India’ s investment policies are designed to attract significant capital inflows into India on a sustained basis and to encourage technology collaborations between Indian and foreign entities. Policy initiatives taken over the last few years have resulted in inflows of foreign investments in diverse sectors of the economy.
Sectoral Composition of FDI( April 2000- January 2012)( US $ Million)
30000
3636
|
25000 |
|
|
|
|
|
20000 |
|
|
|
|
U S $ Millio n |
15000 10000 5000 |
70 336 |
3139 1018 |
581 456 760 |
1263 165 |
|
0 |
|
|
|
|
Services Sector Hotel & Tourism Power Chemicals
Telecommunications Construction Automobile
Computer Harware & Software Drugs & Pharmaceuticals Metallurgical Industries
Figure 8 Source: Department of Industrial Policy & Promotion, Ministry of Commerce & Industry( April 2000 till November 2010)
2.2.1 Joint Ventures & Wholly Owned Subsidiaries
The FDI and all foreign exchange matters are regulated through the Foreign Exchange Management Act, 1998 FEMA. The National Industrial Classification 1987 is the basis for determining activities and classification for the purpose of FDI.
2.2.1.1 Automatic Route
Currently, FDI in all sectors or activities, except those specifically restricted, falls under the automatic route.
Automatic route does not require any prior approval either from the government or the RBI. The company is required to simply inform the concerned regional office of the RBI on receiving remittance towards share application and post issuing shares to the foreign investor 1.
Investment in public sector units, as also for Export Oriented Units( EOU), Export Processing Zones( EPZ) and Software Technology Parks( STP) would be under the automatic route.
1
Refer section 3.1.5.4
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