fdi important points
FOREIGN DIRECT INVESTMENT (FDI)
1. What are the forms in which business can be conducted by a foreign company in India?
A foreign company planning to set up business operations in India has the following options:
As an incorporated entity by incorporating a company under the Companies Act, 1956 through Joint Ventures; or Wholly Owned Subsidiaries.
As an unincorporated entity through:
- Liaison Office/Representative Office, or
- Project Office, or
- Branch Office
Such offices can undertake activities permitted under the Foreign Exchange Management (Establishment in India of Branch Office of other place of business) Regulations, 2000.
2. How does a foreign company invest in India? What are the regulations pertaining to issue of shares by Indian companies to foreign collaborators/investors?
A) Automatic Route
FDI up to 100% is allowed under the automatic route in all activities/sectors except the following which require prior approval of the Government:
Activities/items that require an Industrial License;
Proposals in which the foreign collaborator has an existing financial / technical collaboration in India in the 'same' field,
Proposals for acquisition of shares in an existing Indian company in: Financial services sector and where Securities & Exchange Board of India (Substantial Acquisition of Shares and Takeovers ) Regulations, 1997 is attracted;
All proposals falling outside notified sectoral policy/caps or under sectors in which FDI is not permitted.
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 concerned of RBI within 30 days of receipt of inward remittances and file the required documents with that office within 30 days of issue of shares to foreign investors.
B) Government Route
FDI in activities not covered under the automatic route requires
1. What are the forms in which business can be conducted by a foreign company in India?
A foreign company planning to set up business operations in India has the following options:
As an incorporated entity by incorporating a company under the Companies Act, 1956 through Joint Ventures; or Wholly Owned Subsidiaries.
As an unincorporated entity through:
- Liaison Office/Representative Office, or
- Project Office, or
- Branch Office
Such offices can undertake activities permitted under the Foreign Exchange Management (Establishment in India of Branch Office of other place of business) Regulations, 2000.
2. How does a foreign company invest in India? What are the regulations pertaining to issue of shares by Indian companies to foreign collaborators/investors?
A) Automatic Route
FDI up to 100% is allowed under the automatic route in all activities/sectors except the following which require prior approval of the Government:
Activities/items that require an Industrial License;
Proposals in which the foreign collaborator has an existing financial / technical collaboration in India in the 'same' field,
Proposals for acquisition of shares in an existing Indian company in: Financial services sector and where Securities & Exchange Board of India (Substantial Acquisition of Shares and Takeovers ) Regulations, 1997 is attracted;
All proposals falling outside notified sectoral policy/caps or under sectors in which FDI is not permitted.
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 concerned of RBI within 30 days of receipt of inward remittances and file the required documents with that office within 30 days of issue of shares to foreign investors.
B) Government Route
FDI in activities not covered under the automatic route requires