India at a Glance
  Advantage India
  States & UTs
  Industry & Services
  Doing Business
  Studies & Surveys
  Visitor's Guide

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

In addition 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.

Click to enlarge

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

A small brief of the investment opportunities available in some of the Indian states is given here:

Andaman and Nicobar: Tourism, I.T., Handicrafts, High value added Agro Products, Fisheries, Coir, Hydro Carbon Energy, Shipping Sectors including Transshipment ports and Service Industry.

Andhra Pradesh: Biotechnology, tourism, food and agro based industries, and information technology.

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, pharmaceutical, etc.

Chhattisgarh: Processing of medicinal, aromatic and dye plants, Automobile, auto components, spares and cycle industries, Manufacturing of plant, machinery & engineering spares, pharmaceuticals, etc.

Delhi: computer software, IT enabled services, electronics and high tech industries and small-scale industry.

Goa: Pharmaceuticals, 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 goods, etc.

Karnataka: informatics, 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 and leather.

Manipur: agro based industries, handicraft industries, sericulture, tourism, telecommunications, petrochemicals and pharmaceuticals.

Meghalaya: Minerals 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 units.

Mizoram: bamboo and timber based industries, food processing, agro-horticulture sector, mines and minerals, handloom, handicrafts, tourism, etc.

Nagaland: food-processing 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.

Pondicherry: information technology and software development, electronics, agro processing, textiles, leather products, light engineering and tourism.

Punjab: agriculture, dairy and poultry products, meat processing, leather industry, sports goods, textiles, light engineering goods, etc.

Rajasthan: IT and ITeS, biotechnology, agro based industries, power sector, education, urban infrastructure, tourism, gems and Jewellery, etc.

Sikkim: eco-tourism, handicrafts and handlooms, floriculture, biotechnology, etc.

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.

Uttaranchal: hydropower, floriculture, horticulture, agro based and food processing industries, information and communication technology, etc.

West Bengal: agri business, tourism, information technology, metals, petrochemicals, leather, food processing, etc.


About India In Business
Business Events
Business News
Contact Us
  India at a Glance
  Advantage India
  States & UTs
  Industry & Services
  Doing Business
  Studies & Surveys
  Visitor Guide
Best viewed in 1024 x 800 pxl Disclaimer