This document provides an overview of foreign direct investment (FDI) in India. It defines FDI and outlines the forms a foreign company can take to do business in India. It describes the procedure for FDI entry through the automatic or government route. It lists the eligibility criteria for foreign investors and permissible investment instruments. It identifies sectors prohibited for FDI and provides data on the top source countries and sectors attracting the most FDI inflows. Finally, it outlines the FDI caps and entry routes for different sectors.

1. Foreign Exchange Management Act, 1999
Foreign Direct Investment(FDI)
Presented By-
Akanksshi, Gaurav, Rohit, Sarthak,
Subhash, Sunil, Sumbul, Saima,
Somveer, Vineet

2. Scope : Foreign
Direct Investment : Definition
Forms in which foreign companies can conduct business
Procedure for entry : FDI
Eligibility for Investment in India
Instruments of Investment in India
Sectors where FDI is not allowed
Share of Countries
Sector-wise Contribution in FDI
FDI Cap limit for different sectors

3. Foreign Direct Investment : Definition
FDI means investment by non-resident
entity/person resident outside India in the capital
of an Indian company under Schedule 1 of
Foreign Exchange Management (Transfer or Issue
of Security by a Person Resident Outside India)
Regulations 2000 .
Source : http://rbi.org.in/Scripts/BS_FemaNotifications.aspx?Id=174.

4. Forms in which Business can be conducted by a Foreign Company in India
A foreign company planning to set up business
operations in India may:
• Incorporate a company under the Companies
Act, 1956, as a Joint Venture or a Wholly Owned
Subsidiary.
•Set up a Liaison Office / Representative Office or a
Project Office or a Branch Office of the foreign
company which can undertake activities permitted
under the Foreign Exchange Management
(Establishment in India of Branch Office or Other
Place of Business) Regulations, 2000.

5. Procedure for receiving Foreign Direct Investment in an Indian Company
Automatic
Route
Government
Route

6. Eligibility for Investment in India
Resident Outside India (Except
Pakistan)
NRIs , Residents in Nepal and
Bhutan
Overseas Corporate Bodies (Derecognized with effect from 2003)

7. Instruments for receiving FDI in an Indian Company
Equity Shares
Fully and mandatorily
convertible preference shares.
Fully and mandatorily
convertible debentures

8. Sectors where FDI is not allowed in India
Atomic Energy
Lottery Business
Gambling and Betting
Business of Chit Fund
Nidhi Company
Agricultural
Housing and Real Estate Business
Trading in Transferable Development Rights (TDRs)
Manufacture of tobacco or of tobacco substitutes.

9. SHARE OF TOP INVESTING COUNTRIES : FDI EQUITY INFLOWS
40
37
35
% of Total Inflows
30
25
20
15
11
9
10
7
6
5
5
4
0
Mauritius
Singapore
UK
Japan
Country
USA
Netherlands
Cyprus

10. SECTORS ATTRACTING HIGHEST FDI EQUITY INFLOWS
5
CHEMICALS (OTHER THAN FERTILIZERS)
6
COMPUTER SOFTWARE & SOFTWARE
6
TELECOMMUNICATIONS
6
Sector
DRUGS & PHARMACEUTICALS
11
CONSTRUCTION DEVELOPMENT
19
SERVICES SECTOR
0
2
4
6
8
10
12
% of Total Inflows
14
16
18
20

11. FDI CAP IN DIFFERENT SECTORS
Sector
A.
FDI Cap/Equity
Entry Route
Agriculture
1.
Floriculture, Horticulture,
Development of
100%
Seeds, Animal
Husbandry, Pisciculture, A
quaculture, Cultivation of
vegetables & mushrooms
and services related to agro
and allied sectors.
2. Tea sector, including
100%
plantation
Automatic
FIPB
(FDI is not allowed in any other agricultural sector /activity)
Other Conditions

12. B. Industry
1. Mining covering
exploration and mining
of diamonds & precious 100%
stones; gold, silver and
minerals.
Automatic
2. Coal and lignite
mining for captive
consumption by power
100%
projects, and iron &
steel, cement
production.
Automatic
3. Mining and
mineral separation of
100%
titanium bearing
minerals
FIPB

13. C.
Manufacturing
Automatic
1. Alcohol- Distillation &
Brewing
2. Coffee & Rubber
processing &
Warehousing.
100%
100%
Automatic
3. Defence production
26%
FIPB
4. Hazardous chemicals
and isocyanates
100%
Automatic
5. Industrial explosives Manufacture
100%
Automatic
6. Drugs and
Pharmaceuticals
100%
Automatic
7. Power including
generation (except Atomic
energy); transmission,
100%
distribution and power
trading.
Automatic
(FDI is not permitted for generation, transmission & distribution of electricity
produced in atomic power plant/atomic energy since private investment in this
activity is prohibited and reserved for public sector.)

14. D. Services
1. Civilaviation (Greenfield
projects and Existing projects)
100%
Automatic
2. Asset Reconstruction
companies
49%
FIPB
3. Banking (private) sector
74% (FDI+FII).
FII not to exceed 49%
Automatic
4. Broadcasting
a. FM Radio
b. Cable network; c. Direct to
home
20%
49% (FDI+FII)
FIPB
6. Insurance
49% (FDI+FII) (FDI 26 % FII
23%)
26%
7. Petroleum and natural gas :
a. Refining
49% (PSUs).
100% (Pvt. Companies)
FIPB (for PSUs).
Automatic (Pvt.)
26%
FIPB
100%
FIPB
5. Commodity Exchanges
8. Print Media
a. Publishing of newspaper and
periodicals
9. Telecommunications
FIPB
Automatic
74% (including FDI, FII, NRI,
Automatic up to 49% and FIPB
FCCBs, ADRs/GDRs, convertible beyond 49%.
preference shares, etc.
Clearance from IRDA
S.t.guidelines by Ministry
of Information &
broadcasting

15. Thank You. . .