Commerce Ministry expects India to attract $100 billion FDI in current fiscal year

Tags: Economy/Finance

The Union Ministry of Commerce and Industry expects India to attract $100 billion Foreign Direct Investment (FDI) in 2022-23. The Commerce Ministry on 24 September 2022 said that continuing economic reform and Ease of Doing business in the country will help India in achieving this target.

According to the ministry, FDI in India was $ 45.15 billion in 2014-2015 and it reached a record highest ever" foreign inflows of $83.6 billion in 2021-22. This FDI has come from 101 countries, and invested across 31 UTs and States and 57 sectors in the country.

According to the Commerce ministry, the government has put in place a liberal and transparent policy wherein most sectors are open to FDI under the automatic route to attract global investment.

Union Minister of Commerce and Industry: Piyush Goel 

Foreign Direct Investment (FDI)

What is Foreign Direct Investment (FDI)

Foreign Exchange Management act 1999(FEMA) which deals with Foreign exchange has defined Foreign Direct Investment.

 Foreign Direct Investment is an investment through capital instruments by a person resident outside India in ;

 (a)  an unlisted Indian company; or 

(b) in 10 percent or more of the paid-up equity capital of a listed Indian company.

  • Unlisted Company means that the Capital instrument of the company is not listed on any stock exchange and it cannot be bought and sold in the market.
  • Listed Company means that the Capital instrument of the company is listed on any stock exchange and it can be bought and sold in the market.
  • Capital Instrument means an instrument issued by a company to raise capital (money) from the market for business/investment purposes.  It includes both Shares (equity) or debenture or bonds. 

Routes through which FDI gets in india 

There are two routes under which FDI is allowed in India. One is the automatic route and the other is the approval route. Government puts certain sectors in the Automatic list and Approval route.

Automatic route 

The foreign investor needs no prior approval from the government of India or Reserve bank of India.  For example Thermal power plants, electronic systems etc.

Approval route 

The foreign investor needs permission from the government of India before they can invest in these sectors. For eg public sector banks, print media etc.

Sectors where FDI is prohibited in india 

  • Atomic Energy Generation
  • Any Gambling or Betting businesses
  • Lotteries (online, private, government, etc.)
  • Investment in Chit Funds
  • Nidhi Company
  • Agricultural or Plantation Activities (although there are many exceptions like horticulture, fisheries, tea plantations, , animal husbandry, etc.)
  • Housing and Real Estate (except townships, commercial projects, etc.)
  • Trading in Transferable Development Rights(TDR’s)
  • Cigars, Cigarettes, or any related tobacco industry.

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