The Foreign Direct Investment Policy of India

Introduction:

Foreign Direct Investment (FDI) has become a very important source of income for our country. With the increasing investors all over the world it has become increasingly important to lay importance on our foreign direct investment policy.

Who controls the FDI?

The Foreign Direct Investment Policy has been formulated by the Department of Industrial Policy and Promotion. It also plays a major role in maintaining as well as managing data on inward FDI into India basis the remittances which are reported by the Reserve Bank of India (RBI).

The FDI policy is also reviewed on a regular basis in order to make the policy more investor friendly and attractive for investors. In order to increase the foreign direct investment levels in India, the government has put a liberal policy in place on the FDI under which the foreign direct investment allowed is 100% under the automatic route in most sectors.
A number of changes have been made to the FDI policy in recent times in order to make sure that India stays as an attractive investment decision.
The Department of Industrial policy and Promotion has done a great job as far as the liberalization and rationalization of the FDI policy is concerned.

Sectors in which FDI is permitted:

As per the FDI policy, sectors in which foreign direct investment is allowed include agriculture and animal husbandry, air transport services, airports, auto-components, asset reconstruction companies, automobiles, and banking-private sector.
According to the FDI policy, all the information associated with the sectors mentioned above is in line with the FDI policy that has been issued by the Department of Industrial Policy and Promotion and is overseen from time to time. Also, the sectors or activities that have not been listed here have the FDI permitted up to 100% provided the investment is done by means of automatic route and is subject to the concerned laws, regulations, and other security measures.

Sectors in which FDI is prohibited:

Some sectors in which FDI has been prohibited by the government include Nidhi company, chit funds, gambling and betting sessions, trading in transferable development rights, real estate business or construction of farm houses, lottery business, manufacturing of cigars, cigarillos, tobacco, cigarettes, and sectors that are not open to the private sector investment including railway operations, and atomic energy. Foreign technology collaboration too is not allowed in any form be it franchise, trademark, management contract for lottery business and gambling and betting activities.

Questions :
Why Are NRI’s So Fascinated Towards FDI in India?
Ways on How to Get Foreign Direct Investment in India?