It means “investment into the business of a country by a company in another country”. Such investments are due to taking advantage of cheaper wages, special investment privileges, etc.
In order to attract FDI from the world’s major investors and to present a favorable scenario for investors the Indian government has announced a number of reforms and has implemented several industrial policies.
FDI is allowed in India through collaborations of financial nature, joint ventures through preferential allotments, investment through EURO issues.
Advantages of FDI:
- Increased capital flow.
- Improved technology.
- Management expertise.
- Access to international markets.
Strategy to promote FDI
- Liberal and transparent FDI policy: It includes opening of new sectors to FDI, raising FDI equity caps in sectors already opened and procedural simplification.
· Tax Concessions for EOUs: Central Sales Tax is reimbursed on purchases from local manufacturers. Supplies from local manufacturers are free of Central Excise Duty. In case duties are paid, Terminal Excise Duty is reimbursed. EOUs in manufacturing sector get exemption from State Sales Tax on inputs (excepting fuel).
- Capital inflow by permitting 100% FDI in EOUs/SEZs
- Invest India: The Company with Rs 10,000 million will have 49 percent share from government and 51 percent from FICCI. The principles of the company are to promote FDI in the country, to provide processing facilities to foreign investors and act as coordinator among various ministries and also to provide feedback to the government on industrial policy.
- Foreign Investment Implementation Authority (FIIA): It has mandate to provide translation of FDI approvals into implementation, by helping foreign investors to obtain necessary approvals, sort out operational problems and meet with various Government agencies to find solutions to problems and maximizing opportunities through a partnership approach.
- Foreign Investment Promotion Board (FIPB): It offers a single window clearance for FDI proposals in India that are not allowed access through the automatic route. To expedite flow of foreign investment into the country, the Union government has allowed the FIPB to clear proposals from overseas entities worth up to Rs. 1,200 crore. Earlier the limit was Rs. 600 crore.
- Secretariat for Industrial Assistance (SIA): It assists potential investors in finding joint venture partners and provides complete information on relevant policies and procedures, including those, which are specific to sectors and the State Governments.
- Foreign Technology Agreements: For promoting technological capability, acquisition of foreign technology is encouraged through foreign technology collaboration agreements. Inductions of know-how through such agreements are permitted either through automatic route or with prior approval from the Government.
India has become one of the most preferred investment destinations across the globe because of its lower costs and higher quality output. Recent reform initiatives undertaken by the Government, lack of investment options in other countries and overall positive investor approach are certain factors that have made India to attract foreign investors. You can plan your dream holiday in any travel vacation rentals, holiday home India, homestay in India with us, visit The Other Home.