Monday, June 13

FDI Limits for different sectors in India

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 investment with participation in the management, technology transfer and expertise. 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 sectors 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 sectors along with the FDI ceilings:

Hotel & Tourism - 100% (certains conditions are to be fulfilled for technology transfer)

Non Banking Finance Companies (NBFCs) - 49% subject to RBI regulations as amended from time to time

Insurance - 26% subject to licensing requirements from IRDA

Power  - 100% (other than Atomic power)

Pharmaceuticals - 100%

Roads, Highways, Ports - 100%

Pollution Control - 100%

Call centres - 100%

Business Process Outsourcing (BPO) - 100%

Telecommunication - 49% (upto 100% in certain areas such as ISPs not providing gateways, Email, Voice mail etc subject to certain conditions)

Housing - 100%

FDI is prohibited in only the following activities:

(a) Retail Trading (except single brand product retailing)
(b) Atomic Energy
(c) Lottery Business including Government /private lottery, online lotteries,etc.
(d)Gambling and Betting including casinos etc.
(e)Business of chit fund
(f) Nidhi company
(g)Trading in Transferable Development Rights (TDRs)
(h)Real Estate Business or Construction of Farm Houses
(i) Activities/sectors not opened to private sector investment
(j) Manufacturing of Cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco substitutes.


Reserve Bank of India has published detailed FAQs on FDI in India. Do take a look on the website. Follow the link to navigate:
FDI - FAQs by Reserve Bank of India


2 comments:

  1. Although, it is obviously beneficial to India to some extent have FDI, it is almost clear that foreigners along with their Indian cohorts/multinationals will soon be owning most of India's assets,including land and soon be "lording" over the rest of the indigenous and true Indian born Indians. India belongs to the people who were born there, whose families have lived there for generations; not to opportunistic foreigners and mulitnationals whose only interest is eating up a country's assets and exploiting its people. Believe me, there will come a day when, Indians will be slaves to that which is equivalent of the British Raj all over again. Get ready for "salaam madam" and " salaam saab". Get ready for racial discrimination and get ready for the second take over of India by the resurrected foreign trading companies, now in the garb of multinationals.

    Rich, spoilt, westernized Indians have very little patriotism and love for their country. Like all spoilt rich brats worldwide, their concern is only power, wealth and making sure that the indigenous people know it and kow-tow to them.

    How very sad that everything that Gandhiji worked for and the freedom fighters all ends up being nothing.

    Good bye dear India. Soon the real India will be gone. Good bye Nationalism; Get used to being ruled by the marauding globalists now.

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  2. Hi Anonymous,
    Unfortunately I disagree with your views that India is all set to get "ruled" by foreigners. There are enough regulations in place with respect to repatriation of profits that will prevent exploitation of Indians.

    In this globalised world, there is in fact an economic need for FDI which will help boost employment and the world has already seen that this, in fact, helps the consumers the most.

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