Foreign direct investment (FDI) refers to investment made by companies or individuals in one country into business interests located in another country. India's FDI policy has been liberalized since 1991 to attract more foreign investment. The Department of Industrial Policy and Promotion formulates India's consolidated FDI policy annually. Foreign investors can invest directly in India across most sectors either on their own or through joint ventures, except in a small number of prohibited sectors. FDI can occur through the automatic route without government approval if certain conditions are met, or through the government approval route. India ranks among the top 10 recipients of FDI globally and saw FDI inflows increase by 16% to $49 billion in 2019 according to UNCTAD

1. FDI Policy

2. Foreign Direct Investment
Foreign direct investment (FDI) is a direct
investment into production or business in a
country by an individual or company in another
country, either by buying a company in the
target country or by expanding operations of an
existing business in that country.

3. FDI Policy & Process
Since 1991, the regulatory environment and the process to get FDI has
consistently been eased to make it investor-friendly, catapulting India into the
position of one of the fastest-growing economies of the world.
The GoI through Department of Industrial Policy & Promotion (DIPP)
formulates a consolidated the process of FDI on a yearly basis which is a
defined framework for FDI. Most recently, reforms were made for FDI policy
in India 2019.
Foreign investors can invest directly in India, either on their own or through
joint ventures in virtually all the sectors except in a very small list of activities
where foreign investment is prohibited.

4. FDI Investment Routes
Foreign Direct Investment (FDI) can be made through two routes that are:
Automatic Route: Indian companies engaged in various industries can issue shares to
foreign investors up to 100% of their paid up capital in Indian companies
Government Approval Route: Certain activities that are not covered under the
automatic route require prior Government approval for FDIs.
Category 1- Sectors in which FDI is permitted up to 100% under automatic route
Category 2- Sectors in which FDI is permitted up to 100% under Government Route
Category 3- Sectors in which FDI is permitted beyond certain limit with Government
Category 4- Sectors wherein FDI is permitted up to certain limit under both
Government and Automatic routes subject to applicable laws/ regulations security and
other conditionalities

5. FDI policy:
Automatic Route
Under the Automatic Route, the non-resident investor or the Indian company does not require
any approval from Government of India for the investment.
Government Route
Under the Government Route, prior to investment, approval from the Government of India is
required. Proposals for foreign investment under Government route, are considered by
respective Administrative Ministry/ Department.
Present Position: A non-resident entity can invest in India, subject to the FDI Policy except
in those sectors/activities which are prohibited. However, a citizen of Bangladesh or an entity
incorporated in Bangladesh can invest only under the Government route. Further, a citizen of
Pakistan or an entity incorporated in Pakistan can invest, only under the Government route, in
sectors/activities other than defence, space, atomic energy and sectors/activities prohibited for
foreign investment.

6. 2. Revised Position
A non-resident entity can invest in India, subject to the FDI Policy except in those
sectors/activities which are prohibited. However, an entity of a country, which shares land
border with India or where the beneficial owner of an investment into India is situated in or is
a citizen of any such country, can invest only under the Government route. Further, a citizen
of Pakistan or an entity incorporated in Pakistan can invest, only under the Government route,
in sectors/activities other than defence, space, atomic energy and sectors/activities prohibited
for foreign investment. In the event of the transfer of ownership of any existing or future FDI
in an entity in India, directly or indirectly, resulting in the beneficial ownership falling within
the restriction/purview of the para 3.1.1(a), such subsequent change in beneficial ownership
will also require Government approval.

7. FDI in India
• The Department of Industrial Policy and Promotion (DIPP),
Ministry of Commerce & Industry, Government of India
makes policy pronouncements on FDI which are notified by
the RBI as amendments to the Foreign Exchange
Management Regulations.
• A 2012 UNCTAD survey projected India as the second
most important FDI destination after China.
• India among top 10 FDI recipients, attracts $49 billion inflows
in 2019 attracting $49 billion in inflows, a 16 per cent increase
from the previous year.

8. FDI in 2020:
1. The Global Investment Trend Monitor report compiled by United Nations
Conference on Trade and Development (UNCTAD) states that the global
foreign direct investment remained flat in 2019 at $1.39 trillion, a one per
cent decline from a revised $1.41 trillion in 2018.
2. South Asia recorded a 10 per cent increase in FDI to $60 billion and “this
growth was driven by India, with a 16 per cent increase in inflows to an
estimated $49 billion. The majority went into services industries, including
information technology

9. FDI in India
FDI caps in various sectors:
• Defense 26%
• Insurance 49% (earlier 26%)
• Telecom 100% (earlier 74%)
• Single brand retailing 100%
• Multi brand retailing 51%
• Civil aviation 49%

10. FDI in India
Ventures after liberalization of FDI caps:
• Tata sons with AirAsia and SingaporeAirlines
• Jet Airways with EtihadAirways
• Tata sons and Augusta Westland (IndianRotorcraft)
• Wal-Mart
• Starbucks
• IKEA
• Carrefour

11. FDI trend in India:

12. India Foreign Direct Investment-2020 Data

13. Finance ministry notifies changes in
FDI:2020
The department of economic affairs, under the ministry, has notified
these amendments to the FDI policy under the Exchange
Management Act, 1999 (FEMA).
"Provided that an entity of a country, which shares land border with
India or the beneficial owner of an investment into India who is
situated in or is a citizen of any such country, shall invest only with
the government approval.

14. China objects to India's revised FDI policy that blocks
takeover of stressed firms:
On April 17, the Government of India had reviewed its FDI policy for "curbing
opportunistic takeovers/acquisitions of Indian companies due to the current COVID-19
pandemic“.
The decision came at the back of People's Bank of China (PBoC) raising its stake from 0.8
per cent to 1.01 per cent in India's largest non-banking mortgage provider HDFC.
As of December 2019, China's cumulative investment in India has exceeded 8 billion US
dollars, far more than the total investments of India's other border-sharing countries. The
impact of the policy on Chinese investors is clear. Chinese investment has driven the
development of India's industries, such as mobile phone, household electrical appliances,
infrastructure and automobile, creating a large number of jobs in India, and promoting
mutual beneficial and win-win cooperation. Chinese enterprises actively made donations to
help India fight COVID-19 epidemic

15. FDI:2020
According to the DPIIT data, India received FDI from
China worth $2.34 billion (Rs 14,846 crore)
between April 2000 and December 2019. During the
same period, India has attracted Rs 48 lakh from
Bangladesh, Rs 18.18 crore from Nepal, Rs 35.78 crore
from Myanmar, and Rs 16.42 crore from Afghanistan.
There are no investment from Pakistan and Bhutan.

16. FDI:2020
FDI is allowed through automatic route in most of
the sector however, certain areas such as defence,
telecom, media, pharmaceuticals and insurance,
government approval is required for foreign
investors.
During April-December 2019-20, FDI into India
increased by by 10 per cent to $36.77 billion.

17. THANKYOU