommunications FIPB Automatic 74% (including FDI, FII, NRI, Automatic up to 49% and FIPB FCCBs, ADRs/GDRs, convertible beyond 49%. preference shares, etc. Clearance from IRDA S.t.guidelines by Ministry of Information & broadcasting
  15. 15. Thank You. . .

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