Foreign Exchange Management Act, 1999

Foreign Direct Investment(FDI)

Presented By-Akanksshi, Gaurav, Rohit, Sarthak, Subhash, Sunil, Sumbul, Saima, Somveer, Vineet

Scope :-

Foreign Direct Investment : DefinitionForms in which foreign companies can conduct businessProcedure for entry : FDIEligibility for Investment in IndiaInstruments of Investment in IndiaSectors where FDI is not allowedShare of CountriesSector-wise Contribution in FDIFDI Cap limit for different sectors

FDI means investment by non-resident entity/person resident outside India in the capital of an Indian company under Schedule 1 of Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations 2000 .

Foreign Direct Investment : Definition

Source : http://rbi.org.in/Scripts/BS_FemaNotifications.aspx?

Id=174.

Forms in which Business can be conducted by a Foreign Company in India

A foreign company planning to set up business operations in India may:

• Incorporate a company under the Companies Act, 1956, as a Joint Venture or a Wholly Owned Subsidiary.

•Set up a Liaison Office / Representative Office or a Project Office or a Branch Office of the foreign company which can undertake activities permitted under the Foreign Exchange Management (Establishment in India of Branch Office or Other Place of Business) Regulations, 2000.

Procedure for receiving Foreign Direct Investment in an Indian Company

Automatic Route

Government

Route

Eligibility for Investment in India

Resident Outside India (Except Pakistan)

NRIs , Residents in Nepal and Bhutan

Overseas Corporate Bodies (De-recognized with effect from 2003)

Instruments for receiving FDI in an Indian Company

Equity Shares

Fully and mandatorily convertible preference shares.

Fully and mandatorily convertible debentures

Sectors where FDI is not allowed in India

Atomic Energy

Lottery Business

Gambling and Betting

Business of Chit Fund

Nidhi Company

Agricultural

Housing and Real Estate Business

Trading in Transferable Development Rights (TDRs)Manufacture of tobacco or of tobacco substitutes.

SHARE OF TOP INVESTING COUNTRIES : FDI EQUITY INFLOWS

Mauritius Singapore UK Japan USA Netherlands Cyprus0

5

10

15

20

25

30

35

4037

11

9

76

54

Country

% o

f T

ota

l In

flow

s

SECTORS ATTRACTING HIGHEST FDI EQUITY INFLOWS

SERVICES SECTOR

CONSTRUCTION DEVELOPMENT

TELECOMMUNICATIONS

COMPUTER SOFTWARE & SOFTWARE

DRUGS & PHARMACEUTICALS

CHEMICALS (OTHER THAN FERTILIZERS)

0 2 4 6 8 10 12 14 16 18 20

19

11

6

6

6

5

% of Total Inflows

Secto

r

Sector FDI Cap/Equity Entry Route Other Conditions

A. Agriculture1. Floriculture, Horticulture, Development of Seeds, Animal Husbandry, Pisciculture, Aquaculture, Cultivation of vegetables & mushrooms and services related to agro and allied sectors.  

 100%   

 Automatic   

 

2. Tea sector, including plantation

100% FIPB  

(FDI is not allowed in any other agricultural sector /activity)  

FDI CAP IN DIFFERENT SECTORS

B. Industry1. Mining covering exploration and mining of diamonds & precious stones; gold, silver and minerals.

 100%

 Automatic

 

2. Coal and lignite mining for captive consumption by power projects, and iron & steel, cement production.

100% Automatic  

3. Mining and mineral separation of titanium bearing minerals

100% FIPB  

C. Manufacturing1. Alcohol- Distillation & Brewing

100%Automatic  

2. Coffee & Rubber processing & Warehousing.

100% Automatic  

3. Defence production 26% FIPB  

4. Hazardous chemicals and isocyanates

100% Automatic  

5. Industrial explosives -Manufacture

100% Automatic  

6. Drugs and Pharmaceuticals

100% Automatic  

7. Power including generation (except Atomic energy); transmission, distribution and power trading.

100% Automatic  

(FDI is not permitted for generation, transmission & distribution of electricity produced in atomic power plant/atomic energy since private investment in this activity is prohibited and reserved for public sector.)

 

 

D. Services1. Civilaviation (Greenfield projects and Existing projects)

100% Automatic 

2. Asset Reconstruction companies

49% FIPB  

3. Banking (private) sector74% (FDI+FII).FII not to exceed 49%

Automatic  

4. Broadcasting a. FM Radio b. Cable network; c. Direct to home

 20% 49% (FDI+FII)  

FIPB 

5. Commodity Exchanges49% (FDI+FII) (FDI 26 % FII 23%)

FIPB  

6. Insurance 26% Automatic Clearance from IRDA

7. Petroleum and natural gas : a. Refining

49% (PSUs). 100% (Pvt. Companies)

FIPB (for PSUs). Automatic (Pvt.)

 

8. Print Media a. Publishing of newspaper and periodicals

26%   100%

FIPB   FIPB

S.t.guidelines by Ministry of Information & broadcasting

9. Telecommunications

74% (including FDI, FII, NRI, FCCBs, ADRs/GDRs, convertible preference shares, etc.

Automatic up to 49% and FIPB beyond 49%.  

  

Thank You. . .