FDI Approval Procedure

• Automatic Route
- Inform the Reserve Bank of India (RBI) through bank in which
share application money has been received in the prescribed
form within 30 days after making the inward transfer of funds
required for the business and submit all the necessary documents
within a period of 30 days of issuing the shares to the investors.
• Government Route
- Approval for proposals that are not covered under the
automatic category is made through Foreign Investment
Promotion Board (FIPB) route.
Trends of Foreign Direct Investment
in India
 Sectoral Composition of FDI in
India
• Sector Specific Guidelines for FDI have been issued
by the Indian government.
• Results of Sector Specific Guidelines for FDI in India
has been that :
- it has made it easy for the foreign investors to make
investments in the different sectors of the country .
- this has led to huge inflows of foreign direct
investment in India.
SECTORS ATTRACTING HIGHEST FDI INFLOWS:
Amount Rupees in crores (US$ in million)
Ranks Sector 2008-09 2009-10 2010-11 Cumulativ % age to
(April- (April- ( April- e total
March) March) August) Inflows Inflows
(April ’00 - (In terms
August of US$)
‘10)
1. SERVICES SECTOR 28,516 20,776 5,793 111,023 21 %
(financial & non-financial) (6,138) (4,353) (1,260) (24,862)
2. COMPUTER SOFTWARE & 7,329 4,351 2,090 45,937 9%
HARDWARE (1,677) (919) (458) (10,330)
3. TELECOMMUNICATIONS 11,727 12,338 4,789 45,495 8%
(radio paging, cellular mobile, basic (2,558) (2,554) (1,054) (9,985)
telephone services)
4. HOUSING & REAL ESTATE 12,621 13,586 2,492 39,861 7%
(2,801) (2,844) (539) (8,895)
5. CONSTRUCTION ACTIVITIES 8,792 13,516 1,352 37,045 7%
(including roads & highways) (2,028) (2,862) (294) (8,347)
6. POWER 4,382 6,908 3,121 24,040 4%
(985) (1,437) (677) (5,305)
7. AUTOMOBILE INDUSTRY 5,212 5,754 519 21,341 4%
(1,152) (1,208) (114) (4,710)
8. METALLURGICAL INDUSTRIES 4,157 1,935 2,807 16,247 3%
(961) (407) (613) (3,743)
9. PETROLEUM & NATURAL GAS 1,931 1,328 987 12,491 2%
(412) (272) (218) (2,883)
10. CHEMICALS 3,427 1,707 675 11,949 2%
 FDI inflow to India

• Formation of New Industrial Policy (NIP) in July 1991.

- to invite foreign investment in high priority
industries.
• An acceleration in the flow of foreign capital into India.
DIPP’S (Department of Industrial Policy & Promotion) -
FINANCIAL YEAR-WISE FDI INFLOWS:
INDIA: YEAR WISE FDI INFLOWS
(Aug. 1991 to Sept. 2005)
 Country wise FDI inflow
• Mauritius is the largest source of FDI for India.
• Double taxation Avoidance Agreement
between Mauritius and India has enabled
foreign investors to minimize their tax liability.
HARE OF TOP INVESTING COUNTRIES FDI INFLOWS (Financial years):
Amount Rupees in crores (US$ in millio
Ranks Country 2008-09 2009-10 2010-11 Cumulative Percenta
(April- (April- ( April- Inflows ge to total
March) March) August) (April ’00 - Inflows
August ‘10) (in terms
of US $)
1. MAURITIUS 50,899 49,633 13,461 224,367 42 %
(11,229) (10,376) (2,924) (50,164)
2. SINGAPORE 15,727 11,295 4,934 50,080 9%
(3,454) (2,379) (1,085) (11,275)
3. U.S.A. 8,002 9,230 2,944 40,134 7%
(1,802) (1,943) (636) (8,914)
4. U.K. 3,840 3,094 1,263 27,261 5%
(864) (657) (274) (6,158)
5. NETHERLANDS 3,922 4,283 2,213 22,339 4%
(883) (899) (481) (4,968)
6. JAPAN 1,889 5,670 2,330 19,225 4%
(405) (1,183) (515) (4,230)
7. CYPRUS 5,983 7,728 1,437 19,214 4%
(1,287) (1,627) (310) (4,209)
8. GERMANY 2,750 2,980 315 12,783 2%
(629) (626) (69) (2,868)
9 FRANCE 2,098 1,437 1,178 8,097 2%
(467) (303) (254) (1,784)
10. U.A.E. 1,133 3,017 1,042 8,065 1%
(257) (629) (224) (1,773)
INDIA: SHARE OF TOP INVESTING COUNTRIES FDI INFLOWS
(Aug. 1991 to Sept. 2005)
 Recent Trends
• According to the latest Government data the Foreign direct
investment (FDI) dipped by almost 60 per cent to $1.33 billion
in August this year from $3.26 billion in the year-ago period .
• Even then a recent UNCTAD( United Nations Conference on
Trade and Development) survey projected India as the second
most important FDI destination after China for multinational
corporations during 2010-2012.
• As per the data, the sectors which attracted higher inflows
were services, telecommunication, construction activities and
computer software and hardware.
• Mauritius, Singapore, the US and the UK were among the
leading sources of FDI.