This document provides an overview of foreign direct investment (FDI) in India. It discusses the types of FDI investors, common entry structures, routes for FDI (automatic vs. government), sectors with caps and prohibitions, incentives offered, recent policy measures, the latest FDI data from June 2015, and patterns of FDI inflows. The conclusion states that India's FDI policy has become more liberal and investor-friendly over time, making the country an attractive global investment destination according to international reports.

1. I.F.T. ASSIGNMENT
TOPIC – FDI IN INDIA
Submitted By:-
Vikas( Group I, 2nd
year )

2. ROAD MAP OF ASSIGNMENT
1. Introduction
2. Types of Investors in FDI
3. Entry Structures
4. Routes in FDI
5. Difference between Automatic & Govt. routes
6. Prohibited Sectors
7. Caps on FDI
8. Incentives offered in India
9. Recent Policy Measures
10.Latest data on FDI (June 2015)
11.Pattern of FDI Inflows in India
12.Conclusion

3. INTRODUCTION
An investment made by a company or entity based in one country, into a company or
entity based in another country. The investing company may make its overseas
investment in a number of ways - either by setting up a subsidiary or associate
company in the foreign country, by acquiring shares of an overseas company, or through
a merger or joint venture. Example - an American company taking a majority stake in a
company in India.
TYPES OF INVESTORS IN FDI
INDIVIDUAL:
 FVCI
 Pension/Provident Fund
 Financial Institutions
COMPANY:
 Foreign Trust
 Sovereign Wealth Funds
 NRIs / PIOs
FOREIGN INSTITUTIONAL INVESTORS:
 Private Equity Funds
 Partnership / Proprietorship Firm
 Others
One thing is to be noted that citizen or entity from Bangladesh & Pakistan can invest
only under the government route also investor from Pakistan cannot invest in defence,
space, atomic energy and sectors prohibited for foreign investment.

4. ENTRY STRUCTURES
1. INCORPORATING A COMPANY IN INDIA:
It can be a private or public limited company. Both wholly owned & joint ventures are
allowed. Private limited company requires minimum of 2 shareholders.
2. LIMITED LIABILITY PARTNERSHIPS:
Allowed under the Government route in sectors which has 100% FDI allowed under the
automatic route and without any conditions.
3. SOLE PROPRIETORSHIP/PARTNERSHIP FIRM:
Under RBI approval. RBI decides the application in consultation with Government of
India.
4. EXTENSION OF FOREIGN ENTITY:
Liaison office, Branch office (BO) or Project Office (PO). These offices can undertake only
the activities specified by the RBI. Approvals are granted under the Government and RBI
route. Automatic route is available to BO/PO meeting certain conditions.
5. OTHER STRUCTURES:
Foreign investment or contributions in other structures like not for profit companies etc.
are also subject to provisions of Foreign Contribution Regulation Act (FCRA).
ROUTES IN FDI
An Indian company may receive Foreign Direct Investment under the two routes as
given under :-
i) Automatic Route
ii) Government Route

5. i. Automatic Route
FDI is allowed under the automatic route without prior approval either of the
Government or the Reserve Bank of India in all activities/sectors as specified in the
consolidated FDI Policy, issued by the Government of India from time to time.
ii. Government Route
FDI in activities not covered under the automatic route requires prior approval of the
Government which are considered by the Foreign Investment Promotion Board (FIPB),
Department of Economic Affairs, Ministry of Finance.
Sectors requiring Central Government Approval :-
 Tea sector, including plantations – 100%.
 Mining and mineral separation of titanium-bearing minerals and ores, its value addition
and integrated activities -100%.
 FDI in enterprise manufacturing items reserved for small scale sector – 100%.
 Defence – up to 49% under FIPB/CCEA approval, beyond – 49% under CCS approval (on
a case-to-case basis, wherever it is likely to result in access to modern and state-of-the-
art technology in the country).

6.  Teleports (setting up of up-linking HUBs/Teleports), Direct to Home (DTH), Cable
Networks (Multi-system operators operating at National or State or District level and
undertaking upgradation of networks towards digitalization and addressability), Mobile
TV and Headend-in-the Sky Broadcasting Service(HITS) – beyond 49% and up to 74%.
 Broadcasting Content Services: uplinking of news and current affairs channels – 26%,
uplinking of non-news and current affairs TV channels – 100%.
 Publishing/printing of scientific and technical magazines/specialty journals/periodicals –
100%.
 Print media: publishing of newspaper and periodicals dealing with news and current
affairs- 26%, Publication of Indian editions of foreign magazines dealing with news and
current affairs- 26%.
 Terrestrial Broadcasting FM (FM Radio) – 26%.
 Publication of facsimile edition of foreign newspaper – 100%.
 Airports – brownfield – beyond 74%.
 Non-scheduled air transport service – beyond 49% and up to 74%.
 Ground-handling services – beyond 49% and up to 74%.
 Satellites – 74%.
 Private securities agencies – 49%.
 Telecom-beyond 49%.
 Single brand retail – beyond 49%.
 Asset reconstruction company – beyond 49% and up to 100%
 Banking private sector (other than WOS/Branches) – beyond 49% and up to 74%, public
sector – 20%.
 Pharmaceuticals – brownfield – 100%.
All the items other than above are under the Automatic Route.
PROHIBITED SECTORS
 Lottery Business including Government /private lottery, online lotteries, etc.
 Gambling and Betting including casinos etc.
 Chit funds
 Nidhi company-(borrowing from members and lending to members only).

7.  Trading in Transferable Development Rights (TDRs)
 Real Estate Business (other than construction development) or Construction of Farm
Houses
 Manufacturing of Cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco
substitutes
 Activities / sectors not open to private sector investment e.g. Atomic Energy and
Railway Transport (other than construction, operation and maintenance of (i) Suburban
corridor projects through PPP, (ii) High speed train projects, (iii) Dedicated freight lines,
(iv) Rolling stock including train sets, and locomotives/coaches manufacturing and
maintenance facilities, (v) Railway Electrification, (vi) Signaling systems, (vii) Freight
terminals, (viii) Passenger terminals, (ix) Infrastructure in industrial park pertaining to
railway line/sidings including electrified railway lines and connectivities to main railway
line and (x) Mass Rapid Transport Systems.)
 Services like legal, book keeping, accounting & auditing.
CAPS ON FDI IN INDIA
 Petroleum Refining by PSU (49%).
 Teleports (setting up of up-linking HUBs/Teleports),Direct to Home (DTH), Cable
Networks (Multi-system operators (MSOs) operating at national, state or district level
and undertaking upgradation of networks towards digitalization and addressability),
Mobile TV and Headend-in-the-Sky Broadcasting Service (HITS) – (74%).
 Cable Networks (49%).
 Broadcasting content services- FM Radio (26%), uplinking of news and current affairs TV
channels (26%).
 Print Media dealing with news and current affairs (26%).
 Air transport services- scheduled air transport (49%), non-scheduled air transport (74%).
 Ground handling services – Civil Aviation (74%).
 Satellites- establishment and operation (74%).
 Private security agencies (49%).
 Private Sector Banking- Except branches or wholly owned subsidiaries (74%).
 Public Sector Banking (20%).
 Commodity exchanges (49%).
 Credit information companies (74%).

8.  Infrastructure companies in securities market (49%).
 Insurance and sub-activities (49%).
 Power exchanges (49%).
 Defence (49% above 49% to CCS).
INCENTIVES OFFERED IN INDIA
CENTRAL GOVERNMENT INCENTIVES :
 Investment allowance (additional depreciation) at the rate of 15 percent to
manufacturing companies that invest more than INR 1 billion in plant and machinery
available till to 31.3.2015.
 Incentives available to unit’s set-up in SEZ, NIMZ etc. and EOUs.
 Exports incentives like duty drawback, duty exemption/remission schemes, focus
products & market schemes etc.
 Areas based incentives like unit set-up in north east region, Jammu & Kashmir, Himachal
Pradesh, Uttarakhand.
 Sector specific incentives like M-SIPS in electronics.
STATE GOVERNMENT INCENTIVES :
 Each state government has its own incentive policy, which offers various types of
incentives based on the amount of investments, project location, employment
generation, etc. The incentives differ from state to state and are generally laid down in
each state’s industrial policy.
 The broad categories of state incentives include: stamp duty exemption for land
acquisition, refund or exemption of value added tax, exemption from payment of
electricity duty etc.
Special dispensations have been envisaged for NRI investments in the following :
 Construction development
 Ground Handling & Air transport services
 NRI investing on non-repatriable basis.
 FDI from NEPAL & BHUTAN is allowed in Indian rupees.

9. RECENT POLICY MEASURES
 100% FDI allowed in medical devices
 FDI cap increased in insurance & sub-activities from 26% to 49%
 100% FDI allowed in the telecom sector.
 100% FDI in single-brand retail.
 FDI in commodity exchanges, stock exchanges & depositories, power exchanges,
petroleum refining by PSUs, courier services under the government route has now been
brought under the automatic route.
 Removal of restriction in tea plantation sector.
 FDI limit raised to 74% in credit information & 100% in asset reconstruction companies.
 FDI limit of 26% in defence sector raised to 49% under Government approval route.
Foreign Portfolio Investment up to 24% permitted under automatic route. FDI beyond
49% is also allowed on a case to case basis with the approval of Cabinet Committee on
Security.
 Construction, operation and maintenance of specified activities of Railway sector
opened to 100% foreign direct investment under automatic route.
LATEST DATA – JUNE 2015

10. PATTERN OF FDI INFLOWS IN INDIA

11. CONCLUSION
India’s Foreign Direct Investment (FDI) policy has been gradually liberalised to make the
market more investor friendly. The results have been encouraging. These days, the
country is consistently ranked among the top three global investment destinations by all
international bodies, including the World Bank, according to a United Nations (UN)
report. For Indian economy which has tremendous potential, FDI has had a positive
impact. FDI inflow supplements domestic capital, as well as technology and skills of
existing companies. It also helps to establish new companies. All of these contribute to
economic growth of the Indian Economy.
However, like other countries, there are some factors acting as constraints for FDI in
India like resource challenge, political challenge, federal challenge, equity challenge, etc.
By overcoming these challenges, India can serve as a hot FDI destination.
THANK YOU