Foreign Direct Investment (FDI) is a vital monetary resource for economic development of a country. The level of FDI in-flow is a key indicator of the investment environment in a country. For India, FDI is a major non-debt financial resource acting as a crucial driver of economic growth of the country.
The investment climate in India has improved considerably since the opening up of the economy in 1991. With a focus on the Ease of Doing Business in India, consistent efforts by successive governments have transformed India from a “highly regulated economy” to “one of the most vibrant and liberalized economies”. Now, India is a captivating investment destination underpinned by democratic values and driven forward by abundant human talent, massive markets, enormous growth potential and endless opportunities..
India netted record FDI inflows in the past two decades. As per official FDI data published by DPIIT, India received the cumulative amount of FDI worth US$ 681 Billion between April, 2000 to March, 2020. At one point, India became the top FDI destination in the world overtaking economic giants like the United States of America and China.
In 2018-19, India received FDI worth US$ 42 Billion which increased @ 16% annual growth to US$ 49 Billion in 2019-20 bettering the FDI inflows to developed economies like Germany and Canada.
FDI under Automatic Route:
For specified sectors in which foreign investment is allowed under Automatic Route, non-resident investors do not require any approval from Government of India for permitted level of investment.
FDI under Government Route or Approval Route:
For regulated sectors in which foreign investment is allowed under Government Route or Approval Route, investors are required to obtain prior approval from the Government of India for permitted level of investment in specified sectors. Upon receipt of applications through FIFP, concerned administrative ministries / departments are entrusted for processing approval applications.