User:Aravind V R/Foreign Development Investment in India

Foreign Direct Investment (FDI) plays a crucial role in the accelerated economic growth of the country. Over the years, FDI inflow in India is increasing. Government is encouraging Foreign Direct Investment (FDI) in all the vital sectors of the economy.

FDI in India is permitted as under the following forms of investments: Through financial collaborations. Through joint ventures and technical collaborations. Through capital markets via Euro issues. Through private placements or preferential allotments. FDI is not permitted in the following industrial sectors: Arms and ammunition. Atomic Energy. Railway Transport. Coal and lignite. Mining of iron, manganese, chrome, gypsum, sulphur, gold, diamonds, copper, zinc. Approval of Foreign Direct Investment in India Foreign direct investments in India are approved through two routes:

(1) Automatic Approval by RBI The Reserve Bank of India accords automatic approval within a period of two weeks (provided certain parameters are met) to all proposals involving: foreign equity up to 50% in 3 categories relating to mining activities foreign equity up to 51% in 48 specified industries (List 3). foreign equity up to 74% in 9 categories FDI on automatic route is not allowed in the following cases: Proposals that require an industrial licence and cases where foreign investment is more than 24% in the equity capital of units manufacturing items reserved for the small scale industries. Proposals in which the foreign collaborator has a previous venture/tie-up in India. Proposals relating to acquisition of shares in an existing Indian company in favour of a Foreign/Non-Resident Indian (NRI)/Overseas Corporate Body (OCB) investor; and Proposals falling outside notified sectoral policy/caps or under sectors in which FDI is not permitted and/or whenever any investor chooses to make an application to the Foreign Investment Promotion Board and not to avail of the automatic route. (2) FIPB Route FIPB stands for Foreign Investment Promotion Board which approves all other cases where the parameters of automatic approval are not met. Normal processing time is 4 to 6 weeks. FIPB has Secretary, Department of Economic Affairs as its chairman. The other members of the boards are Secretary, Department of Industrial Policy & Promotion, Commerce Secretary and Foreign Secretary

The government has set up Foreign Investment Implementation Authority (FIIA) to facilitate quick translation of FDI approvals into implementation by providing a pro-active one stop after care service to foreign investors, help them obtain necessary approvals and by sorting their operational problems.