21-06-2012 FDI Limits Sector Wise

KPS Consultants Pvt. Ltd.

Foreign Direct Investment (FDI) has been one of the factors that has driven the India growth story. Foreign Direct Investment refers to the investment of multinationals who invest in the equities (generally 10% or more)of other companies that are established in other countries. The investing company benefits from the growth and expansion of other countries while the country that has received the investment is benefitted by the large inflow of foreign equity that is used for the country's development. FDI generally entails long term inves tment with participation in the management, technology transfer and expertis e. The net flow (inflow - outflow) of foreign exchange calculated as sum of equity capital, reinvestment of earnings, long-term capital, and short-term capital is shown in the Balance of payments. India has allowed FDI in various s ectors through automatic route and has fixed ceilings for FDI. Investment beyond the ceiling through automatic route requires Government approval.

Here is a small list of s ectors along with the FDI ceilings :

FDI Sector Hotel & Tourism Non Banking Finance Companies (NBFCs) Insurance Power Pharmaceuticals Roads, Highways, Ports Pollution Control Call centres Business Process Outsourcing (BPO) Telecommunication Housing

FDI ceilings 100% (certains conditions are to be fulfilled for technology transfer) 49% subject to RBI regulations as amended from time to time 26% subject to licensing requirements from IRDA 100% (other than Atomic power) 100% 100% 100% 100% 100% 49% (upto 100% in certain areas such as ISPs not providing gateways, Email, Voice mail etc subject to certain conditions) 100%

FDI is prohibited in only the following activities :

Retail Trading (except single brand product retailing) Atomic Energy Lottery Business including Government /private lottery, online lotteries,etc. Gambling and Betting including casinos etc. Bus iness of chit fund Nidhi company Trading in Transferable Development Rights (TDRs) Real Estate Business or Cons truction of Farm Houses Activities/sectors not opened to private s ector investment
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21-06-2012 KPS Consultants Pvt. Ltd. Manufacturing of Cigars , cheroots, cigarillos and cigarettes, of tobacco or of tobacco substitutes.

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