The Central government said that India is on track to attract USD 100 billion in Foreign Direct Investment (FDI) in the current fiscal on account of economic reforms and ease of doing business. In 2021-22, India received the “highest ever” foreign inflows of USD 83.6 billion.
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FDI Last Year:
“This FDI has come from 101 countries, and invested across 31 union territories and states and 57 sectors in the country. On the back of economic reforms and Ease of Doing Business in recent years, India is on track to attract USD 100 billion FDI in the current financial year,” the commerce and industry ministry said in a statement. The statement also mentions that the government has installed a liberal and transparent policy to attract foreign investment. Currently, most sectors of the Indian economy are open to FDI under an automatic route.
FDI Proceedings:
The Foreign Direct Investment (FDI) in India can be made under two routes- automatic and government routes. Under the automatic route, the investor requires no or very less permissions from the Reserve Bank of India (RBI) or from the Government of India to invest. Under the government rules, permissions from the appropriate authorities of the government or the RBI are required to invest in the country. The reform measures include liberalization of guidelines and regulations, in order to reduce unnecessary compliance burdens, bring down costs and enhance the ease of doing business in India, the statement added.
FDI This Year Till Now:
Meanwhile, during the April-June quarter of the current fiscal, FDI equity inflows in India dipped by 6% to $16.6 billion.The government is also taking some strategic interventions in addressing the import of low-quality and hazardous toys and enhancing domestic manufacturing of toys, the statement added. The import of toys in 2021-22 have reduced by 70 per cent to USD 110 million ( ₹877.8 crore). On the other hand, exports rose by 61 per cent to USD 326 million.
FDI In India :
Foreign direct investment (FDI) is when a company takes controlling ownership in a business entity in another country. With FDI, foreign companies are directly involved with day-to-day operations in the other country. This means they aren’t just bringing money with them, but also knowledge, skills and technology. Generally, FDI takes place when an investor establishes foreign business operations or acquires foreign business assets, including establishing ownership or controlling interest in a foreign company.
FDI is an important monetary source for India’s economic development. Economic liberalisation started in India in the wake of the 1991 crisis and since then, FDI has steadily increased in the country. India, today is a part of top 100-club on Ease of Doing Business (EoDB) and globally ranks number 1 in the greenfield FDI ranking.
Routes through which India gets FDI:
Automatic route: The non-resident or Indian company does not require prior nod of the RBI or government of India for FDI.
Govt route: The government’s approval is mandatory. The company will have to file an application through Foreign Investment Facilitation Portal, which facilitates single-window clearance. The application is then forwarded to the respective ministry, which will approve/reject the application in consultation with the Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce. DPIIT will issue the Standard Operating Procedure (SOP) for processing of applications under the existing FDI policy.
Sectors which come under the ‘ 100% Automatic Route’ category are:
Agriculture & Animal Husbandry, Air-Transport Services (non-scheduled and other services under civil aviation sector), Airports (Greenfield + Brownfield), Asset Reconstruction Companies, Auto-components, Automobiles, Biotechnology (Greenfield), Broadcast Content Services (Up-linking & down-linking of TV channels, Broadcasting Carriage Services, Capital Goods, Cash & Carry Wholesale Trading (including sourcing from MSEs), Chemicals, Coal & Lignite, Construction Development, Construction of Hospitals, Credit Information Companies, Duty Free Shops, E-commerce Activities, Electronic Systems, Food Processing, Gems & Jewellery, Healthcare, Industrial Parks, IT & BPM, Leather, Manufacturing, Mining & Exploration of metals & non-metal ores, Other Financial Services, Services under Civil Aviation Services such as Maintenance & Repair Organizations, Petroleum & Natural gas, Pharmaceuticals, Plantation sector, Ports & Shipping, Railway Infrastructure, Renewable Energy, Roads & Highways, Single Brand Retail Trading, Textiles & Garments, Thermal Power, Tourism & Hospitality and White Label ATM Operations.
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