FDI Restrictions in Indian Sectors

Abstract:

FDI Restrictions in Indian Sectors have been imposed in a number of sectors such as, atomic energy, chit fund business and lottery business. FDI Restrictions in Indian Sectors have been imposed by the government of India in order to protect the interests of the nation.

Foreign direct investment in India:

The several policy initiatives taken by the government of India in the 1990s helped to transform the country from a restrictive regime with regard to foreign direct investment to a liberal one.

As in 2007, foreign direct investment in India is encouraged in almost all the sectors of the country's economy under the automatic route. At the same time there are a few Indian sectors in which foreign direct investment has been restricted by the government. Forms through which foreign direct investment in India are allowed include, Euro issues, preferential allotments, technical collaborations, and financial collaborations. The amount of foreign direct investment in India came to around US$ 4.7 billion in 2006 - 2007, and the next year this figure increased more than three times to about US$ 15.7 billion.

Various Indian sectors having FDI restrictions:

FDI Restrictions in Indian Sectors have been imposed on a few sectors by the Indian government. FDI Restrictions in Indian Sectors have been imposed in order to protect the interests of the country, as these sectors either relate to national security or sensitive enough to keep apart the foreign companies. Foreign direct investment restrictions in Indian sectors have also been imposed in order to allow the domestic companies to make more profits with less competition, than that of in the presence of rivalry international firms. The various Indian Sectors having restrictions of foreign direct investment are:

• Atomic energy
• Nidhi company
• Betting and gambling
• Chit fund business
• Plantation or agricultural activities
• Real estate business
• Business in Transferable Development Rights
• Lottery business
• Retail trading
• Railway transport
• Mining of chrome, zinc, gold, diamonds, copper, iron, gypsum, manganese, and sulfur
• Ammunition and arms

Last Updated on 05/07/2011