India: An Attractive Destination for FDI
The Indian growth story seems to be on a roll and India has emerged as the fourth largest economy in the world on a purchasing power parity basis. The quality of business environment in India has improved manifolds in the recent years. The strong fundamentals underlying the Indian economy make it an obvious choice for investors all over the world.
There is ample reason for India's viability as a destination
for foreign investment. In addition to the above-mentioned
macroeconomic indicators, higher disposable incomes, emerging
middle class, low cost competitive workforce, investment
friendly policies and progressive reform process all contribute
towards India being an appropriate choice for investors.
The government of India has put in place a liberal and transparent FDI policy. In the post liberalization era, a number of initiatives have been taken to attract FDI in several sectors. This includes opening of many new sectors to FDI, raising FDI equity caps in sectors already opened and procedural simplification. Today, the FDI policy in India is widely reckoned to be among the most liberal in the emerging economies and FDI up to 100% is allowed under the automatic route in most sectors and activities.
The Indian Government is committed in its efforts to maintain a healthy growth rate and provide a conducive policy environment to the enterprises, both public and private, to invest and grow their business in the country. To this end, the Government has liberalized the foreign investment regime substantially over the last decade. Today, foreign direct investment is allowed in almost all sectors barring a few sensitive areas such as defence. Further, FDI is allowed in most of the sectors under the automatic route, except a few, where approval from the Foreign Investment Promotion Board (FIPB) is required. India's foreign trade policy has been formulated with a view to invite and encourage FDI in India. The process of regulation and approval has been substantially liberalized. The Reserve Bank of India has prescribed the administrative and compliance aspects of FDI.
FDI can be divided into two broad categories: investment under automatic route and investment through prior approval of Government. The pickup in FDI inflows further reflects growing investor interest in the Indian economy on the back of strong fundamentals and simplified procedures. The FDI policy rationalization and
liberalization measures taken by the Government have
resulted in increased inflows of FDI over the years.
FDI can be divided into two broad categories: investment
under automatic route and investment through prior approval
of Government. The pickup in FDI inflows further reflects
growing investor interest in the Indian economy on the
back of strong fundamentals and simplified procedures.
Foreign Institutional Investment (FII) in India
to FDI, Foreign Institutional Investment (FII) is also
flowing into India. Qualified foreign entities (other
than those predominantly owned by non resident Indians)
seeking to undertake portfolio investments in India
are regarded as Foreign Institutional Investors (FIIs).
Eligible institutional investors that can register as
FIIs include asset management companies, pension funds, mutual funds, banks, investment trusts, nominee companies,
incorporated/institutional portfolio managers, power
of attorney holders, university funds, endowment foundations,
charitable trusts and charitable societies.
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Indian States and Union Territories
The country houses 28 states and 7 union territories.
Each of the Indian state and union territory of India
is blessed with several investment opportunities depending
on their geographical location and availability of natural
resources. These opportunities are further enhanced
by the rapid technological advancements taking place
in almost all states that enhance the ability to innovate
and grow. There exists plethora of diversified investment
opportunities across India and the respective state
Governments are taking progressive steps such as development
of powerful infrastructure and formulating conducive
and stable policies to harness the same. The state Governments
have devised investor friendly policies in terms of
incentives and concessions offered for several sectors
such as biotechnology, infrastructure and information
technology among others to promote FDI into their respective
states. A healthy competition has emerged among states
to attract investment in their states and this has proved
to be beneficial for the potential investor.
States of India
brief of the investment opportunities available in some
of the Indian states is given here:
and Nicobar: Tourism,
I.T., Handicrafts, High value added Agro Products, Fisheries,
Coir, Hydro Carbon Energy, Shipping Sectors including
Transshipment ports and Service Industry.
tourism, food and agro based industries, and information
Arunachal Pradesh: art and craft industries, tourism and educational services.
Assam: IT Sector, Tourism,
Agro- Horti & Food Processing Sector, Bamboo Industries
and Bio Technology Sector.
Bihar:Agro based industries,
sericulture, chemical industry, tourism, biotechnology,
of medicinal, aromatic and dye plants, Automobile, auto
components, spares and cycle industries, Manufacturing
of plant, machinery & engineering spares, pharmaceuticals,
Delhi: computer software,
IT enabled services, electronics and high tech industries
and small-scale industry.
Drugs and Biotech Industries, Food processing and Agro
based Industries, IT and IT-enabled services, Eco tourism/Heritage
tourism/Adventure tourism/Event tourism/Medical, Tourism
and Entertainment Industry.
Gujarat: Agro Based
and Food Processing Industry, Chemical and Allied Industry,
Information Technology, Mineral Based and Allied Industries,
Plastic and Allied Industries, Port Related activities
and infrastructure and Textile Industry.
Haryana: Agro based
and Food Processing Industry., Electronics and Information
& Communication Technology, Automobiles & Automotive
Components., Handloom, Hosiery, Textile and Garments
Manufacturing., Export- Oriented Units, Footwear, leather
garments and accessories.
Himachal Pradesh: units
based directly on horticulture produce, mineral water
bottling, automobile manufacturing units, cold storage
units, electronic units, floriculture, handicrafts,
precision industries, etc.
Jammu and Kashmir:
food processing, agro based industries, floriculture,
information technology, sports goods industry, etc.
Jharkhand: mining and
mineral based industry, agro based industries, sericulture,
engineering, auto components, tourism, ceramics, sports
computer software, IT enabled services, telecom, auto
and auto components, food processing, floriculture,
biotechnology, tourism, infrastructure projects, etc.
Kerala: Mineral and
Clay based products, Agriculture and Horticulture Produce,
Traditional Industries, Tourism, Auto Components, Marine
Products and Agro Processing industries.
Madhya Pradesh: agro-
processing industries, cement, textiles and apparels,
tourism, power, education, information technology, etc.
Maharashtra: auto industry,
biotechnology, floriculture, food processing, textiles
Manipur: agro based
industries, handicraft industries, sericulture, tourism,
telecommunications, petrochemicals and pharmaceuticals.
based industries, Horticulture and agro based industry,
Power Generation, Export Promotion Industrial Park (EPIP),
Tourism, Biotechnology- based units, Electronics and
information technology and Tissue culture and orchid
Mizoram: bamboo and
timber based industries, food processing, agro-horticulture
sector, mines and minerals, handloom, handicrafts, tourism,
industry, agro based industry, tourism, mineral based
industry, pharmaceuticals, etc.
Orissa: mineral and
mineral based industries, agro and food processing industries,
Information technology, tourism, biotech, pharma, handicrafts,
handlooms, chemicals and fertilizers, etc.
technology and software development, electronics, agro
processing, textiles, leather products, light engineering
dairy and poultry products, meat processing, leather
industry, sports goods, textiles, light engineering
Rajasthan: IT and ITeS,
biotechnology, agro based industries, power sector,
education, urban infrastructure, tourism, gems and Jewellery,
handicrafts and handlooms, floriculture, biotechnology,
Tamil Nadu: engineering,
automobiles and components, software and ITeS, biotechnology,
health care, pharma, tourism, textiles, etc.
Tripura: natural gas,
food processing, rubber, tea, handicraft, bamboo, handloom,
tourism, information technology, etc.
Uttar Pradesh: power,
food processing, agro based industries, animal husbandry,
engineering, horticulture, etc.
floriculture, horticulture, agro based and food processing
industries, information and communication technology,
West Bengal: agri business,
tourism, information technology, metals, petrochemicals,
leather, food processing, etc.