Foreign Direct Investment
 
The FDI regime has been progressively liberalized during the course of the 1990s (particularly after 2000), with most restrictions on foreign investment being removed and procedures simplified. With limited exceptions, foreigners can invest directly in India, either on their own or as a joint venture. Today, there are very few industries where foreign investment is prohibited. Moreover, investment ceilings, which are applicable in certain cases, are gradually being removed /phased out. Features of the government’s foreign investment policies and incentives offered by it:
  • No government approval is required for FDI in virtually all the sectors/activities, except for a small negative list formulated by the government.
  • The government has formulated”Sector Specific Guidelines for FDI,” wherein investments up to specified sectoral caps are covered under the automatic route, with a few exceptions.
  • FIPB considers proposals for foreign participation that do not qualify for automatic approval.
  • Decisions on all foreign investment proposals are usually taken within 30 days of submitting an application.
  • Free repatriation of capital investment is permitted, provided the original investment (on a repatriable basis) was made in convertible foreign exchange. Further, free repatriation of profits on capital investment is permitted, subject to payment of taxes and other specified conditions
  • Use of foreign brand names/trademarks is permitted for the sale of goods in India.
  • Indian capital markets are open to FIIs.
  • Indian companies are permitted to raise funds from international capital markets.
  • Special investment and tax incentives are given for exports and sectors, including power, electronics, software and food processing.
  • “Single window” clearance facilities and “investor escort services” are available in various states to simplify the approval process for new ventures.
 
 
 
 
     
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