FDI in Indian economy

FDI in Indian economy

[op-ed snap] There is a contradiction in trying to attract foreign investors before reforming labour, land acquisition lawsop-ed snap


From UPSC perspective, the following things are important :

Prelims level : Nothing much

Mains level : FDI India - challenges


India launched the Make in India campaign in 2014 with these words: “Sell anywhere but manufacture here.” 


    • Emulate China — India wanted to emulate China in attracting foreign investment to industrialise India. 
    • Manufacturing growth – to increase the manufacturing sector’s growth rate to 12-14% per annum.
    • Manufacturing share – to increase this sector’s share in the economy from 16 to 25% of the GDP by 2022.
    • Employment – to create 100 million additional jobs by then.

Status of FDI & exports

    • FDI – Foreign direct investment has increased from $16 billion in 2013-14 to $36 billion in 2015-16. 
    • Stagnant – FDIs have plateaued since 2016 and are not contributing to India’s industrialisation. 
    • Declining – FDIs in the manufacturing sector are on the wane. In 2017-18, they were just above $7 billion, as against $9.6 billion in 2014-15. 
    • Services – they cornered most of the FDIs — $23.5 billion, more than three times that of the manufacturing sector.
    • Export-led growth – Few investors have been attracted by this prospect. India’s share in the global exports of manufactured products remains around 2% — China’s is around 18%.

Reasons for failure

    • Shell companies – a large fraction of the Indian FDI is neither foreign nor direct but comes from Mauritius-based shell companies. Most of these investments were “black money” from India, which was routed via Mauritius. 
    • Productivity – The productivity of Indian factories is low.
      • According to a McKinsey report, workers in India’s manufacturing sector are almost four and five times less productive than their counterparts in Thailand and China. 
      • This is not just because of insufficient skills, but also because the size of the industrial units is too small for attaining economies of scale, investing in modern equipment and developing supply chains. 
    • Small companies – Labour regulations are more complicated for plants with more than 100 employees. Government approval is required under the Industrial Disputes Act of 1947 before laying off any employees and the Contract Labour Act of 1970 requires government and employee approval for simple changes in an employee’s job description or duties.
    • Infrastructure is also a problem area. 
    • Although electricity costs are about the same in India and China, power outages are much higher in India.
    • Transportation takes much more time in India. 
      • According to Google Maps, it takes about 12.5 hours to travel the 1,213 km distance between Beijing to Shanghai. A Delhi to Mumbai trip of 1,414 km takes about 22 hours. 
      • Average speeds in China are about 100 km per hour, while in India, they are about 60 km per hour. 
      • Railways in India have saturated while Indian ports have constantly been outperformed by many Asian countries.
      • The 2016 World Bank’s Global Performance Index ranked India 35th among 160 countries. Singapore was ranked fifth, China 25th and Malaysia 32nd. 
      • The average ship turnaround time in Singapore was less than a day; in India, it was 2.04 days.
    • Governance – Bureaucratic procedures and corruption continue to make India less attractive to investors.
      • In the World Bank’s Ease of Doing Business index, India is ranked 77 among 190 countries. 
      • India ranks 78 out of 180 countries in Transparency International’s Corruption Perception Index
      • To acquire land to build a plant remains difficult. 
      • India has slipped 10 places in the latest annual Global Competitiveness Index compiled by the Geneva-based World Economic Forum (WEF).


    • There is clearly a contradiction in the attempt to attract foreign investors to Make in India before completing the reforms of labour and land acquisition laws. 
    • Liberalization is not the panacea for all that ails the economy, but it is a prerequisite if India intends to follow an export-oriented growth pattern.

Steps in the direction

    • Reduction of the company tax from about 35 to about 25% comparable with most of India’s neighbors. 
    • This is also consistent with the government’s effort to compete with Southeast Asian countries, to attract FDIs. 
    • In the context of the US-China trade dispute, several companies will shift their plants from China to other Asian countries. 
    • According to the Japanese financial firm Nomura, only three of the 56 companies that decided to relocate from China moved to India. Of them, Foxconn is a major player which will be now assembling its top-end iPhones in India.

New challenge

India will have to face another external challenge too as it sees capital fleeing the country. The net outflow of capital has jumped as the rupee has dropped from 54 a dollar in 2013 to more than 70 to a dollar in 2019.

FDI in Indian economy

[pib] Cabinet approves proposal for Review of FDI policy on various sectorsPIB


From UPSC perspective, the following things are important :

Prelims level : FDI

Mains level : Benefits of easing FDI norms

  • The Union Cabinet has approved the proposal for Review of Foreign Direct Investment on various sectors.

What is FDI?

  • Foreign direct investment (FDI) is an investment made by a firm or individual in one country into business interests located in another country.
  • Generally, FDI takes place when an investor establishes foreign business operations or acquires foreign business assets, including establishing ownership or controlling interest in a foreign company.
  • FDI are distinguished from portfolio investments in which an investor merely purchases equities of foreign-based companies.

Major decisions on FDI by the Cabinet

I. 100% FDI under automatic route in coal mining and associated infrastructure

  • It will attract international players to create an efficient and competitive coal market.

II. 100% FDI in contract manufacturing under automatic route

  • Manufacturing through contract contributes equally to the objective of Make in India.
  • FDI now being permitted under automatic route in contract manufacturing will be a big boost to Manufacturing sector in India.

III. Relaxing FDI rules for single brand retail; expands definition of 30% domestic sourcing

  • It will lead to greater flexibility and ease of operations for SBRT entities, besides creating a level playing field for companies with higher exports in a base year.

IV. Online retailing under single-brand retail; relaxing rule of mandatory brick-and-mortar store

  • Permitting online sales prior to opening of brick and mortar stores brings policy in sync with current market practices.
  • Online sales will also lead to creation of jobs in logistics, digital payments, customer care, training and product skilling.

Benefits from FDI Policy Reform

  • The above amendments to the FDI Policy are meant to liberalize and simplify the FDI policy to provide ease of doing business in the country, leading to larger FDI inflows and thereby contributing to growth of investment, income and employment.
  • It will result in making India a more attractive FDI destination, leading to benefits of increased investments, employment and growth.
Posted on | Custom
FDI in Indian economy

US Federal Reserves rate cut and its impact on IndiaMains Only


From UPSC perspective, the following things are important :

Prelims level : Not Much

Mains level : USD inflow in India

  • The US Federal Reserve has announced a quarter-percentage-point cut in interest rates — the first rate cut by the US central bank in 11 years.

Why is US Fed’s rate-cut significant?

  • The cut in interest rates is the first time since the 2008 financial crisis.
  • What is ironic is that this move comes despite a strong US economy and indicators such as job market data showing renewed buoyancy.
  • The rate cut follows months of pressure from US President who has been pushing the American central bank for a cut in rates.

Impact on India

  • A rate cut cycle means a weaker dollar, which is good for the US but may not be so for the rest of the world.
  • It has been seen in the past that as the dollar weakens due to lower growth tendencies, the rupee has tended to strengthen which will pose a conundrum for us as exports will come under pressure.
  • The exports will be reduced due to lower global growth and a stronger rupee. This will not be good for the current account deficit (CAD).


  • A rate cut in the US is good for emerging market economies and is projected to catalyse a debt and equity market rally in countries such as India.
  • Typically, emerging economies such as India tend to have higher inflation and thereby higher interest rates than those in developed countries such as the US and Europe.
  • As a result, investors would want to borrow money in the US at low-interest rates in dollar terms and then invest that money in bonds of emerging countries such as India in terms to earn a higher rate of interest.
  • When the US Fed cuts its interest rates, the difference between interest rates of the two countries increases, thus making India more attractive for the currency carry trade.
FDI in Indian economy

Mauritius leaksPriority 1


From UPSC perspective, the following things are important :

Prelims level : Mauritius leaks

Mains level : FDI routes in India

Mauritius Leaks

  • According to the recently released data by the International Consortium of Investigative Journalists (ICIJ), as many as 50 entities, or one-fourth of those disclosed in the Mauritius leaks, had India as their only country or one of the countries of activity.

India-Mauritius connection

  • The Double Taxation Avoidance Agreement (DTAA) was signed between India and Mauritius in 1982.
  • Under this,any entity could apply for tax residency and pay zero capital gains tax.
  • This became the principal reason why Mauritius emerged as a top channel for investments being routed into India.
  • Over 200,000 emails, contracts and bank statements leaked from Mauritius show how it was used by corporates to facilitate partnerships with multinationals.
  • This was done without paying any capital gains tax, remit profits as Foreign Direct Investment (FDI) to India.

Why is the Mauritius connection important?

  • In 2016, India amended its Double Taxation Avoidance Agreement (DTAA) with Mauritius, and the new provisions — capital gains tax, instance — are now fully applicable.
  • Almost a third of India’s FDI came through Mauritius.
  • There was strong resistance from Mauritius. They were benefited in the sense that lots of support and infrastructure like accounting firms and firms that set up companies and get income from that.
FDI in Indian economy

[op-ed snap] Building confidence, BIT by BITMains Onlyop-ed snap


From UPSC perspective, the following things are important :

Prelims level : Nothing Much

Mains level : New model of bilateral investment treaties should balance state and investor's rights


Indian bilateral investment treaties need to strike a balance between foreign investor interests and those of the state .

Current  Economic scenario

  •  The GDP growth rate is at a five-year low, domestic consumption is sinking, the business confidence index has plunged, and India has recorded its highest unemployment rate in the last 45 years.
  • To add to this list of woes is a claim made by Arvind Subramanian, India’s former Chief Economic Adviser, that India’s GDP has been overestimated.
  • Foreign direct investment (FDI) equity inflows to India in 2018-19 contracted by 1%, according to the government’s own data.

Lost opportunity

1.Shifting base of global supply chains –

  • This contraction in FDI inflows comes at a time when global supply chains are shifting base as a result of the ongoing trade war between the U.S. and China. India has failed to attract firms exiting China.
  • Many of these supply chains have relocated to Vietnam, Taiwan, Malaysia and Indonesia.
  • India is clearly not the natural/first option for these firms for a host of reasons, such as poor infrastructure, rigid land and labour laws, a deepening crisis in the banking sector and a lack of structural economic reforms.

2. Termination of bilateral investment treaties  –

  • The decline in the FDI growth rate, despite the well-advertised improvement in India’s ease of doing business rankings, interestingly, has coincided with India’s decision, in 2016, to unilaterally terminate bilateral investment treaties (BITs) with more than 60 countries; this is around 50% of the total unilateral termination of BITs globally from 2010 to 2018.
  • Unilateral termination of BITs on such a mass scale projects India as a country that does not respect international law.
  • India also adopted a new inward-looking Model BIT in 2016 that prioritises state interests over protection to foreign investment.

Impacts of BITs

Studies have shown that BITs positively impacted foreign investment inflows to India.

Bad regulation in previous BIT

  • True, India’s BITs gave extensive protection to foreign investment with scant regard for the state’s interests — a characteristically neoliberal model.
  • This design flaw could have been corrected by India negotiating new balanced treaties and then replacing the existing ones with the new ones instead of terminating them unilaterally, which has created a vacuum.

Reasons for increased BIT claims

  • Importantly, the design flaw was not the real reason for the increasing number of BIT claims.
  • Judiciary’s interference – A large number arose either because the judiciary could not get its act together (an example being inordinate delays in deciding on the enforceability of arbitration awards) or because it ruled in certain cases without examining India’s BIT obligations such as en masse cancellation of the second generation telecom licences in 2012.
  • Executive interference – Likewise, the executive — the Manmohan Singh government — got the income tax laws retrospectively amended in 2012 to overrule the Supreme Court’s judgment in favour of Vodafone and cancelled Devas Multimedia’s spectrum licences in 2011 without following due process, thus adversely impacting Mauritian and German investors.
  • In correcting the pro-investor imbalance in India’s BITs, India went to the other extreme and created a pro-state imbalance as evident in the Model BIT.

Way Forward

  • Indian BITs should strike a balance between the interests of foreign investors and those of the state.
  • A certain degree of arrogance and misplaced self-belief that foreign investors would flock to India despite shocks and surprises in the regulatory environment should be put to rest.
  • Clarity, continuity and transparency in domestic regulations and a commitment to a balanced BIT framework would help India project itself as a nation committed to the rule of law, both domestically and internationally, and thus shore up investor confidence.
  • As the 2019 World Investment Report confirms, since India is fast becoming a leading outward investor, balanced BITs would also help in protecting Indian investment abroad.
FDI in Indian economy

[op-ed snap] Why High-Profile Foreign Investors and Multinational Companies Sue Indiaop-ed snap


Mains Paper 2: IR | Bilateral, regional & global groupings & agreements involving India &/or affecting India’s interests

From the UPSC perspective, the following things are important:

Prelims level: Bilateral investment treaties

Mains level: India’s new model BIT and inherent flaws in it


Legal cases arising out of BITs

  1. Ever since foreign investors started bringing cases against India under different bilateral investment treaties (BITs), the focus on the so-far neglected area of international investment law has increased
  2. BIT disputes against India, involving billions of dollars, revolve around measures triggered “by public health emergencies, economic crises or other matters directly involving public welfare — which would, therefore, be permissible under the Constitution, but which a corporation believes have negatively impacted its financial interests”

How do BITs work?

  1. Signing a BIT, like entering into any treaty, is in itself a sovereign function
  2. By signing, states voluntarily accept certain restrictions on the exercise of their sovereign public power
  3. If a state adopts a public measure which is not in accordance with these accepted restrictions, the multinational corporations, subject to jurisdictional requirements, are very much within their right to challenge such measures as breaches of the BIT
  4. Whether such measures are permissible under the state’s constitution or not is immaterial as regards that state’s international law obligations are concerned

Are MNCs wrong in bringing these claims?

  1. Contrary to popular perception, none of these claims have been brought because India exercised her sovereign public power to attain an important public welfare objective that allegedly hurt the financial interests of a foreign investor
  2. If the judiciary cannot get its act together; if the executive, Central and state, behaves in a manner that disregards due process, or goes back on the assurances and promises that lured foreign investors to invest; if the legislature amends laws retrospectively ignoring the decision of the apex court of the country, then what is a foreign investor expected to do?
  3. To bemoan these claims suggests not accepting to be governed by rule of law (but by the rule of whims and fancies) and telling foreign investors to accept whatever treatment is dished out to them in the name of third world sovereignty

India’s new model BIT

  1. The new model BIT is a major departure from earlier models (1993 and 2003) as it provides protection to foreign investors in limited circumstances
  2. Under the new Model, controversial clauses such as most favoured nation have been completely dropped while the scope of national treatment and fair and equitable treatment clauses has been considerably narrowed down
  3. Although investor-state dispute settlement (ISDS) mechanism – which allows investors to initiate international arbitration against states and thereby bypass domestic courts entirely – has been retained but access to ISDS mechanism has been made conditional on the exhaustion of local remedies
  4. In simple words, foreign investors will have to first approach the relevant domestic courts for the resolution of an investment dispute before commencing an arbitration case
  5. Besides, the new model provides an exhaustive list of economic, environmental and social measures, which shall be exempted under the treaty
  6. This includes taxation matters, intellectual property rights and measures to protect macroeconomic stability

Redrawing BIT

The redrawing of BITs should be based on two factors

  • First, there has to be a recognition that BITs are an integral element of the legal infrastructure necessary for the functioning of the global economy based on rules, not power politics
  1. Looked this way, BITs are an important component of international rule of law holding states accountable internationally for the exercise of their public power vis-à-vis foreign investors
  • Second, the functioning of the international investment relations between countries, under a rule of law framework, has to be informed by the normativity of ‘embedded liberalism’
  1. ‘Embedded liberalism’, different from the laissez faire liberalism of the 19th century, focuses on shaping an economic order that represents a compromise between free markets and States intervening in favour of their regulatory goals

Flaws in model BIT

  1. It significantly dilutes international scrutiny of India’s exercise of public power
  2. It undermines international rule of law and is divorced from the conception of ‘embedded liberalism’
  3. It takes India back to the pre-economic liberalisation era by giving a new template of the old-fashioned economic nationalism prioritising Indian government’s interests over foreign investors

Way forward

  1. The BIT cases against India should have triggered an introspection of the overall governance and decision-making processes
  2. Instead, India has used these cases to play the victim
  3. This victimhood narrative has ignored the fact that these cases deserved to be brought due to India’s poor governance and abuse of public power

Original article: Why High-Profile Foreign Investors and Multinational Companies Sue India

With inputs from the article: Remodeling India’s Investment Treaty Regime

FDI in Indian economy

India drops three ranks in AT Kearney FDI Confidence IndexIOCRPrelims Only

Image Source


Mains Paper 3: Economy | Mobilization of resources

From UPSC perspective, the following things are important:

Prelims level: FDI Confidence Index

Mains level: Issues rose after implementation of landmark GST and Demonetisation


GST implementation challenges, demonetisation may have deterred investors

  1. India in 2018 has fallen out of the top 10 destinations for FDI in terms of its attractiveness, according to an AT Kearney report.
  2. The report says it could be due to troubles in the implementation of the GST and the government’s demonetisation decision in 2016.

Highlights of the Report

  1. India ranks 11 in the 2018 AT Kearney FDI Confidence Index, down from 8 in 2017 and 9 in 2016.

2.      The report highlighted several of the reforms such as removing the Foreign Investment Promotion Board and liberalizing FDI limits in key sectors that have maintained India’s high rankings in terms of FDI attractiveness.

3.      Other notable reforms include the liberalisation of foreign investment thresholds for the retail, aviation, and biomedical industries as per the report.


FDI Confidence Index

  1. The Foreign Direct Investment Confidence (FDI) Index is prepared by A.T. Kearney.
  2. It is an annual survey which tracks the impact of likely political, economic, and regulatory changes on the foreign direct investment intentions and preferences of CEOs, CFOs, and other top executives of Global 1000 companies.
  3. The report includes detailed commentary on the markets and the impact a variety of global trade issues have on their FDI attractiveness, as well as a ranking of the top 25 countries.
FDI in Indian economy

FII flows to Indian markets may slow as Fed hikes rates


Mains Paper 3: Economy | Effects of liberalization on the economy

From UPSC perspective, the following things are important:

Prelims level: FIIs (foreign institutional investors), Difference between FDI & FII

Mains level: Impact of policies of various financial sector regulators across the world on India

Impact of fed rate hikes

  1. Foreign investors, who have pulled out nearly $240 million from Indian stocks since the beginning of the year, may continue selling after interest rate increase in the US
  2. FIIs (foreign institutional investors) have been net sellers in this year
  3. The quarter percentage point increase is the second hike this year and the seventh since it started increasing lending rates in 2015
  4. The US Federal Reserve’s rate-setting panel also signaled two more rate hikes this year

Why funds revert?

  1. Higher interest rates tempt large foreign funds to move their money to the US
  2. Rising interest rates suggest a pickup in consumption and demand. It is a sign that US economy is getting stronger
  3. The currency may also depreciate further if US Fed goes ahead and hike rates further
  4. A few investors who have invested in the Indian markets over the last 3-5 years or even more might have chosen to book profit at this juncture, anticipating higher volatility in the Indian markets the closer it is to general elections
FDI in Indian economy

MHA fast-tracks security clearance for overseas investment proposals


Mains paper 3: money-laundering and its prevention

Prelims Level: Particulars of the Revised National Security Clearance Policy, 2015, FDI through automatic routes

Mains Level: Potential security threats from liberalized FDI inflow


Speedy Clearance of FDI proposals

  1. Among foreign countries, the maximum investment proposals in critical sectors like telecom and defense that was cleared by the Home Ministry in 2017 were from China, United Kingdom, U.S., and Mauritius
  2. The Ministry said it has given security clearance to more than 5,000 investment proposals, including for Foreign Direct Investment, in the last four years
  3. The earlier time taken for security clearance for a project was eight-nine months on an average. This has been brought down to 40 days since last year
  4. At present, only 11 sectors, including defense and retail trading, require government approval for foreign direct investment
  5. Over 90% of FDI proposals have come through the automatic route

Potential threats from the free flow of FDI

  1. Sovereignty risks: Funding of terror groups and other banned outfits.
  2. Financial risks: Money Laundering, Unverifiable investors from tax heavens, Hawala etc.
  3. Commercial risks: Dumping cheap manufactured components
  4. Political risk: Political Funding & subsequent influence on decisions


Revised National Security Clearance Policy, 2015

  1. The Ministry of Home Affairs had formulated a new national security clearance policy in 2015 after the government decided to speed up projects, which were stuck for lack of approval by Intelligence Bureau (IB) or other agencies including the State police
  2. It has introduced the National Security Clause as an important component of this Policy
  3. It aims to extend fast-track security clearance to foreign investment proposals in the critical sectors such as telecom, private security, and defense while ensuring that national interests are not endangered
  4. The clearance process aims to boost government’s ease-of-doing-business and Make in India initiative.
  5. The policy has 15 parameters on which inputs from security agencies are sought. Once it has got an application from an investor, the Ministry decides on the status of security clearance to the company within 4-6 weeks.
  6. As per the policy, the promoters, owners, and directors of the company are mandated to give self-declarations regarding any criminal history on their part, which reduced the period required to give security clearance from 2-3 months earlier to just 4-6 weeks now
  7. Security inputs from the Intelligence Bureau, the CBI, the Enforcement Directorate and other agencies are sought only in cases of serious crimes and not in case of minor offenses
Posted on | The Hindu
FDI in Indian economy

NIIF partners UK govt for Green Growth Equity Fund


Mains Paper 3: Economy | Infrastructure: Energy, Ports, Roads, Airports, Railways etc.

From UPSC perspective, the following things are important:

Prelims level: NIIF, Green Growth Equity Fund

Mains level: Government initiatives for reviving infrastructure sector and providing required capital to the sector

Launch of GGEF

  1. The government’s National Investment and Infrastructure Fund of India (NIIF) has announced a partnership with the UK government to launch Green Growth Equity Fund (GGEF)
  2. NIIF and the UK government have committed £120 million each for the fund which will be managed by EverSource Capital, a joint venture of home-grown private equity firm Everstone Group and Lightsource BP

About the fund

  1. Green Growth Equity Fund is an alternative investment fund registered with the Securities and Exchange Board of India
  2. It aims to raise £500 million from international institutional investors to invest in areas such as renewable energy, clean transportation, water, sanitation, waste management, emerging technologies and other similar industries in India
  3. It will be the first investment for NIIF’s Fund of Funds

National Investment and Infrastructure Fund of India (NIIF)

  1. NIIF, an institution sponsored by the government of India, is a collaborative investment platform for international and Indian investors
  2. The government had set up the Rs40,000 crore NIIF in 2015 as an investment vehicle for funding commercially viable greenfield, brownfield, and stalled projects
FDI in Indian economy

NIIF, Everstone Group in talks to tie up for $500 million fund


Mains Paper 3: Economy | Mobilization of resources

From UPSC perspective, the following things are important:

Prelims level: NIIF, Green Growth Equity Fund

Mains level: Various initiatives to boost capital investments

Private equity firm to manage GGEF

  1. The government’s National Investment and Infrastructure Fund (NIIF) is in talks with private equity firm Everstone Group for a tie-up to manage its Green Growth Equity Fund (GGEF)
  2. The corpus of the fund is expected to be in the range of $500 million to $1 billion

About NIIF

  1. NIIF, an institution sponsored by the government of India, is a collaborative investment platform for international and Indian investors
  2. The government had set up the Rs40,000 crore NIIF in 2015 as an investment vehicle for funding commercially viable greenfield, brownfield, and stalled projects
  3. NIIF’s mandate includes investing in areas such as energy, transportation, housing, water, waste management and other infrastructure-related sectors in India
  4. The Indian government is investing 49% and the rest of the corpus is to be raised from third-party investors such as sovereign wealth funds, insurance and pension funds, endowments, etc


Green Growth Equity Fund (GGEF)

  1. GGEF, which will invest in renewable energy assets, is a joint venture between NIIF and the UK government
  2. It aims to leverage private sector investment from the City of London to invest in green infrastructure projects in India
  3. It shall have anchor commitments of GBP 120 million each from Government of India (through NIIF) and Government of UK
FDI in Indian economy

[pib] FDI policy further liberalized in key sectorsPIB


From UPSC perspective, the following things are important:

Prelims level: FDI, FII, FPI, DIPP

Mains level: Liberalisation in Indian economy


  • 100% FDI under automatic route for Single Brand Retail Trading
  • 100% FDI under automatic route in Construction Development
  • Foreign airlines allowed to invest up to 49% under approval route in Air India
  • FIIs/FPIs allowed to invest in Power Exchanges through primary market


  • Government approval no longer required for FDI in Single Brand Retail Trading (SBRT)
  • Foreign airlines are allowed to invest under Government approval route in the capital of Indian companies operating scheduled and non-scheduled air transport services
  • Real-estate broking service does not amount to real estate business and is, therefore, eligible for 100% FDI under the automatic route.
  •  Allowing FIIs/FPIs to invest in Power Exchanges through the primary market as well.

Other Approval Requirements under FDI Policy

  • Issue of shares against non-cash considerations like pre-incorporation expenses, import of machinery etc. shall be permitted under automatic route in case of sectors under the automatic route.
  • To align FDI policy on Indian company/ies/ LLP and in the Core Investing Companies with FDI policy provisions on Other Financial Services

Competent Authority for examining FDI proposals from countries of concern

  • FDI applications for investments in automatic route sectors, requiring approval only on the matter of investment being from country of concern would be processed by Department of Industrial Policy & Promotion (DIPP) for Government approval


  • Now it’s been decided to amend the definition of ‘medical devices’ as contained in the FDI Policy

Restrictive conditions regarding audit firms

  • It has been decided to provide in the FDI policy that wherever the foreign investor wishes to specify a particular auditor/audit firm having the international network for the Indian investee company, then audit of such investee companies should be carried out as joint audit wherein one of the auditors should not be part of the same network
FDI in Indian economy

FDI jumps 37% to $10.4 billion during April-June 2017

Image result for Foreign direct investment

Image source


Mains Paper 3: Economy | Mobilization of resources

From UPSC perspective, the following things are important:

Prelims level: Foreign direct investment (FDI)

 Mains level: FDI flow to India-Challenges and Way forward


  1. Foreign direct investment (FDI) into the country grew by 37 per cent to USD 10.4 billion during the first quarter of the current fiscal
  2. Since the launch of ‘Make in India’ initiative (October 2014 – June this year), foreign inflows jumped 64 per cent to USD 110.12 billion from USD 67.26 billion in the same period last year.
  3. Sectors which attracted the highest foreign inflows include services, telecom, trading, computer hardware and software and automobile. 
  4. Bulk of the FDI came in from Singapore, Mauritius, the Netherlands and Japan. 
  5. The government has announced several steps to attract foreign inflows.The measures include liberalisation of FDI policy and improvement in business climate.

Why FDI is important for India?

  1. India needs around USD 1 trillion for overhauling its infrastructure sector such as ports, airports and highways to boost growth.
  2. A strong inflow of foreign investments will help improve the country s balance of payments situation
  3. It will strengthen the rupee value against other global currencies, especially the US dollar.
FDI in Indian economy

Eclectic FPI mix drives Indian equities

  • What do Trinidad and Tobago, Russia, Brazil, Greece, Cook Islands, Israel, New Zealand and Republic of Malta
    have in common?
  • One institutional investor from each of these countries has registered as a foreign portfolio investor (FPI) with
    the Securities and Exchange Board of India (SEBI), aiming to reap gains from the Indian equity market.
  • According to SEBI data, there are nearly 8,000 registered FPIs in India coming from almost 60 different countries across the world.
  • The number of FPIs domiciled in Mauritius was much higher and began to fall only after the benefits of double tax avoidance started to wean away.
  • Simply put, FPIs from Mauritius were not required to pay any tax in India before the rules were changed.
  • Market participants say that an increasing number of foreign investors are attracted to India because of the higher returns when compared with some of the other leading markets, including the emerging markets pack.
  • SEBI data shows that there are investors from countries like Bahamas, Liechtenstein, Republic of Slovenia,
    Brunei, Bermuda, Guernsey and Jersey. Both Guernsey and Jersey are islands in the English Channel.
  • Foreign investors have historically been the prime drivers of the various bull runs seen in the Indian equity market.
  • Data from National Securities Depository Ltd. (NSDL) shows that FPIs have been net buyers of Indian equity at ₹40,911 crore or more than $6 billion.
FDI in Indian economy

No logic behind low credit rating for India: Parekh

  • Critical of rating agencies for giving India the lowest investment grade rating, eminent banker Deepak
    Parekh has wondered how a country with such “strong fundamentals” on both economic and political fronts can be rated so low.
  • India continues to be rated ‘BBB-’, just a notch above the junk grade and lowest among investment grade ratings, by most of the global credit rating agencies.
  • This is despite the government pitching hard for an upgrade on the basis of several reforms initiated over the
    last few years.
  • On the other hand, Italy and Spain, which are far weaker and smaller, are having much higher ratings than India.
  • With all macro economic fundamentals being positive, India, the fastest growing emerging economy for over one year now is rated just BBB-.


  • What is a ‘Credit Rating’? An assessment of the creditworthiness of a borrower in general terms or with
    respect to a particular debt or financial obligation.
  • A credit rating can be assigned to any entity that seeks to borrow money – an individual, corporation, state or
    provincial authority, or a sovereign government.
  • Credit assessment and evaluation for companies and governments is generally done by a credit rating agency
    such as Standard and Poor’s, Moody’s or Fitch.
  • Moody’s was the first agency to issue publicly available credit ratings for bonds, in 1909, and other agencies
    followed suit in the decades after.
  • Credit rating agencies typically assign letter grades to indicate ratings. Standard and Poor’s, for instance, has a
    credit rating scale ranging from AAA (excellent) and AA+ all the way to C and D.
  • A debt instrument with a rating below BBB- is considered to be speculative grade or a junk bond, which means it is more likely to default on loans.
  • The agency also looks at the entity’s future economic potential. If the economic future looks bright, the credit
    rating tends to be higher; if the borrower does not have a positive economic outlook, the credit rating will fall.
FDI in Indian economy

Treaty hurdle no bar for U.S. investments

  1. Talks between India-USA are in a limbo over a proposed Bilateral Investment Treaty (BIT)
  2. However, US companies are finding novel ways to address investment protection and dispute-related issues with their Indian counterparts
  3. U.S. investors are also signing up with Indian firms to use London and Brussels as seats of arbitration
  4. For instance: The Gujarat International Finance Tec-City (GIFT City) has offered American investors the option of using the Singapore arbitration model to solve disputes
  5. GIFT City: India’s first International Financial Services Centre (IFSC)
  6. The BIT is aimed at promoting and protecting two-way direct investments
FDI in Indian economy

FDI in multi-brand retail only if playing field level

  1. The Centre will allow foreign direct investment in multi-brand retail only after equipping domestic traders and farmers to compete with such retailers
  2. Aim: To ensure a level playing field
  3. Why not yet? The rationale behind this is the lack of adequate infrastructure and last-mile connectivity in the country to ensure the financial inclusion of traders and farmers
FDI in Indian economy

Cabinet nod for permanent residency to FDI investors

  1. News: Union Cabinet approved a scheme to grant permanent residency status (PRS) to all foreign investors, except those from Pakistan, subject to the relevant conditions.
  2. Aim: To encourage foreign investment in India and facilitate the Make in India programme
  3. Conditions: To avail this scheme, the foreign investor will have to invest a minimum of Rs.10 crore to be brought within 18 months or Rs.25 crore to be brought within 36 months
FDI in Indian economy

Panel suggests corporate bond index, easier norms for FPIs

  1. Context: The ‘Report of the Working Group on Development of Corporate Bond Market in India’ has been submitted to RBI Governor Raghuram Rajan in his capacity as Chairman of the FSDC (Financial Stability and Development Council) Sub Committee
  2. Aim: To develop corporate bond market in India
  3. Recommendations: Easing of norms for foreign investors, a corporate bond index on the lines of Sensex or Nifty
  4. Also, making it mandatory for large corporates to tap this market for funds beyond a threshold
  5. Tightening of norms for credit rating agencies by mandating them to strictly adhere to timely public disclosure of defaults
FDI in Indian economy

Cabinet nod for changes to FDI regulations in NBFCs

  1. Effect: The amendment in the existing Foreign Exchange Management regulations on NBFCs will enable inflow of foreign investment in ‘other financial services’ on automatic route
  2. Condition: Such services must be regulated by any financial sector regulators (RBI, SEBI, PFRDA etc.)/ Govt agencies
  3. Others: Foreign investment in ‘other financial services’ that are not regulated by any regulators or by a Govt agency can be made via the approval route
  4. Minimum capitalisation norms: These have been eliminated as most of the regulators have already fixed minimum capitalisation norms
FDI in Indian economy

US investors keen on Indian road and port sectors

  1. News: The mood among US investors is highly positive towards Indian road and port infrastructure sector Union Minister Nitin Gadkari said
  2. He also assured that the negative remarks about the country’s investment climate in a recent report of the US State Department, would have no impact on investment flow
  3. India will be looking for ways to adopt the latest US technologies in road safety, highway construction, and waterways management
FDI in Indian economy

FDI in newspapers and periodicals

  1. News: The government is mulling a raise in foreign direct investment limit in newspapers and periodicals to 49% from 26% currently
  2. Currently, the FDI policy permits 26% foreign direct investment in the publishing of newspapers and periodicals dealing with news and current affairs through government approval route
  3. The Department of Industrial Policy and Promotion (DIPP) will consider the proposal
FDI in Indian economy

India retains tenth spot among FDI destinations

  1. The World Investment Report 2016 released by the United Nations Conference on Trade and Development (UNCTAD)
  2. India has retained its ranking as the t10th highest recipient of foreign direct investment in 2015, receiving $44 billion of investment that year compared to $35 billion in 2014, according to the United Nations
  3. India also jumped a place in terms of attractiveness as a business destination in 2015, to 6th place, with 14% of the respondents naming it as their destination of choice
FDI in Indian economy

Radical liberalisation of the FDI regime by Govt- II

  1. Aviation: 100% FDI in India-based airlines
  2. However, a foreign carrier can only own upto 49% stake in the venture, and the rest can come from a private investors including those based overseas
  3. Impact: This is expected to bring in more funds into domestic airlines
  4. Airport: 100% FDI in existing airport projects has been allowed without government permission, from 74% permitted so far
  5. The move comes close on the heels of the new civil aviation policy that relaxed norms for domestic carriers to fly abroad
  6. Pharma: Up to 74% FDI under automatic route in existing pharmaceutical ventures
  7. Govt approval route will continue beyond 74% FDI & upto 100& in such brown-field pharma
FDI in Indian economy

Radical liberalisation of the FDI regime by Govt

  1. Defence: FDI beyond 49% (& upto 100%) has been permitted through the government approval route, in cases resulting in access to modern technology in the country
  2. The condition of access to ‘state-of-art’ technology in the country has been done away with
  3. Why? Many foreign investors had complained about the ambiguity regarding that term
  4. Retail: 100 per cent FDI under government approval route for trading, including through e-commerce, in respect of food products manufactured or produced in India
  5. This brings into effect the proposal made in the Budget 2016-17
FDI in Indian economy

FDI inflows hit record in April-February last fiscal

  1. Context: India received $51 billion FDI, the highest-ever, during April-February FY16, according to DIPP
  2. Reason: Govt’s efforts to improve the ease of doing business and initiatives such as Make In India
  3. The complex procedures and delays are now being gradually dismantled
  4. Where from? Singapore ($10.98 bn), Mauritius ($6.1 bn)
  5. Top sectors: Computer software/ hardware, Services, Automobile, Telecom
FDI in Indian economy

Services corner bulk of FDI inflows

  1. Context: Official data released by the Department of Industrial Policy and Promotion (DIPP)
  2. Findings: India received an all-time high annual foreign direct investment (FDI) in 2015
  3. Services lead: The surge is led by the inflows into the services sector rather than manufacturing or infrastructure
  4. The ‘Make in India’ initiative has not yet materialised into FDI inflows
  5. More than half of total FDI came into the services sector- software, financial services, trading, hospital and tourism
FDI in Indian economy

Government permits 100 per cent FDI in e-commerce

  1. News: The govt permitted 100% FDI in the market place format of e-commerce retailing
  2. Reason: To attract more foreign investments in the e-commerce segment
  3. FDI has not been allowed in inventory-based model of e-commerce
  4. The govt. has already allowed 100% FDI in business-to-business e-commerce
  5. Definition: As per the guidelines, e-commerce means buying and selling of goods and services, including digital products over digital and electronic network
FDI in Indian economy

Govt allows 49% FDI in insurance under automatic route

  1. News: The govt has relaxed FDI norms for the insurance sector by permitting overseas companies to buy 49% stake in domestic insurers without prior approval
  2. Reason: Govt. wants to bring to attract more foreign investment in the sector
  3. Statistics: There are 52 insurance companies operating in India, of which 24 are in the life insurance business and 28 in general insurance
  4. During Apr-Dec 2015, FDI into the country grew by 40% to $ 29.44 billion
FDI in Indian economy

Small retailers oppose 100 % FDI in marketing of food products

  1. Context: Budget proposed that 100% FDI will be allowed through the govt approval route in marketing food products produced in India
  2. News: Several small retailers, street vendors and farmers’ organisations have opposed the move
  3. Reason: They have questioned the govt’s claim that post-harvest losses are high (around 30-40%)
  4. According to a recent report of the Indian Council of Agricultural Research,  the post-harvest losses of several food items were very low (at below 10%)
  5. Criticism: The move would threaten livelihood of all street vendors depending on retailing food
  6. This will allow big food companies and MNCs into multi-brand retail trade through the backdoor
FDI in Indian economy

FDI in food processing to push local sourcing: Budget

  1. What? Proposal to permit 100 % FDI in the marketing of food products made in India
  2. Benefits: Expected to encourage manufacturers to utilise local produce in their products even more
  3. Companies are expected to step up their R&D effort to accommodate local produce in their products
  4. This could be a game changer for the domestic food processing business
  5. It could have a cascading impact on local farming
FDI in Indian economy

Govt eases FDI norms in 15 major sectors, including defence, civil aviation

The Government has eased FDI norms in 15 major sectors.

  1. The govt. also increased the financial power of the FIPB to give single window clearance for investment projects up from Rs 3,000 crore to Rs 5,000 crore.
  2. This will help him reinforce the govt’s narrative on economic reforms and its intent to attract global investors and ease rules for them.
  3. The new norms have removed outdated conditionalities and  many more areas have been put on the automatic route.
  4. In defence, the govt. has allowed foreign investment up to 49% under the automatic route, earlier under the govt. approval route.-
FDI in Indian economy

Why are defence and banking out of composite FDI caps?

  1. The reason is that being very important sectors, Govt. does not want them to suffer from vulnerability of ‘quick come – quick go’ international money.
  2. In defence sector, foreign investment is limited to 49% under automatic route. However, portfolio investments such as FPIs is capped at 24%.
  3. In private banking sector, FDI limit is 74% of net paid up capital with 49% cap on FPIs.
FDI in Indian economy

India leads FDI in South Asia with 34 billion investment in 2014

  1. FDI inflow to India has surged by 22% to about 34 billion US dollars.
  2. India has improved its position to 9th top host country in the world for FDI in 2014.
  3. Top 5 FDI recipients in South Asia: India, Iran, Pakistan, Bangladesh, Sri Lanka.
  4. India was also the biggest investor in terms of outward FDI in South Asia region with 9.8 billion dollars.
FDI in Indian economy

FDI in services sector grows by 46% in 2014-15 fiscal

  1. How & why? The government had taken series of steps to improve ease of doing business and attracting domestic as well as foreign investments.
  2. The services sector includes banking, outsourcing, insurance, Research & Development (R&D), courier and technology testing.
FDI in Indian economy

Union Government relaxes FDI norms for NRIs, PIOs, OCI

  1. Gov. will amend FDI policy on investments by NRIs, PIOs & OCIs which will give them parity in economy and education.
  2. Now non-repatriable investments under under Schedule 4 of FEMA regulations will considered as domestic investment.
  3. FDI in Railway infrastructure sector has been opened to 100% FDI under automatic route.
  4. FDI limit in the insurance sector has been increased to 49%.
  5. Sectoral cap for FDI in defence sector has been raised to 49%.


What is Foreign Direct Investment (FDI)?

FDI means where a foreign company, generally an MNC, may invest in a country in any of the following 3 forms:

#1. Setup a plant or project to manufacture a commodity- consumer goods, capital goods, automobile, aircrafts, ships etc. It may also engage itself in construction activity- highways, roads, bridges, ports, airports, real estate etc.

#2. Setup network for providing services- banking, insurance, shipping, telecom, software, civil aviation etc.

#3. Only provide technology by way of Technology Transfer through any company of the country. It can provide technology only or provide technology along with #1 & #2 above

Foreign Portfolio Investment (FPI):

  • It means that foreign investors, generally Foreign Institutional Investors in case of India (FIIs are very large investors who invest bulk amounts just like Mutual Funds), invest in country stock market by investing in shares, debentures, bonds, Mutual Funds etc.
  • The objective here is to make capital gains in the stock markets
  • Hence this is investment is also called ‘Hot Money’ or ‘Fly-by-Night Money’ as it has a tendency to move from one country to another in search of quick profit
  • Therefore it has a potential to cause volatility in those markets from where it leaves

FDI routes:

#1. Automatic

A foreign company wishing to invest in India doesn’t have to seek prior approval of any body/ agency in India
It can straight away bring in investments in India & has only to inform the RBI within 1 month of bringing its investment in a certain sector
This route is relatively hassle free due to which more than 55% of total FDI has come through this route

#2. Foreign Investment Promotion Board (FIPB)

It was established in 1992 (just after L-P-G reforms)
Investments upto Rs. 5000 crore from notified sectors have to go through its approval

#3. Cabinet Committee on Economic Affairs (CCEA)

This approves investments above Rs. 5000 crores from notified sectors

Merits of FDI:


  • Adds to the productive capacity of a nation (by definition, as mentioned above)
  • Long term and stable- Because an MNC would continue to manufacture in a country, earn profits, engage in exports and thus spread its wings across the world as it enjoys a global name
  • No repayment obligation on part of the country where it is operating. This is the most important feature
  • Brings in capital and bolsters FOREX reserves
  • Brings in technology
  • Helps export promotion (because of global brands)
  • Generates employment
  • Expands markets (domestic as well as foreign)
  • International Best Practices- Brings in latest administrative and work culture
  • Infuses competition among domestic industries

What is the impact of FDI on Inflation?


  • FDI has been generally touted as a measure to dampen inflation. But this can NOT be concluded in all situations
  • The FDI’s impact on dampening the inflation is based upon the assumption that FDI would result in the developing of country’s back-end infrastructure and crack the supply bottlenecks. Practically, it may or may not happen
  • Economics has no rule to link FDI and Inflation because inflation may have many reasons behind it rather than only infrastructure and supply bottlenecks
  • Generally the FDI’s role in containing inflation is supported by the facts that- it improves infrastructure, improves supply chain, brings permanent investment


  • May threaten a country’s economic and political sovereignty (remember East
  • India Company which came to India just as a trader)
  • It may bring obsolete technology (this was true especially during 1950-90 because US and UK were the only countries bringing FDI. But now due to many countries bringing FDI, there is competition and this risk is reduced)
  • Focus on short term profit earning tactics rather than long term investments with a view of national industrial development
  • Indulging in cut-throat competition
  • Indulging in transfer pricing practices

Why Foreign Investors go for FDI?

  • To take advantage of cheaper wages in the country, special investment privileges such as tax exemptions offered by the country as an incentive
  • To gain tariff-free access to the markets of the country
  • To acquire lasting interest in enterprises operating in the target country.

What attracts FDI?

  • The growth rate of the source economy is an important determinant
  • The political and economic stability of the target region
  • How ‘open’ the economy is towards foreign trade (both imports and exports)
  • The policies, rules, regulations and loopholes incidental thereto
  • For example, Mauritius has been top FDI source for India due to the later (loophole) reasons

Recent FDI reforms (November 2015):

#1. Townships, shopping complexes & business centres – all allow up to 100% FDI under the auto route

Conditions on minimum capitalisation & floor area restrictions have now been removed for the construction development sector

#2. India’s defence sector now allows consolidated FDI up to 49% under the automatic route

FDI beyond 49% will now be considered by the Foreign Investment Promotion Board

Govt approval route will be required only when FDI results in a change of ownership pattern

#3. Private sector banks now allow consolidated FDI up to 74%

#4. Up to 100% FDI is now allowed in coffee/rubber/cardamom/palm oil & olive oil plantations via the automatic route

#5. 100% FDI is now allowed via the auto route in duty free shops located and operated in the customs bonded areas

#6. Manufacturers can now sell their products through wholesale and/or retail, including through e-commerce without Government Approval

#7. Foreign Equity caps have now been increased for establishment & operation of satellites, credit information companies, non-scheduled air transport & ground handling services from 74% to 100%

#8. 100% FDI allowed in medical devices

#9. FDI cap increased in insurance & sub-activities from 26% to 49%

#10. FDI up to 49% has been permitted in the Pension Sector

#11. Construction, operation and maintenance of specified activities of Railway sector opened to 100% foreign direct investment under automatic route

#12. FDI policy on Construction Development sector has been liberalised by relaxing the norms pertaining to minimum area, minimum capitalisation and repatriation of funds or exit from the project

To encourage investment in affordable housing, projects committing 30 percent of the total project cost for low cost affordable housing have been exempted from minimum area and capitalisation norms

#13. Investment by NRIs under Schedule 4 of FEMA (Transfer or Issue of Security by Persons Resident Outside India) Regulations will be deemed to be domestic investment at par with the investment made by residents

#14. Composite caps on foreign investments introduced to bring uniformity and simplicity is brought across the sectors in FDI policy

#15. 100% FDI allowed in White Label ATM Operations White Label ATMs? Answer in comments>

Crux of the reforms:

  • To further ease, rationalise and simplify the process of foreign investments in the country
  • To put more and more FDI proposals on automatic route instead of Government route where time and energy of the investors is wasted
  • Refining of foreign investment norms in construction is to facilitate the construction of 50 million houses for poor
  • Opening up of the manufacturing sector for wholesale, retail and e-commerce is aimed at motivating industries to Make In India and sell it to the customers here instead of importing from other countries

Sectoral caps:

  • Petroleum Refining by PSU (49%)
  • Teleports (setting up of up-linking HUBs/Teleports),Direct to Home (DTH), Cable Networks (Multi-system operators (MSOs) operating at national, state or district level and undertaking upgradation of networks towards digitalisation and addressability), Mobile TV and Headend-in-the-Sky Broadcasting Service (HITS) – (74%)
  • Cable Networks (49%)
  • Broadcasting content services- FM Radio (26%), uplinking of news and current affairs TV channels (26%)
  • Print Media dealing with news and current affairs (26%)
  • Air transport services- scheduled air transport (49%), non-scheduled air transport (74%)
  • Ground handling services – Civil Aviation (74%)
  • Satellites- establishment and operation (74%)
  • Private security agencies (49%)
  • Private Sector Banking- Except branches or wholly owned subsidiaries (74%)
  • Public Sector Banking (20%)
  • Commodity exchanges (49%)
  • Credit information companies (74%)
  • Infrastructure companies in securities market (49%)
  • Insurance and sub-activities (49%)
  • Power exchanges (49%) power exchanges? What are the issues with them? Hint- Economic Survey 2015-16 Chapter 11>
  • Defence (49% above 49% to CCS)
  • Pension Sector (49%)

Sectors which need Govt (FIPB/ CCEA) approval:

  • Tea sector, including plantations – 100%
  • Mining and mineral separation of titanium-bearing minerals and ores, its value addition and integrated activities -100%
  • FDI in enterprise manufacturing items reserved for small scale sector – 100%
  • Defence – up to 49% under FIPB/CCEA approval, beyond – 49% under CCS approval (on a case-to-case basis, wherever it is likely to result in access to modern and state-of-the-art technology in the country)
  • Teleports (setting up of up-linking HUBs/Teleports), Direct to Home (DTH), Cable Networks (Multi-system operators operating at National or State or District level and undertaking upgradation of networks towards digitisation and addressability), Mobile TV and Headend-in-the Sky Broadcasting Service(HITS) – beyond 49% and up to 74%
  • Broadcasting Content Services: uplinking of news and current affairs channels – 26%, uplinking of non-news and current affairs TV channels – 100%
  • Publishing/printing of scientific and technical magazines/specialty journals/periodicals – 100%
  • Print media: publishing of newspaper and periodicals dealing with news and current affairs- 26%, Publication of Indian editions of foreign magazines dealing with news and current affairs- 26%
  • Terrestrial Broadcasting FM (FM Radio) – 26%
  • Publication of facsimile edition of foreign newspaper – 100%
  • Airports – brownfield – beyond 74%
  • Non-scheduled air transport service – beyond 49% and up to 74%
  • Ground-handling services – beyond 49% and up to 74%
  • Satellites – establishment and operation – 74%
  • Private securities agencies – 49%
  • Telecom-beyond 49%
  • Single brand retail – beyond 49%
  • Asset reconstruction company – beyond 49% and up to 100%
  • Banking private sector (other than Branches) – beyond 49% and up to 74%, public sector – 20%
  • Insurance – beyond 26% and up to 49%
  • Pension Sector – beyond 26% and up to 49%
  • Pharmaceuticals – brownfield – 100%

All sectors other than these are under automatic route.

Sectors where FDI is prohibited:

  • Lottery Business including Government /private lottery, online lotteries, etc.
    Gambling and Betting including casinos etc.
  • Chit funds
  • Nidhi company-(borrowing from members and lending to members only)
  • Trading in Transferable Development Rights (TDRs) <What are TDRs? Answer in comments>
  • Real Estate Business (other than construction development) or Construction of Farm Houses
  • Manufacturing of Cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco substitutes
  • Activities/ sectors not open to private sector investment e.g. Atomic Energy and Railway Transport (other than construction, operation and maintenance of
    (i) Suburban corridor projects through PPP,
    (ii) High speed train projects,
    (iii) Dedicated freight lines,
    (iv) Rolling stock including train sets, and locomotives/coaches manufacturing and maintenance facilities,
    (v) Railway Electrification,
    (vi) Signaling systems,
    (vii) Freight terminals,
    (viii) Passenger terminals,
    (ix) Infrastructure in industrial park pertaining to railway line/sidings including electrified railway lines and connectivities to main railway line and
    (x) Mass Rapid Transport Systems)
  • Services like legal, book keeping, accounting & auditing.

Published with inputs from Swapnil

Leave a Reply

Please Login to comment
0 Comment threads
0 Thread replies
Most reacted comment
Hottest comment thread
0 Comment authors
Recent comment authors
newest oldest most voted
Notify of