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fdi and india

fdi and india

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  • (cumulative inflows Apr’00 to Nov’09)
  • The liberalization measures post-1990 has changed with foreign investments radically, now portfolio as well as Foreign Direct Investment are not only allowed but also actively encouraged.
  • In both banking and insurance, foreign investment is permitted subject to specific caps or entry conditions. FDI in media is permitted with varying sector caps. Retail trade is currently restricted to 51% FDI permitted in single brand retail stores and 100% FDI permitted in wholesale cash and carry. Legal services are currently not open to foreign investment.
  • The manufacturing sector is estimated to have a US$ 180-billion investment opportunity over the next five years, according to the Investment Commission of India.
  • Besides this, FICCI study pointed-out that the technology transfer and absorption which is one of the major benefits of FDI has not taken place adequately in various manufacturing sectors in India. While there are few Indian manufacturing firms whose technological capabilities are world class, but for many manufacturers especially in SMEs, technological capabilities are limited. A concrete and comprehensive Action plan to attract FDI in important and strategic areas like Computer Hardware, Capital Goods, Ship Building, Aerospace, Electronics, Medical Devices and Food Processing. FDI Policy should aim at incentivizing maximum value addition in the country. Incentivize technology transfer by adopting ‘Swap Technology for Market’ policy as is the case in China. Rationalizing complex regulatory procedures and reducing delays in the project approvals.
  • Subject to these foreign equity conditions, a foreign company can set up a registered company in India and operate under the same laws, rules and regulations as any India-owned company.India extends National Treatment to foreign investors with absolutely no discrimination against foreign-invested companies registered in India or in favor of domestic ones
  • About six States in India account for more than 55 per cent of FDI receipts.This high regional concentration could pose long-term problems for both countries. Hence, it is vital to analyze the main determinants of regional differences in FDI.The studies reviewed indicate that four possible sets of factors influence interregional distribution of FDI in a given country. They are:(a) International orientation, (b) Infrastructure, (c) Education and social indicators, and (d) Prosperity and industrial development of the region.