India attracts $13 billion FDI in non-conventional energy sector

Tags: Economy/Finance

The Foreign Direct Investment (FDI) in the Non-Conventional source of energy in India in the last 22 years was USD 13.034 billion. This information was given by the Union Minister for New and Renewable Energy (MNRE) R K Singh in the Rajya Sabha on 20 December 2022. The total FDI in India in 2021-22 was $83.6 billion.  Government has allowed 100% FDI through automatic routes in the solar sector.

Sharing the country-wise details of FDI/ equity inflow during the period April, 2000 to September, 2022, he said Mauritius was the major source of FDI in the sector and it was followed by the United Kingdom, Singapore, Netherland and the United Arab Emirates (UAE).

Non-conventional Source of Energy 

Non -Conventional sources of Energy is also called as renewable source of energy as they can be continuously replenished through natural sources. For example solar energy, wind energy, Tidal energy, biofuel, hydropower etc. 

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 (a) in 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, Pisciculture, 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