Policy On FDI

The Policy on FDI in India has been most liberal and transparent among all other developing countries, receiving FDI Inflows for economic development. India receives up to 100 percent Foreign Direct Investments under the automatic route in almost all the activities and industrial sectors except those which require Government approval for the execution of activities.

Sectors in India Prohibited For FDI-

Sectors which require industrial license for execution of activities

Proposals by the foreign players who already possess a financial or technical collaboration firm in the similar field in India
Proposals regulated by Securities and Exchange Board of India for acquisition of shares in an already existent Indian company in the financial service sector
Proposals which are not included or which do not abide by the recommended sectoral policy or CAPS under sectors in which Foreign Direct Investment is not permitted
Sectors which are not under automatic route and in which investments in those sectors require prior approval of Central Government, the approvals for proposals are granted by Foreign Investment Promotion Board (FIPB)

Industrial Units in India Deprived from FDI as per FDI Policy-

Atomic Energy
Gambling and betting
Retail Trading
Lottery Business
Agricultural or plantation activities of Agriculture

FDI Policy in India-

After the granting of Foreign Direct Investment by the Foreign Investment Promotion Board (FIPB) under automatic route, the industrial sectors in India can take regulatory approvals from the state government and other authorities in the local places for construction of building, water, environmental clearance, and so on.

FDI Policy Under Automatic Route-

Sectors working under automatic route does not require any prior approval of the Central Government of RBI to attract Foreign Direct Investment. The foreign investors are only required to inform the Regional Office concerned of RBI within thirty days receiving of inward payments and submit the required documents in that office again within thirty days of the issuing of the shares of foreign institutional investors.

FDI Policy Under Government Approval-

The proposals which involve foreign investment or foreign technical collaboration is granted permission by the Foreign Investment Promotion Board (FIPB). All the proposals for FDI are to be submitted to the FIPB Unit and those of Non-Resident Indian (NRI) investments and 100% Export Oriented Units (EOUs) should be submitted to SIA in Department of Industrial Policy and Promotion.

Industrial Licensing in FDI Policy-

Industrial Licensing is regulated by Industries (Development and Regulation) Act 1951. Following are the sectors which require Industrial Licensing:

Industries which abide by compulsory licensing
Manufacturing of items by the larger industrial units for small sector industries
Locational restrictions on the proposed sites

Sectors Which Require Industrial Licensing-

Electronic aerospace and defense equipment
Alcoholics drinks
Explosives
Cigarettes and tobacco products
Hazardous chemicals such as, hydrocyanic acid, phosgene, isocynates and di-isocynates of hydro carbon and derivatives