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India's Foreign Investment policies and procedures are simple, transparent and investor friendly.
The Common Minimum Programme of the Government states that "FDI will continue to be encouraged and actively sought particularly in areas of infrastructure, high technology and exports where local assets and employment are created on a significant scale. The country needs and can easily absorb at least two to three times the present level of FDI inflows".
Foreign investment can be freely channeled into all sectors except for the following sectors: retail trade, agriculture (excluding Floriculture, Horticulture, Development of seeds, Animal Husbandry, Pisiculture & Cultivation of Vegetables, mushrooms etc. under controlled conditions and services related to agro & allied sectors), plantations (other than tea plantations), atomic energy, gas pipelines, courier services, trading and lottery and gambling. In most of the sectors foreign investors can go through the Automatic Route without need for any approvals. The investor has to merely keep the Reserve Bank of India informed of the flow of funds and issue of shares.
Maximum limits on foreign investment in some sectors are being progressively liberalized, eg : telecommunications (74%), insurance (26%), banking (74%), mining (74%) aviation (49%), defence equipments(26%), cable network (49%), trading (51%), print media (26%) and small-scale industries (24%). FDI in excess of 24% is permitted in small-scale industry with 50% export obligation.
100% FDI is allowed in non news publications, which means all foreign non-news scientific, technical, specialty magazines, periodicals and journals are allowed to be published and sold throughout the country.
Retail Trading is permitted under automatic route with FDI up to 51% provided it is primarily export activities, and the undertaking is an export house/trading house/super trading house/star trading house.
Wholesale trading activity is allowed subject to prior approval of FIPB.
The Government has decided to allow FDI up to 100% under the automatic route in townships, housing, built-up infrastructure and construction-development projects (which would include, but not be restricted to, housing, commercial premises, hotels, resorts, hospitals, educational institutions, recreational facilities, city and regional level infrastructure), subject to the following guidelines:
o Minimum area to be developed under each project would be as under:
o In case of development of serviced housing plots, a minimum land area of 10 hectares
o In case of construction-development projects, a minimum builtup area of 50,000 sq.mts
o In case of a combination project, anyone of the above two conditions would suffice
Prior approval of the Government is needed for those cases, which need industrial license ( examples: alcoholic beverages, cigarettes, defence equipments, gunpowder and hazardous chemicals. ) and those involving investment beyond the maximum limits. Such cases are cleared by the Foreign Investment Promotion Board in a transparent, efficient, time-bound and predictable manner. The FIPB meets once a week.
The Department of Industrial Policy and Promotion is the nodal agency for information and assistance to foreign investors. Their website www.dipp.nic.in has comprehensive information for foreign investors and gives weekly update on proposals for foreign investment under consideration. It also gives information on projects available for foreign investors and contains online applications for clearances.
The various State Governments in India extend incentives and competitive offers to foreign investors.
Intellectual Property Rights Laws of India are well on track with the rest of the world.
Full Capital account convertibility is allowed for foreign investors.
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