India: Hotspot Investment Destination for Foreign Investors
India is the largest democracy in the world. It ranks second in terms of population. The policy of liberalization has transformed the prospects for the Indian economy. Today India is one of the favorite destinations for global investments. The major investors in India are Mauritius, Singapore, the US, the UK, the Netherlands, Japan, Germany, etc. Foreign direct investment (FDI) in India went up by 31 per cent to US$ 27.5 billion last year. The sectors that attracted maximum FDI last year include services (financial and non financial), telecom, housing and real estate, and construction and power.
The government has come up with several incentives like import of capital goods at concessional customs duty, liberalisation of external commercial borrowing norms, tax holiday to encourage investments, etc. "The government should allow 100 per cent FDI in sectors like domestic airlines and insurance sector to boost inflows and generate employment, "as per Rajiv Kumar, Secretary General, FICCI. Sectors like automobiles, chemicals, food processing, oil and natural gas, petrochemicals, power, services and telecommunications have witnessed tremendous investments.
Investment options in India
There are number of options available for foreign investment in India for both short term and long term. The major options are real estate, bonds, mutual funds, money markets, gold, and financial assets (non-marketable, LIC policies & equity shares). Today, there are businesses and industries that are even 100% open for such investment. Some of the sectors that are still not open for foreign investment include, rail transport, lottery business, tobacco business, certain agricultural activities, atomic energy, mineral oils, etc.
Who can invest in India?
There are following categories of non-Indian resident who may invest in the capital of Indian Company:
The government has come up with several incentives like import of capital goods at concessional customs duty, liberalisation of external commercial borrowing norms, tax holiday to encourage investments, etc. "The government should allow 100 per cent FDI in sectors like domestic airlines and insurance sector to boost inflows and generate employment, "as per Rajiv Kumar, Secretary General, FICCI. Sectors like automobiles, chemicals, food processing, oil and natural gas, petrochemicals, power, services and telecommunications have witnessed tremendous investments.
Investment options in India
There are number of options available for foreign investment in India for both short term and long term. The major options are real estate, bonds, mutual funds, money markets, gold, and financial assets (non-marketable, LIC policies & equity shares). Today, there are businesses and industries that are even 100% open for such investment. Some of the sectors that are still not open for foreign investment include, rail transport, lottery business, tobacco business, certain agricultural activities, atomic energy, mineral oils, etc.
Who can invest in India?
There are following categories of non-Indian resident who may invest in the capital of Indian Company:
- A non-resident entity (other than citizen of Pakistan)
- A citizen or entity of Bangladesh under Government route.
- NRI resident as well as citizen of Nepal and Bhutan on repatriation basis.
- Sebi registered NRIs through a registered broker on recognised India stock exchange.
- Foreign venture capital investor registered by Sebi.
- An FII (foreign institutional investor) may invest in the capital of an Indian company under the portfolio investment scheme.
Business Opportunities in India
There are various factors that create favorable business opportunities in India are:
- There are huge business opportunities in Indian retail sector as people have become more conscious about branded products. Improvement in purchasing power and huge middle class population results in the growth of the economy.
- India's competitive advantage in information technology can be used to enhance productivity in industries.
- Availability of large number of technical manpower has led to the expansion of manufacturing base across different industries.
- India's rich natural resources, availability of better infrastructure, well established banking system, better agriculture, etc. have created more investment opportunities.
- The capital markets in India are one of the fastest growing markets in the world, attracting huge investments from foreign institutional investors.
- The economic reforms have brought in policy changes in terms of freedom of entry, investment, location, usage of technology, import and export. These changes have created an investment friendly environment.
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