MONTHS                                      YEARS                                             LESS THAN THATQ.13 Are you s...
2. Secretariat for Industrial Assistance from time to time.The following Guidelines are laid-down to enable theForeign Inv...
and/or enlargement of foreign equity in existing Indian companies, the reason why the proposal has beenmade and the modali...
would recommend such cases for approval on an automatic basis.19. As regards proposal for private sectorbanks, the applica...
airlines • 100% investment by NRIs • The automatic route is not available8 Defence & Strategic Foreign DirectInvestment, i...
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  1. 1. NAME:______________________________________________________________________________AGE:______________________________________________________________________________OCCUPATION:_________________________________________________________________________Q.1 MONTHLY NET INCOME: LESS THAN 5000 5000 – 20,000 20,000 AND ABOVEQ.2 Do you know what is electronic customer relationship management? YES NOQ.3 With which bank you maintain a bank account? ICICI HDFC SBI AXIS OTHERSQ.4 Do your bank provide ecrm services? CICI YES NOQ.5 Which ecrm service of your bank you use? ATM INTERNET BANKING MOBILE BANKING OTHERSQ.6 Other services provided by your banks includes? MOBILE ATM MOBILE RECHARGE BILL PAYMENTS INTERNET PACKS OTHERSQ.7 For your banking transaction which one you use ? BANKS ATMS INTERNET MOBILE OTHERSQ.8 To what extend you use ecrm services? DAILY FEW TIMES IN WEEK WEEKLY MONTHLY MORE THAN THATQ.9 Do you want to switch to other bank for this service? YES NOQ.10 Why do you think ecrm is better? FAST OVERVIEW TO EVERYTHING AVAILAIBLE EVERYWHERE OTHERSQ.11 What according to you are the disadvantages of ecrm? OVERVIEW TO ALL COMPLICATED EXPENSIVE SECURITY RISK OTHERSQ.12For how long you are using these services?
  2. 2. MONTHS YEARS LESS THAN THATQ.13 Are you satisfied with your banking services? YES NOForeign direct investment — Document Transcript 1. Foreign direct investment (FDI) has become a key battleground for emerging marketsand some developed countries. Government-level policies are needed to enable FDIinflows and maximize their returns for both investors and recipient countries.Foreign direct investment (FDI) policies play a major role in the economic growth of developingcountries around the world. Attracting FDI inflows with conductive policies has therefore become akey battleground in the emerging markets.Developed countries also seek to bring in more FDI and use various policies and incentives toattract overseas investors, particularly for capital-intensive industries and advanced technology.The primary aim of these policies is to create a friendly business environment where foreigninvestors feel comfortable with the legal and financial framework of the country, and have thepotential to reap profits from economically viable businesses. The prospect of new growthopportunities and outsized profits encourages large capital inflows across a range of industry andopportunity types.Investors tend to look for predictable environments where they understand how decision- makingprocesses work. Governments therefore are incentivized to build up a track record of rationaldecision making. The business environment often requires work to remove onerous regulations,reduce corruption and encourage transparency. Governments often also seek to improve theirdomestic infrastructure to meet the operational needs of investors.Providing fiscal incentives for attracting FDI is a subject of controversy – analysts have argued bothin favor and against the idea. A general consensus is developing in favor of certain incentives whichhave been proven historically to grow profits and therefore foreign investments.When policies are effective, significant FDI investments are injected into countries that help thedomestic economy to grow. Different countries and regions offer various kinds of fiscal incentives,with a related variance in the level of FDI investments attracted.Governments are increasingly setting up promotional agencies to foster foreign direct investment.These agencies promote FDI-friendly policies, identify prospective sectors and investors, andstructure specific deals and incentives for major foreign investors such as multi-nationalcorporations (MNCs).Global trade associations also play a major role in some of these investment activities. Theseassociations are tasked with creating a positive environment for foreign direct investors andensuring that both investors and recipient countries enjoy a favorable environment.The formation of human capital is vital for the continued growth of FDI inflows. To enable the mostbeneficial, technology and IP-driven FDI, highly skilled personnel are necessary. Governments musttherefore enact policies to provide training and skills upgrading to develop their workforce and meetthe employment needs of foreign investors.GUIDELINES FOR THE CONSIDERATION OF FOREIGN DIRECT INVESTMENT(FDI) PROPOSALS BY THE FOREIGN INVESTMENT PROMOTION BOARD(FIPB)(The Guidelines are meant to assist the FIPB to consider proposals in an objectiveand transparent manner. These would not in any way restrict the flexibility or bindthe FIPB from considering the proposals in their totality or makingrecommendation based on other criteria or special circumstances or features itconsiders relevant. Besides these are in the nature of administrative Guidelinesand would not in any way be legally binding in respect of any recommendation tobe made by the FIPB or decisions to be taken by the Government in casesinvolving Foreign Direct Investment (FDI). These guidelines are issued withoutprejudice to the Governments right to issue fresh guidelines or change the legalprovisions and policies whenever considered necessary.)These guidelines stand modified to the extent changes have been notified by
  3. 3. 2. Secretariat for Industrial Assistance from time to time.The following Guidelines are laid-down to enable theForeign InvestmentPromotion Board (FIPB) to consider the proposals for Foreign Direct Investment(FDI) andformulate its recommendations. Related Links 1. All applications should be put up before the FIPB by the SIAFDI (Secretariat for Industrial Assistance) within 15 days and it Meaning FDI should be ensured thatcomments of the administrative ministries are placed before the Board either prior to/or in the FDI in India andUS meeting of the Board. FDI in China 2. FDI Performance Attract FDI 3. Proposals should be considered bythe Board keeping in view the time frame of 30 days for communicating Government FDI in India decision (i.e.approval of C&IM/CCEA or rejection as the case may be). 4. In cases in which either the proposal is notcleared or further information is required, in order to obviate delays presentation by applicant in the meeting ofthe FIPB should be resorted to. 5. While considering cases and making recommendations, FIPB should keepin mind the sectoral requirements and the sectoral policies vis-a-vis the proposal(s). 6. FIPB would considereach proposal in totality (i.e. if it includes apart from foreign investment, technical collaboration/ industriallicence) for composite approval or otherwise. However, the FIPBs recommendation would relate only to theapproval for foreign financial and technical collaboration and the foreign investor will need to take otherprescribed clearances separately. 7. The Board should examine the following while considering proposalssubmitted to it for consideration: • Whether the items of activity involve industrial licence or not and if so theconsiderations for grant of industrial licence must be gone into; • Whether the proposal involves technicalcollaboration and if so:- (a) the source and nature of technology sought to be transferred. • Whether theproposal involves any mandatory requirement for exports and if so whether the applicant is prepared toundertake such obligation (this is for items reserved for small scale sector as also for dividend balancing, andfor 100% EOUs/SEZ units); • Whether the proposal involves any export projection and if so the items ofexport and the projected destinations; • Whether the proposal has concurrent commitment under otherschemes such as EPCG Scheme etc. • In the case of Export Oriented Units (EOUs) whether the prescribedminimum value addition norms and the minimum turn over of exports are met or not; • Whether the proposalinvolves relaxation of locational restrictions stipulated in the industrial licensing policy; • Whether the proposalhas any strategic or defence related considerations, and • Whether the proposal has any previous jointventure or technology transfer/trademark agreement in the same or allied field in India, the detailedcircumstance in which it is considered necessary to set-up a new joint venture/enter into new technologytransfer (including trade mark), and proof that the new proposal would not in any way jeopardize the interestof the existing joint venture or technology/trade mark partner or other stake holders. 8. While consideringproposals the following may be prioritised. • Items/activities covered under automotive route (i.e. those, whichdo not qualify under automatic route). • Items falling in infrastructure sector. • Items which have an exportpotential3. • Items which have large scale employment potential and especially for rural people. • Items, which have adirect or backward linkage with agro business/farm sector. • Item which have greater social relevance such ashospitals, human resource development, life saving drugs and equipment. • Proposals, which result ininduction of technology or infusion of capital.9. The following should be especially considered during thescrutiny and consideration of proposals: • The extent of foreign equity proposed to be held (keeping in viewsectoral caps if any - e.g. 24% for SSI units, 40% for air taxi/airlines operators, 49% in basic/cellular/paging inTelecom sector etc). • Extent of equity with composition of foreign/NRI (which may include OCB)/residentIndians. • Extent of equity from the point of view whether the proposed project would amount to a holdingcompany/wholly owned subsidiary/a company with dominant foreign investment (i.e. 75% or more) jointventure. • Whether the proposed foreign equity is for setting up a new project (joint venture or otherwise) orwhether it is for enlargement of foreign/NRI equity or whether it is for fresh induction of foreign equity/NRIequity in an existing Indian company. • In the case of fresh induction of foreign/NRI equity and/or cases ofenlargement of foreign/ NRI equity in existing Indian companies whether there is a resolution of the Board ofDirectors supporting the said induction/ enlargement of foreign/NRI equity and whether there is ashareholders agreement or not. • In the case of induction of fresh equity in the existing Indian companies
  4. 4. and/or enlargement of foreign equity in existing Indian companies, the reason why the proposal has beenmade and the modality for induction/ enhancement [i.e. whether by increase of paid up capital/authorisedcapital, transfer of shares (hostile or otherwise) whether by rights issue, or by what modality]. Casespertaining to FIPB approvals, which involve increase in the non-resident equity within the approvedpercentage of non-resident equity in a joint venture company and enhancement of paid-up capital in a whollyowned subsidiary do not require FIPB approval provided the intent for increase in the amount of foreign equityis duly notified to SIA and formal documentation by way of intimation is made to SIA within 30 days of receiptof funds and allotment of shares (to non-resident shareholders). • Issue/transfer/pricing of shares will be asper SEBI/RBI guidelines. • Whether the activity is an industrial or a service activity or a combination of both. •Whether the item of activity involves any restriction by way of reservation for the small scale sector. • Whetherthere are any sectoral restrictions on the activity (e.g. there is ban on foreign investment in real estate while itis not so for NRI investment). • Whether the item involves only trading activity and if so whether it involvesexport or both export and import, or also includes domestic trading and if domestic trading whether it alsoincludes retail trading. • Whether the proposal involves import of items which are either hazardous, banned ordetrimental to environment (e.g. import of plastic scrap or recycled plastics).10. In respect of activities towhich equity caps apply, FIPB may consider recommending higher levels of foreign equity as compared to theprescribed caps, keeping in view the special requirements and merits of each case.11. In respect of otherindustries/activities the Board may consider recommending 51 per cent foreign equity on examination of eachindividual proposal. For higher levels of equity up to 74 per cent the Board may consider such proposalskeeping in view considerations such as the extent of capital needed for the project, the nature and quality oftechnology, the requirements of marketing and management skills and the commitment for exports.4. 12. FIPB may consider recommending proposals for 100 percent foreign owned holding/subsidiarycompanies based on the following criteria: • where only "holding" operation is involved allsubsequent/downstream investments to be carried out would require prior approval of the Government; •where proprietary technology is sought to be protected or sophisticated technology is proposed to be broughtin; • where at least 50% of production is to be exported; • proposals for consultancy; and • proposals forindustrial model towns/industrial parks or estates.13. In special cases, where the foreign investor is unableinitially to identify an Indian joint venture partner, the Board may consider and recommend proposalspermitting 100 per cent foreign equity on a temporary basis on the condition that the foreign investor woulddivest to the Indian parties (either individual, joint venture partners or general public or both) at least 26 percent of its equity within a period of 3-5 years.14. Similarly in the case of a joint venture, where the Indianpartner is unable to raise resources for expansion/ technological upgradation of the existing industrial activitythe Board may consider and recommend increase in the proportion/percentage (up to 100 per cent) of theforeign equity in the enterprise.15. In respect of trading companies, 100 per cent foreign equity may bepermitted in the case of the activities involving the following: • exports; • bulk imports with ex-port/ex-bondedwarehouse sales; • cash and carry wholesale trading; • other import of goods or services provided at least75% is for procurement and sale of goods and services among the companies of the same group.16. Inrespect of the companies in the infrastructure/services sector where there is a prescribed cap for foreigninvestment, only the direct investment should be considered for the prescribed cap and foreign investment inan investing company should not be set off against this cap provided the foreign direct investment in suchinvesting company does not exceed 49 per cent and the management of the investing company is with theIndian owners.17. No condition specific to the letter of approval issued to a foreign investor would be changedor additional condition imposed subsequent to the issue of a letter of approval. This would not prohibitchanges in general policies and regulations applicable to the industrial sector.18. Where in case of a proposal(not being 100% subsidiary) foreign direct investment has been approved up to a designated percentage offoreign equity in the joint venture company the percentage would not be reduced while permitting induction ofadditional capital subsequently. Also in the case of approved activities, if the foreign investor(s) concernedwished to bring in additional capital on later dates keeping the investment to such approved activities, FIPB
  5. 5. would recommend such cases for approval on an automatic basis.19. As regards proposal for private sectorbanks, the application would be considered only after "in principle" permission is obtained from the ReserveBank of India (RBI).20. The restrictions prescribed for proposals in various sectors as obtained, at present,are given in the annexure - IV and these should be kept in view while considering the proposals. Sl. SectorGuidelines No. 1 Airports Up to 100%, with FDI beyond 74% requiring Government approval5. 2 Atomic minerals The following three activities are permitted to receive FDI/NRI investments through FIPB(as per detailed guidelines issued by Department of Atomic Energy vide Resolution No.8/1(1)/97-PSU/1422dated 6.10.98): d Mining and mineral separation d Value addition per se to the products of (a) above aIntegrated activities [comprising of both (a) and (b) above.] The following FDI participation is permitted: • Up to74% in both pure value addition and integrated projects • For pure value addition projects as well asintegrated projects with value addition upto any intermediate stage, FDI is permitted upto 74% through jointventure companies with Central/State PSUs in which equity holding of at least one PSU is not less than 26% •In exceptional cases, FDI beyond 74% will be permitted subject to clearance of the Atomic EnergyCommission before FIPB approval3 Agriculture (including No FDI/NRI Investment is permitted other thanplantation) Tea sector. FDI, permitted up to 100% in Tea sector, including tea plantations, with priorGovernment approval and subject to following conditions: • Compulsory divestment of 26% equity in favour ofIndian partner/Indian public within a period of five years, and • Prior State government approval required incase of any future land use change. The above dispensation would be applicable to all fresh investments(FDI) made in this sector.4 Advertising and films • Advertising sector: FDI up to 100% allowed on theautomatic route • Film sector (film production, exhibition and distribution including related services/products)FDI up to 100% allowed on the automatic route with no entry level condition5 Broadcasting Broadcasting • TVSoftware Production 100% foreign investment allowed subject to: • all future laws on broadcasting and noclaim of any privilege or protection by virtue of approval accorded, and • not undertaking any broadcastingfrom Indian soilwithout Government approval6. • Setting up hardware facilities, such as uplinking, HUB, etc. Private companies incorporated in India withpermissible FII/ NRI/PIO equity within the limits (as in the case of telecom sector FDI limit up to 49% inclusiveof both FDI and portfolio investment) to set up uplinking hub (teleports) for leasing or hiring out their facilitiesto broadcasters Foot note:- As regards satellite broadcasting, all TV channels irrespective of managementcontrol to uplink from India provided they undertake to comply with the broadcast (programme & advertising)code • Cable Network Foreign investment allowed up to 49% (inclusive of both FDI and portfolio investment)of paid up share capital. Companies with minimum 51% of paid up share capital held by Indian citizens areeligible under the Cable Television Network Rules (1994) to provide cable TV services • Direct-to-HomeCompany with a maximum of foreign equity including FDI/NRI/FII of 49% would be eligible to obtain DTHLicense. Within the foreign equity, the FDI component not to exceed 20% • Terrestrial Broadcasting FM Thelicensee shall be a company registered in India under the Companies Act. All share holding should be held byIndians except for the limited portfolio investment by FII/NRI/PIO/OCB subject to such ceiling as may bedecided from time to time. Company shall have no direct investment by foreign entities, NRIs and OCBs. Asof now, the foreign investment is permissible to the extent of 20% portfolio investment • Terrestrial TV Noprivate operator is allowed in terrestrial TV transmission6 Coal & Lignite • Private Indian companies setting upor operating power projects as well as coal or lignite mines for captive consumption are allowed FDI up to100% • 100% FDI is allowed for setting up coal processing plants subject to the condition that the companyshall not do coal mining and shall not sell washed coal or sized coal from its coal processing plants in theopen market and shall supply the washed or sized coal to those parties who are supplying raw coal to coalprocessing plants for washing or sizing iii. FDI up to 74% is allowed for exploration or mining of coal or lignitefor captive consumption • In all the above cases, FDI is allowed up to 50%7. under the automatic route subject to the condition that such investment shall not exceed 49% of the equityof a PSU7 Domestic Airlines (Detailed guidelines have been issued by Ministry of Civil Aviation) In thedomestic Airlines • FDI up to 40% permitted subject to no direct or indirect equity participation by foreign
  6. 6. airlines • 100% investment by NRIs • The automatic route is not available8 Defence & Strategic Foreign DirectInvestment, including NRI Industries investment, is permitted up to 26% with prior Government approvalsubject to licensing and security requirements. Detailed guidelines for participation of private sector andforeign investors in this sector are given in Appendix- IV.9 Drugs & FDI up to 100% is permitted on theautomatic Pharmaceuticals route for manufacture of drugs and pharmaceutical, provided the activity does notattract compulsory licensing or involve use of recombinant DNA technology, and specific cell / tissue targetedformulations. FDI proposals for the manufacture of licensable drugs and pharmaceuticals and bulk drugsproduced by recombinant DNA technology, and specific cell / tissue targeted formulations will require priorGovernment approval10 Establishment & FDI up to 74% is permitted with prior Government Operation ofSatellite approval11 Hotels & Tourism 100% FDI is permissible in the sector on the automatic route The termhotels include restaurants, beach resorts, and other tourist complexes providing accommodation and/orcatering and food facilities to tourists. Tourism related industry include travel agencies, tour operatingagencies and tourist transport operating agencies, units providing facilities for cultural, adventure and wild lifeexperience to tourists, surface, air and water transport facilities to tourists, leisure, entertainment, amusement,sports, and health units for tourists and Convention/Seminar units and organisations For foreign technologyagreements, automatic approval is granted if • up to 3% of the capital cost of the project is proposed to bepaid for technical and consultancy services including fees for architects, design, supervision, etc. • up to 3%of net turnover is payable for8. franchising and marketing/publicity support fee, and • up to 10% of gross operating profit is payable formanagement fee, including incentive fee12 Housing & Real No foreign investment is permitted in this sectorEstate except for development of integrated townships and settlements where FDI up to 100% is permittedwith prior Government approval. NRIs are allowed to invest in the following activities • Development ofserviced plots and construction of built up residential premises • Investment in real estate coveringconstruction of residential and commercial premises including business centres and offices • Development oftownships • City and regional level urban infrastructure facilities, including both roads and bridges •Investment in manufacture of building materials, which is also open to FDI • Investment in participatoryventures in (a) to (e) above • Investment in housing finance institutions, which is also open to FDI as anNBFC13 Investing Companies In respect of the companies in in Infrastructure infrastructure/service sector,where there is a /Service Sector prescribed cap for foreign investment, only the direct investment will beconsidered