Foreign Investment in India
Foreign Investment in India
Foreign Investment in India
com
http://www.company-formationindia.com/foreign-investment-in-india.html
The Foreign Investment in India is undertaken in accordance with the FDI Policy which is
formulated and announced by the Government of India. The Government of India has
allowed different channels of Investment in India on basis of the entity of the foreign national.
The foreign investment refers to the direct or indirect investment done by a company or an
individual in some other country.
Foreign Investment in India can be summarized in the below mentioned points:
Mode of Payment
An Indian company issuing shares /convertible debentures under FDI Scheme to a person
resident outside India shall receive the amount of consideration required to be paid for such
shares /convertible debentures:
Inward remittance through normal banking channels.
Debit to NRE / FCNR account of a person concerned maintained with an AD
(Category I) bank.
Conversion of Royalty / Lump sum / Technical know-how fee due for payment, import
of capital goods by units in SEZ or conversion of ECB shall be treated as
consideration for issue of shares.
Conversion of import payables / pre incorporation expenses / share swap can be
treated as consideration for issue of shares with the approval of FIPB.
Debit to non-interest bearing Escrow account in Indian Rupees in India which is
opened with the approval from AD Category I bank and is maintained with the AD
(Category I) bank on behalf of residents and non-residents towards payment of share
purchase consideration.
Further, the Reserve Bank may on an application made to it and for sufficient reasons, permit
an Indian Company to refund / allot shares for the amount of consideration received towards
issue of security if such amount is outstanding beyond the period of 180 days from the date of
receipt.
Lottery Business including Government /private lottery, online lotteries, etc.( Foreign
technology collaboration in any form including licensing for franchise, trademark,
brand name, management contract is also prohibited for Lottery Business and
Gambling and Betting activities).
Gambling and Betting including casinos etc.
Manufacturing of Cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco
substitutes
Activities / sectors not open to private sector investment e.g. Atomic Energy and
Railway Transport (other than Mass Rapid Transport Systems).
prescribed guidelines and NOC / tax clearance certificate from the Income Tax Department
has been produced.
FDI in activities not covered under the automatic route require prior government approval.
Approval of all such proposals including composite proposals involving foreign
investment/foreign technical collaboration is granted on the recommendations of Foreign
Investment Promotion Board (FIPB).
Sector/ Activity
% Allowed
ROUTE
100%
Government
100%
Government
26%
Government
26%
Government
26%
Government
26%
Government
100%
Government
26%
(NRI/PIO/FII)
Government
26%
(NRI/PIO/FII)
Government
100%
Government
100%
Government
Existing projects
Above 74%
Government
Above 49%
& up to 74%
Government
Above 49%
Government
Print Media
Airports
Government
74%
Government
49%
Government
Above 49%
Government
Above 49%
Government
Above 49%
Government
Above 49%
& up to 74%
Government
20%(FDI &
PIO)
Government
100%
Government
Pharmaceuticals
Greenfield
**NOTE: All the above investments are subject to the conditions laid down in the RBI
Circular on Foreign Direct Investment
Certificate from the Company Secretary of the company accepting investment from
person resident outside India certifying that:
The company has complied with the procedure for issue of shares as laid down
under the FDI scheme.
Shares have been issued in terms of SIA/FIPB approval No. --------------------dated -------------------- (enclose the FIPB approval copy)
Certificate from Statutory Auditors/ SEBI registered Merchant Banker /
Chartered Accountant indicating the manner of arriving at the price of the
shares issued to the persons resident outside India.
Certificate from Statutory Auditors/ SEBI registered Merchant Banker /
Chartered Accountant indicating the manner of arriving at the price of the
shares issued to the person resident outside India.
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% Allowed
ROUTE
100%
Automatic
100%
Government
100%
Automatic
100%
Automatic
49%
Automatic
74%
Automatic
49%
Automatic
Greenfield Projects
100%
Automatic
Existing projects
100%
Automatic
upto 74%
49% FDI
100% NRI
Automatic
74% FDI
100% NRI
Automatic
upto 49%
100%
Automatic
74% FDI
100% NRI
Automatic
upto 49%
74% FDI
100% NRI
Automatic
upto 49%
100%
Automatic
Townships, housing, built-up infrastructure and constructiondevelopment projects (which would include, but not be
restricted to, housing, commercial premises, hotels, resorts,
hospitals, educational institutions, recreational facilities, city
and regional level infrastructure)
100%
Automatic
100%
Automatic
100%
Automatic
upto 49%
100%
Automatic
E-commerce activities
100%
Automatic
100%
Automatic
upto 49%
100% of
paid up
capital of
ARC
Automatic
upto 49%
74% incl.
investment
by FII
Automatic
upto 49%
74%(FDI &
FII)
Automatic
49% (FDI
& FII)
Automatic
Insurance
26%
Automatic
100%
Automatic
Pharmaceuticals
100%
Automatic
Existing Companies
49 %( FDI
& FII)
Automatic
49% (FDI
& FII)
Automatic
Power Exchanges
Power Exchanges under the Central Electricity Regulatory
Commission (Power Market) Regulations, 2010
**NOTE: All the above investments are subject to the conditions laid down in the RBI
Circular on Foreign Direct Investment