FDI Approval in India

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Abstract: FDI Approvals in India are carried out by agencies like the Reserve Bank of India and the Foreign Investment Promotion Board. FDI Approval in India is done quickly by the concerned agencies in order to bring in huge amounts of foreign direct investment into the country.

Foreign Direct Investment in India:

Major economic reforms were undertaken in India in the early 1990s.

This led to the liberalization and deregulation of the Indian economy and also opened the country's markets to Foreign Direct Investment (FDI).

In India, foreign direct investments are allowed through collaborations that are of financial nature, joint venture collaborations, through preferential allotments, and also through Euro issues.

Various routes of FDI Approval in India:

The proposals for foreign direct investment in India get their approval through two routes that are the Reserve Bank of India and the Foreign Investment Promotion Board. Automatic approval is given by the Reserve Bank of India to the proposals for foreign direct investment in India. The Reserve Bank of India gives approval within the time period of two weeks. It gives approval to the proposals for foreign direct investment in India that involve FDI up to 74% in the nine categories that are included in List four, FDI up to 50% in the three categories that are included in List two, and FDI up to 51% in the forty eight industries that are included in List 3.

FDI Approval in India is also done by the Foreign Investment Promotion Board (FIPB), which processes cases of non- automatic approval. The time taken by Foreign Investment Promotion Board for approving the proposals for foreign direct investment in India is between four to six weeks. The approach of FIPB is liberal as a result of which it accepts most of the proposals and rejects very few.

FDI Approval in India and Economic Growth

FDI approvals in India have grown significantly in recent years. Significant FDI approvals have taken place in telecom, real estate, banking and insurance sectors. Several other sectors have also benefited from FDI approvals in India. FDI approvals have played a major role in the economic growth of India in recent years.

Last Updated on 05/07/2011