Foreign Direct Investment in India (Need)

With strong governmentaI support, FDI has heIped the Indian economy
grow tremendousIy. But with $34 biIIion in FDI in 2007, India gets onIy
about 25% of the FDI in China.
Foreign direct investment (FD) in ndia has played an important role in the development
of the ndian economy. FD in ndia has in a lot of ways enabled ndia to achieve a
certain degree of financial stability, growth and development. This money has allowed
ndia to focus on the areas that needed a boost and economic attention, and address
the various problems that continue to challenge the country.
ndia has continually sought to attract FD from the world's major investors. n 1998 and
1999, the ndian national government announced a number of reforms designed to
encourage and promote a favorable business environment for investors.
FDs are permitted through financial collaborations, through private equity or
preferential allotments, by way of capital markets through euro issues, and in
joint ventures. FD is not permitted in the arms, nuclear, railway, coal or
mining industries.
A number of projects have been implemented in areas such as electricity generation,
distribution and transmission, as well as the development of roads and highways, with
opportunities for foreign investors.
The ndian national government also granted permission for FDs to provide up to 100%
of the financing required for the construction of bridges and tunnels, but with a limit on
foreign equity of NR 1,500 crores, approximately $352.5 million.
urrently, FD is allowed in financial services, including the growing credit card
business. These also include the non-banking financial services sector. Foreign
investors can buy up to 40% of the equity in private banks, although there is condition
that these banks must be multilateral financial organizations. Up to 45% of the shares of
companies in the global mobile personal communication by satellite services
(GMP$$) sector can also be purchased.
n 2007, ndia received $34 billion in FD, a huge growth compared to the previous
years, but significantly less than the $134 billion that flowed into hina. Although the
hinese approval process is complex, hina continues to outshine ndia as a choice
destination for foreign investors. Why does ndia, a country with resources and a skilled
workforce, lag so far behind hina in FD amounts?
Physical infrastructure is the biggest hurdle that ndia currently faces, to the
extent that regional differences in infrastructure concentrates FD to only a few
specific regions. While many of the issues that plague ndia in the aspects of
telecommunications, highways and ports have been identified and remedied,
the slow development and improvement of railways, water and sanitation
continue to deter major investors.
Federal legislation is another perverse impediment for ndia. Local authorities
in ndia are not part of the approval process and the large bureaucratic
structure of the central government is often perceived as a breeding ground
for corruption. Foreign investment is seen as a slow and inefficient way of
doing business, especially in a paperwork system that is shrouded in red tape.

LATE$T Things happenin in FD
http://bx.businessweek.com/foreign-direct-investment/
http://www.indianrealtynews.com/category/fdi-india
What is a nidhi company?
Nidhi company is a company registered under Companies Act and notified as a nidhi company by
Central Government under Section 620-A of Companies Act. It is a non-banking finance company
doing the business of lending and borrowing with its members or shareholders

http://www.slideshare.net/snehalsoni/fdi-presentation#