Saturday, 31 August 2013

What is FDI And It's Procedures

· .
Government Route
FDI in activities not covered under the automatic route requires prior Government approval and are considered by the Foreign Investment Promotion Board (FIPB), Ministry of Finance. Application can be made in Form FC-IL, which can be downloaded from Plain paper applications carrying all relevant details are also accepted. No fee is payable.
General permission of RBI under FEMA
Indian companies having foreign investment approval through FIPB route do not require any further clearance from the Reserve Bank of India for receiving inward remittance and issue of shares to the non-resident investors. The companies are required to notify the concerned regional office of the Reserve Bank of India of receipt of inward remittances within 30 days of such receipt and submit form FC-GPR within 30 days of issue of shares to the non-resident investors.
3. Which are the sectors where FDI is not allowed in India, under the Automatic Route as well as Government Route?
FDI is prohibited under Government as well as Automatic Route for the following sectors:
· i) Retail Trading (except single brand product retailing)
· ii) Atomic Energy
· iii) Lottery Business
· iv) Gambling and Betting
· v) Business of Chit Fund
· vi) Nidhi Company
· vii) Agricultural or plantation activities (cf Notification No. FEMA 94/2003-RB dated June 18, 2003).
· viii) Trading in Transferable Development Rights (TDRs
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Non-resident Indians are Indians who live in foreign countries, but still continue to hold Indian nationality. Since India is a country with a developing economy, its need of foreign exchange is great and continuing, with the result that the country is the largest borrower in the foreign market. This problem of foreign exchange can be easily solved, if non-resident Indians are induced to invest in India. That is why only recently the government appealed to them to invest liberally in the industries of their motherland.
The result was that a number of non-residents invested large funds in Indian industries. However, such investments carry with them their own problems. These problems were highlighted by the case of Swaraj Paul, a London based industrialist. He invested huge funds and purchased a majority of shares of a number of D. C. M. concerns as well as Escorts ltd. the Indian industrialists raised a hue and cry at this, for they felt that non-residents, like Swaraj Paul, were out to destabilize Indian industries and acquire control over their management. The problem was discussed acquire control over their management. The problem was discussed threadbare by leading industrialist and economists so that it became clear that the problem needs cautious approach, and clear understanding..
In short, the investment by non-residents is to be welcomed, but only within reasonable limits. It would certainly help the country in augmenting its foreign exchange reserves and also in technological and industrial advancement of the country. But unlimited Non-Resident investment in bound to have serious economic and psychological consequences. Such adverse impact is to be avoided at all costs. A judicious and balanced approach to the problem is called for. Cautious approach in this connection is a must

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