Home Exclusive Insights into how to get FDI in India

Insights into how to get FDI in India

Insights into how to get FDI in India
An insight into the highest employment generating sectors in India:

In today’s date, the real estate industry in India has been recorded at a whooping size of US$ 12 billion. Not only this, the size is also constantly growing at 30 percent. The real estate sector comprises of 80 percent of residential space and the rest comprises of technology consulting, call centres, and software programming. It has also been attributed as the second largest sector in India after agriculture to generate the largest employment in India. India has become a good choice for investment opportunities in the last three decades due to its diverse sectors and the growing economy. It has become quite a popular choice amongst the European countries to establish some strong investment practices.

Introduction to Foreign Direct Investment:

The Foreign Investment Promotion Board (FIPB) was set up by the Indian government in order to oversee the investment and banking aspect of the country. Its aim was to promote foreign direct investment in India with the help of facilitation of international companies, non-resident Indians to invest in India. Investment in India can be undertaken via joint ventures, financial collaborations, capital markets, etc. However, not all sectors allow foreign direct investment and the sectors for which it is banned include stock markets, atomic energy, arms and ammunition, real estate, and mining of minerals. It is important for the Indian government to approve the investment being made in India from the foreign company through the FIPB.

What makes India an ideal location to invest:

Due to the huge workforce and the diverse business sectors present in India, it has become quite an attractive option for the foreign companies to invest. Since its market potential is great, India constantly urges the foreign groups to bring their investment into the country.

Some companies that have been a product of foreign direct investment and these foreign direct companies in India include Equity India, Merc Holding Pvt. Ltd., Bajaj Allianz, Sarabhai Holding Pvt. Ltd., Tata Investment Corporation Ltd., Veronica Financial Services Ltd., Stanrose Mafatlal Investment and Finance Ltd., Toss Financial Pvt. Ltd., Indian Investment Centre etc.

How to get FDI in India:

There are two routes which can be followed in order to get foreign direct investment in India including:

  1. Automatic Route

The sectors falling under this route do not require prior approval from the government. Under this route, in all the activities/sectors, 100% FDI is allowed. Some features associated with the automatic route of FDI are as follows:

  • Provisions of Press note 1 that are issued by the government are attracted
  • More than 24% of the foreign equity is proposed to be invested to manufacture the items that are reserved for the small-scale sector
  • The sectors falling under the automatic route do not require any prior approval from the government or the Reserve bank of India
  • The regional office associated with the Reserve Bank of India needs to be notified within 30 days of inward remittances by the investors. In addition to this, the required documents have to be filed along with the FC-GPR form within 30 days of issuance of shares to the non-resident investors.
  1. Government Route

All the activities/sectors that are not covered under the automatic route follow the government route. The government route requires prior approval from the government and are considered by the Foreign Investment Promotion Board (FIPB), Ministry of Finance. One can either submit the plain paper application forms with all the relevant details or download the form FC-IL from the official website i.e., www.dipp.gov.in. Also, in this case, no fee needs to be paid along with the application form.

All the general permissions of RBI falling under FEMA

The Reserve Bank of India need not give any further clearance to the companies which have a foreign investment approval via the FIPB route to receive an inward remittance and issue shares to the non-resident investors. However, the company needs to ensure that the concerned regional office of the Reserve Bank of India is notified about receiving the inward remittances within 30 days of receiving it. The companies also need to submit the FC-GPR form within 30 days when the shares are issued to the non-resident investors.


Please enter your comment!
Please enter your name here