ABOUT FOREIGN DIRECT INVESTMENT
Foreign direct investment (FDI) is a direct investment into production or business in a country by a company in another country, either by buying a company in the target country or by expanding operations of an existing business in that country. Foreign direct investment is in contrast to portfolio investment which is a passive investment in the securities of another country such as stocks and bonds. Foreign direct investment has many forms. Broadly, foreign direct investment includes "mergers and acquisitions, building new facilities, reinvesting profits earned from overseas operations and intra-company loans". In a narrow sense, foreign direct investment ...view middle of the document...
* Government Route
FDI in activities not covered under the automatic route requires prior approval of the Government which are considered by the Foreign Investment Promotion Board (FIPB), Department of Economic Affairs, Ministry of Finance.
Many countries seek FDI for following reasons
(a) Domestic capital is inadequate for purpose of economic growth;
(b) Foreign capital is usually essential, at least as a temporary measure, during the period when the capital market is in the process of development;
(c) Foreign capital usually brings it with other scarce productive factors like technical know-how, business expertise and knowledge.
AUTHOROTIES DEALING WITH FDI
Foreign Investment Promotion Board (FIPB)
* Expedite clearance process
* Periodically review implementation of cleared proposals
* Review general and sectorial policy guidelines
* Undertake investment promotion activities
Secretariat for Industrial Assistance (SIA)
* Acts as gateway to industrial investment in India
* Assist entrepreneurs & investors in setting up projects
* Liaise with Govt. bodies to seek necessary clearance.
Foreign Investment Implementation Authority (FIIA)
* Quick implementation of FDI approvals
* Resolution of operational difficulties faced by foreign investors
* Gather feedback from foreign investors
Other authorities involved
* Investment Commission
* Project Approval Board
* Reserve Bank of India
In India, Foreign investment was introduced in 1991 under Foreign Exchange Management Act (FEMA), driven by then finance minister Manmohan Singh. As Singh subsequently became a prime minister, this has been one of his top political problems, even in the 2012 election. India disallowed overseas corporate bodies (OCB) to invest in India.
Starting from a baseline of less than $1 billion in 1990, a 2012 UNCTAD survey projected India as the second most important FDI destination after China for transnational corporations during 2010–2012. As per the data, the sectors that attracted higher inflows were services, telecommunication, construction activities and computer software and hardware. Mauritius, Singapore, US and UK were among the leading sources of FDI. Based on UNCTAD data FDI flows were $10.4 billion, a drop of 43% from the first half of the last year.
India has been ranked at the second place in global foreign direct investments in 2010 and will continue to remain among the top...