What Are the Sectors Where FDI Is Permitted in India- Over the past few years, many changes have been made to FDI. A few days ago, there was a news report. The government is looking to ease the flow of foreign money into the Indian economy. What is the foreign direct investment? What are the ways for that? What are all sectors where foreign direct investment is permitted? Let’s take a look
What is the foreign direct investment?
Foreign direct investment is an investment made by an individual or company from one country to another country for any commercial purpose/interest. The plan is also a major source of cash for the country, and the rules for foreign direct investment regulate the flow and exchange of foreign currencies to and from India. Since the economic crisis in 1991, the liberalization of the Indian economy has taken place, which has resulted in a periodic increase in foreign direct investment over the years. This has resulted in the birth of more than one crore job in India and has been of great benefit to the country’s economic stability.
The growth in foreign direct investment has been phenomenal in India, to the point that in 2015, according to a study by the Financial Times, India surpassed both China and the United States as the largest accumulator of foreign direct investment, attracting $ 31 billion in investment. Here is a look at all of the sectors in which India permits FDI.
Foreign direct investment methods
In the first place, there are two ways in which India attracts foreign investment. :
Automatic route: This allows foreign direct investment to enter the country without prior approval from the government or the Reserve Bank of India.
Government Road: This method requires prior government approval, and therefore, the application must be submitted through the Foreign Investment Facilitation Portal. This platform operates on a one-window removal system and allows approval for the required FDI application. The request is sent to the relevant ministries through the portal, and the minister submits the request according to the established procedures.
The Foreign Investment Promotion Board was entrusted with the responsibility of overseeing the entire procedure and was charged with approving the correct investment requests. But this agency was canceled in May 2017 after it held its 245th meeting in April. The central government took a step to abolish this agency.
Since 2017, the relevant ministries have undertaken all work related to processing FDI applications and ensuring their approval. The concerned departments will share this responsibility with the Department of Promotion of Industry and Internal Trade and the Ministry of Trade. The Ministry of Commerce has been tasked with developing a standard operating procedure to process these requests in accordance with the FDI policy. What Are The Sectors Where FDI Is Permitted In India
Allowed sectors
Now that we know how foreign direct investment flows into India, let us look at all the sectors that are allowed to accept foreign investment in accordance with the foreign direct investment policy and what ways these investments can take.
1- Agriculture and animal husbandry: 100% automatic
This includes:
• Planting flowers, gardening, vegetables, fruits, and growing mushrooms
• Seed production
Any form of animal husbandry (including dogs)
• Basis culture
• Aquaculture
• Bee planting
• Agricultural services
2- Air transport services:
• Unscheduled – 100% automatic (helicopters and water planes)
• Scheduled – up to 49% automatic and the rest by the government (local and regional services)
• Aviation Services – 100% Automatic
3- Asset Rebuilding Firms: 100% automatic
The aforementioned company must be registered with the RBI in accordance with Article 3 of the SARFAESI Act 2002.
4- Automotive and auto components: 100% automatic
5- The banking sector:
Private: up to 49% automatic, the rest by the government
Public: 20 percent through the government
6- Biotechnology:
• Brownfield – up to 74% automatic and the government contributes the rest
Greenfield – 100% automatic
7- Broadcasting:
• Non-news – 100% automatic
• DTH, Teleports, Cable Network, Mobile TV, HITS- 100% automatic
• FM and news channels – 49% government
Digital Media – 26% of the government
8- Goods:
• Good capital – 100% automatic
• Wholesale – 100% automatic
• Chemicals – 100% automatic
Coal and Lignite – 100% automatic
100% electronic – automatic systems
• Duty-Free Shops – 100% Automatic
• Food processing – 100% automatic
E-commerce – 100% automatic
• Food products – 100% government
• Precious stones and jewels – 100% automatic
Leather – 100% automatic
Manufacturing – 100% automatic
• Medical devices – 100% automatic
Mining – 100% automatic
Titanium Mining – 100% Government
• Multi-brand retail – 51% government
• Oil and Gas – 100% automatic
• Oil refining – 49% automatic
• Farm – 100% automatic
• Shipping – 100% automatic
• Rail infrastructure – 100% automatic
• Roads – 100% automatic
• Textiles – 100% automatic
• Thermal energy – 100% automatic
Tourism – 100% automatic
9- Construction:
• Township -100% automatic
Hospitals – 100% automatic
10. The investment company:
• Basic – 100% government
11- Defense: up to 49% automatic and the rest by the government
12. Health care:
• Brownfield – up to 74% automatic and the rest is government
Greenfield – 100% automatic
13- Insurance:
Up to 49% automatic and the rest by the government
14- Pension: 49% automatically
15- Pharmaceutical Preparations:
• Brownfield – up to 74% automatic and the rest through the government
Greenfield – 100% automatic
16- Print media:
• Scientific Journals, Journals, and Periodicals – 100% government
Newspaper – 26% government
Restricted sectors
• the lottery
• Gambling and betting
• Casinos
• Shit boxes
• Nidi Companies
Convertible Development Rights
• Real estate business
• Build a farmhouse
Cigars, cheer, cigars, cigarettes, and tobacco substitutes
Also, the following sectors will not be able to benefit from private investment – atomic energy and rail operations.
Deposit to obtain government approval
Deposit: The application must be submitted online, and the required documents must be submitted online, through the Foreign Investment Facilitation Portal.
Internal Procedure: The portal then sends the request to the concerned departments within two days. A copy must also be sent to the RBI to verify FEMA compliance. Foreign direct investment from Pakistan and Bangladesh also require the approval of the Ministry of Interior. By the end of 4 weeks, the ministers will give their judgment, and the process will go ahead. If they are unhappy, they may ask for clarifications that must be provided within a week. For FDIs exceeding 50 billion riyals, the application must be approved by the Economic Affairs Committee.
• Approval: Once all comments are considered, the application is approved, and the entire process takes up to 8 weeks.
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