foreign direct investment and its regulation regarding FDI in India

1. FDI & Regulations regarding
FDI in India
Sejal Ambre 17301A0031
Mahek Sarwaiya 17301A0032
Karan Hariya 17301A0033
Deepvanshi Gupta 17301A0034
Kuldeep Singh 17301A0035

2. Meaning Of FDI
Foreign direct investment (FDI) in India is the major monetary source
for economic development in India.
Foreign companies invest directly in fast growing private Indian
businesses to take benefits of cheaper wages and changing business
environment of India.
Economic liberalisation started in India in wake of the 1991 economic
crisis and since then FDI has steadily increased in India.
It were Manmohan Singh and P. V. Narasimha Rao who brought FDI in
India, which subsequently generated more than one crore jobs.
In 2015 India overtook China and the US as the top destination for the
Foreign Direct Investment.
In first half of the 2015, India attracted investment of $31 billion compared
to $28 billion and $27 billion of China and the US respectively.

3. Infrastructure
Indian government has invested $1 trillion on infrastructure from 2012–
2017. 40% of this $1 trillion had to be funded by private sector.
Example:- GVK Power & Infrastructure Ltd won the bid to develop Mumbai’s
second airport in Navi Mumbai for Rs 16,000 crore (US$ 2.39 billion).
Automotive
FDI in automotive sector was increased by 89% between April 2014 to
February 2015. India is 7th largest producer of vehicles in the world with
17.5 million vehicles annually.
Example:- Ford motors investment in India of about (US$ 979.50 billion).
Manufacturing
India is making progress turning itself into a magnet for manufacturers,
the aim being to increase the share of manufacturing in India’s GDP from
a stagnant 15-16% since 1980 to 25% by 2022 and create an additional
100 million jobs.
Example:- Britannia Industries Ltd (BIL), is setting up its largest plant
ever, in Ranjangaon, Maharashtra, with an investment of Rs 1,000 crore
(US$ 156.89 million).

4. Pharmaceuticals
Indian pharmaceutical market is 3rd largest in terms of volume and 13th
largest in terms of value. Indian pharma industry is expected to grow at
20% compound annual growth rate from 2015 to 2020.
Example:- Eric Lifesciences Pvt Ltd, has launched its initial public offering (IPO)
worth Rs 2,000 crore (US$ 311 million) in June 2017.
Service
FDI in service sector was increased by 46% in 2014–15. Service sector
includes banking, insurance, outsourcing, research & development,
courier and technology testing. FDI limit in insurance sector was raised
from 26% to 49% in 2014.
Example:-FM Logistic Asia, outlined plans of investing around EUR 50 million
(US$ 56.14 million) in India
Railways
Mumbai Ahemdabad high speed corridor project is single largest
railway project in India, other being CSTM-Panvel suburban corridor.
Foreign investment more than ₹90,000 crore (US$14 billion) is expected
in these projects.
Example:-Minister for Road Transport and Highways and Shipping, has stated
that India will likely collaborate with Germany for projects worth Rs 1 trillion
(US$ 15 billion), aimed at enhancing railway connectivity of Indian

5. Chemicals
Chemical industry of India earned revenue of $155–160 billion in
2013. India's share in global specialty chemical industry is expected to
rise from 2.8% in 2013 to 6–7% in 2023.
Example:- International companies like Dow Chemical, BASF, Du Pont, Bayer has
invested around US$ 1,316 million between 1991 and 2002.
Textile
Textile is one major contributor to India's export. Nearly 11% of India's
total export is textile. During year 2013–14, FDI in textile sector was
increased by 91%. Indian textile industry is expected reach up to $141
billion till 2021.
Example:-Max Fashion, a part of Dubai based Landmark Group, plans to expand
its sales network to 400 stores in 120 cities by investing Rs 400 crore (US$ 60
million)
Airlines
Foreigner investment in a scheduled or regional air transport service
or domestic scheduled passenger airline is permitted to 100,with FDI
up to 49% permitted under automatic route and beyond 49% through
goor existing airport under automatic route.
Example:-Foreign airlines to own as much as 49% in private Indian airlines,
but not in Air India. IndiGo, run by InterGlobe Aviation Ltd, and Tata Sons
Ltd have shown interest in Air India’s operations.

6. Advantages Of FDI
• Favorable balance of
payments
• Increase competition that
benefits the economy
• Access to markets
• Reduces cost of production
• Consumer benefits
• Reduced disparity between
revenues and costs
• Tax incentives
• Employment and Economic
boost
Disadvantages Of
FDI
• Crowding of local industries
• Loss of control
• Conflict of laws
• Effect on natural environment
• Effect on local cultures
• Negative impact on the
country's investment
• Erosion of host culture
• Unstable economic conditions

7. Regulations regarding FDI
The General rules regarding FDI are-
• Minimum size of investment
• Sector open to the investors
• Collaboration and franchise
• Subscription
• Debt equity ratio
• Foreign exchange
• Employment and labour
The rules regarding registration of FDI are-
• Eligibility
• Business Approval
• Business Rejection
• Incorporation
• Licensing
• Issue of Certificate

8. The rules regarding REGISTRATION OFFICE of FDI are-
• Registration Office
• Appointment of Registration Officer
• Jurisdiction
• Appeal
• Penalties
The MISCELLANEOUS rules regarding FDI are-
• Amendment of Certificate
• Suspension of a Certificate
• Cancellation of Certificate
• Reporting
• Monitoring of Business

9. Conclusion-
It can be summed up by saying that to attract FDI, India should
use its advantages such as large domestic market, abundant
supply of trained and low-wage labor, vast pool of technical
professional, second largest nation, etc. At present, Maharashtra
rank first with 17.5 percent of FDI inflows, Delhi second with 12.1
percent. After Delhi , Karnataka and Gujarat occupy next position
respectively. India attracted 25 billion Dollar in 2007 and in 2008
FDI inflow in India was 43.4 billion dollar. FDI in India has
contributed effectively to the overall growth of the economy in the
recent times. Market oriented policies are boosting economic
activity, all round development and economic growth rate. As the
Indian economy gears up for competition in the international
market, overseas investors clearly see the potential for attractive
returns from investment in India, which is also evident from the
already achieved FDI success stories.