Restriction on Different Sectors for FDI in India

Foreign Direct Investment (FDI) is that investment, which is made to serve the business interests of the investor in a company, which is in a different nation( distinct from the investor’s country of origin). The parent enterprise through its foreign direct investment effort seeks to exercise substantial control over the foreign affiliate company. Example – An American company taking a majority stake in a company in India.

Factors affecting the FDI

  • Financial incentives (Funds from local Government)
  • Fiscal Policy / Tax incentives (Exemption from import duties)
  • Indirect incentives (Provides land and other resources)
  • Political stability
  • Market potential & accessibility
  • Large economy
  • Market size

 Advantage of FDI Investment

  • Economic growth
  •  Trade
  • Employment and skill levels
  • Technology diffusion and knowledge transfer
  • Linkages and spillover to domestic firms
  • Improved technology.
  • Management expertise.
  • Access to international markets

 Restriction on different sectors for FDI in India

Name of Sectors

FDI investment allowed in %

Insurance

26

Defense Industry

26

Airlines

49

Commodity Exchanges

49

Infra Cos Insecurities Mkt

49

Asset Reconstruction Cos

49

Credit Information Cos

49

Pvt Security Agencies

49

Multibrand Retail

51

Telecom

74

Banking –Pvt Sector

74

 

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