FDI (Foreign Direct Investment) in India: An Overview - SSRANA

Tax & Finance

FDI

Foreign Direct Investment in India

Foreign direct investment (FDI) is an investment made by a company or individual in one country in business in another country. It not only involves monetary transfer of funds, it also involves acquisition of ownership or controlling interest in a foreign company by the investing company.

As per the DIPP (Department of Industrial Policy and Promotion), the object of the Government is to attract more foreign investment into India so that technology and skills, domestic capital and most importantly the economic growth of the Indian subcontinent can be supplemented. FDI is different from portfolio investment in the sense that FDI is aimed at establishing a lasting interest in the economy other than the investor’s economy.

Entry routes for investment

The two entry routes for investment are: Automatic Route and the Government Route. Under the Automatic Route, the non-resident investor or the Indian company does not require any approval from Government of India for the investment whereas under the Government Route, prior approval of the Government of India is required and investment proposals under Government route, are considered by respective Administrative Ministry/Department.

The Consolidated FDI Policy was last released by the DIPP, Ministry of Commerce and Industry on August 28, 2017 and the same can be accessed here.

The latest FDI Statistics in India can be accessed here.

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