A Study on Sector-wise Composition of FDI Inflows in India

Abstract

Since the beginning of economic reforms in 1991, major reforms initiatives have been taken in the fields of investment, trade, financial sector, exchange control, simplification of procedures, enactment of competition and amendments in the intellectual property rights laws, etc. India provides a liberal, attractive, and investor friendly investment climate. India has the most liberal and transparent policies on FDI (Foreign direct investment) among the emerging economies. FDI up to 100 percent is allowed under the automatic route in most of activities/sectors. FDI in sectors/activities to the extent permitted under automatic route does not require any prior approval either by the Government or RBI. The investors are only required to notify the Regional office within 30 days of receipt of inward remittances and file the required documents in that office within 30 days of issue of shares to foreign investors. On the other hand, other sectors required the approval by either the foreign investment promotion board or the cabinet committee of foreign investment. Presently, foreign direct investment is freely allowed in most of the sectors but a few sectors where the existing and notified sectoral policy does not permit foreign direct investment beyond a specific limit. Foreign direct investment for almost all sectors/activities can be brought in through the automatic route under the power delegated to the Reserve Bank of India and the remaining sectors/activities through government approval. This research article brings forth the data related to centre government approved foreign direct investment in these sectors on the recommendations of the foreign investment promotion board (FIPB).