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FDI

About FDI

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What is Foreign Direct Investment (FDI)

Foreign direct investment (FDI) is when a company takes controlling ownership in a business entity in another country. With FDI, foreign companies are directly involved with day-to-day operations in the other country. This means they aren’t just bringing money with them, but also knowledge, skills and technology.
 
Generally, FDI takes place when an investor establishes foreign business operations or acquires foreign business assets, including establishing ownership or controlling interest in a foreign company.  
 
Where is FDI made?
 
Foreign Direct Investments are commonly made in open economies that have skilled workforce and growth prospect. FDIs not only bring money with them but also skills, technology and knowledge.
 
FDI in India
 
FDI is an important monetary source for India's economic development. Economic liberalisation started in India in the wake of the 1991 crisis and since then, FDI has steadily increased in the country. India, today is a part of top 100-club on Ease of Doing Business (EoDB) and globally ranks number 1 in the greenfield FDI ranking.
 
Routes through which India gets FDI
 
Automatic route: The non-resident or Indian company does not require prior nod of the RBI or government of India for FDI.
 
Govt route: The government's approval is mandatory. The company will have to file an application through Foreign Investment Facilitation Portal, which facilitates single-window clearance. The application is then forwarded to the respective ministry, which will approve/reject the application in consultation with the Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce. DPIIT will issue the Standard Operating Procedure (SOP) for processing of applications under the existing FDI policy.
 
Sectors which come under the ' 100% Automatic Route' category are
 
Agriculture & Animal Husbandry, Air-Transport Services (non-scheduled and other services under civil aviation sector), Airports (Greenfield + Brownfield), Asset Reconstruction Companies, Auto-components, Automobiles, Biotechnology (Greenfield), Broadcast Content Services (Up-linking & down-linking of TV channels, Broadcasting Carriage Services, Capital Goods, Cash & Carry Wholesale Trading (including sourcing from MSEs), Chemicals, Coal & Lignite, Construction Development, Construction of Hospitals, Credit Information Companies, Duty Free Shops, E-commerce Activities, Electronic Systems, Food Processing, Gems & Jewellery, Healthcare, Industrial Parks, IT & BPM, Leather, Manufacturing, Mining & Exploration of metals & non-metal ores, Other Financial Services, Services under Civil Aviation Services such as Maintenance & Repair Organizations, Petroleum & Natural gas, Pharmaceuticals, Plantation sector, Ports & Shipping, Railway Infrastructure, Renewable Energy, Roads & Highways, Single Brand Retail Trading, Textiles & Garments, Thermal Power, Tourism & Hospitality and White Label ATM Operations.
 
Sectors which come under up to 100% Automatic Route' category are
 
  • Infrastructure Company in the Securities Market: 49%
  • Insurance: up to 49%
  • Medical Devices:up to 100%
  • Pension: 49%
  • Petroleum Refining (By PSUs): 49%
  • Power Exchanges: 49%
 
Government route
 
Sectors which come under the 'up to 100% Government Route' category are
 
  • Banking & Public sector: 20%
  • Broadcasting Content Services: 49%
  • Core Investment Company: 100%
  • Food Products Retail Trading: 100%
  • Mining & Minerals separations of titanium bearing minerals and ores: 100%
  • Multi-Brand Retail Trading: 51%
  • Print Media (publications/ printing of scientific and technical magazines/ specialty journals/ periodicals and facsimile edition of foreign newspapers): 100%
  • Print Media (publishing of newspaper, periodicals and Indian editions of foreign magazines dealing with news & current affairs): 26%
  • Satellite (Establishment and operations): 100%
 
FDI prohibition
 
There are a few industries where FDI is strictly prohibited under any route. These industries are
 
  • Atomic Energy Generation
  • Any Gambling or Betting businesses
  • Lotteries (online, private, government, etc)
  • Investment in Chit Funds
  • Nidhi Company
  • Agricultural or Plantation Activities (although there are many exceptions like horticulture, fisheries, tea plantations, Pisciculture, animal husbandry, etc)
  • Housing and Real Estate (except townships, commercial projects, etc)
  • Trading in TDR’s
  • Cigars, Cigarettes, or any related tobacco industry
 
FDI inflow
 
During the fiscal ended March 2019, India received the highest-ever FDI inflow of $64.37 billion. The FDI inflows were $45.14 billion during 2014-15 and $55.55 billion in the following year.

Latest Updates on FDI

Foreign direct investment (FDI) into the Chinese mainland, in actual use, expanded 6.1 per cent year on year to 268.44 billion yuan in the first two months of 2023

Updated On: 17 Mar 2023 | 4:40 PM IST

BCI said that the entry of foreign firms will be restricted, well-controlled and regulated to ensure that it is mutually beneficial to Indian as well as foreign lawyers

Updated On: 15 Mar 2023 | 12:42 PM IST

What has the G20 achieved so far in 2023? What is hurting India's FDI story? What's behind MFs' optimism in Indian equities? What is the 'Hindu rate of growth'? All answers here

Updated On: 07 Mar 2023 | 8:00 AM IST

According to the official, as far as 2022 is concerned, there has been a 4 per cent increase in FDI inflows

Updated On: 24 Feb 2023 | 11:19 PM IST

Business Standard brings you the top headlines at this hour

Updated On: 23 Feb 2023 | 9:12 AM IST

Computer software and hardware manufacturing were the highest recipient of FDI at $8.07 billion

Updated On: 22 Feb 2023 | 11:22 PM IST

The computer software and hardware sector attracted the highest inflows of USD 8 billion during the nine-month period of this fiscal

Updated On: 22 Feb 2023 | 5:13 PM IST

The Survey points out that the highly competitive sector is already witnessing M&As as insurers have huge opportunities and volume to co-exist in the space

Updated On: 31 Jan 2023 | 11:03 PM IST

Foreign direct investment into the country is expected to rebound in the coming months on account of India's high economic growth, and steps to further improve the business environment of India

Updated On: 31 Jan 2023 | 2:50 PM IST

With an estimated 250 unicorns by 2025 from a little over 100 now and $180 billion of total funding by CY23, India's startup ecosystem is well-positioned to leverage the availability of young talent

Updated On: 03 Jan 2023 | 3:33 PM IST

Despite the Narendra Modi government's high-octane push to boost manufacturing through the 'Make in India' initiative, foreign investors continue to chase bets in the services sector

Updated On: 28 Dec 2022 | 7:24 PM IST

"Presently, India has one of the most liberalized FDI policies wherein very few sectors require government approval"

Updated On: 27 Dec 2022 | 12:08 PM IST

Many of these proposals are from China, either directly or indirectly, Minister of State for Commerce and Industry Som Parkash said in a written reply to the Lok Sabha

Updated On: 21 Dec 2022 | 6:39 PM IST

Domestic non-conventional energy sector has received over $13 billion through FDI route in the last 22 years, the govt told Parliament

Updated On: 20 Dec 2022 | 5:12 PM IST

We have been a potential partner for too long without actually committing ourselves to delivery

Updated On: 19 Dec 2022 | 8:12 AM IST

The Minister of State for Electronics and Information Technology said that despite the deep disruption caused by the pandemic, India as a nation has emerged stronger

Updated On: 02 Nov 2022 | 10:48 PM IST

The study says 71% of MNCs see the country as a key destination for their global expansion

Updated On: 16 Oct 2022 | 10:49 PM IST

For India to work as a dynamic global investment destination, it must work for its ordinary people

Updated On: 12 Oct 2022 | 10:33 PM IST

India Inc encourages FDI, raising dollar deposits from NRIs

Updated On: 29 Sep 2022 | 11:43 PM IST

At the current rate, the reserves may provide cover for eight months of imports in FY23. Four months could be considered a danger mark

Updated On: 29 Sep 2022 | 1:05 PM IST