India's Competitive Advantages
India is today the fourth largest economy (GDP of US$ 3.699 trillion) in terms of Purchasing Power Parity (2005).
The government is pursuing reforms and liberalization not out of compulsion but out of conviction and consensus.
Indian economy is a high growth one with a long term perspective.
India is among one of the most attractive FDI destination worldwide.
India welcomes foreign investment and most sectors are open for investors.
Why invest in India?
- One of the largest economies of the world in terms of purchasing power parity
- Large and rapidly growing consumer market of 300 million people
- Large and diversified infrastructure spread across the country
- Strong and mature private sector accounting for 75% of the GDP
- Large manufacturing capability spanning all areas of manufacturing activities
- Well developed R&D infrastructure, technical and marketing services
- Abundance of natural resources and agricultural self-sufficiency
- Well developed banking system with a commercial banking network of over 63,000 branches
- Vast pool of highly skilled and motivated human resource base available at competitive costs
- Knowledge and usage of English as the preferred business language
- Easy access to South and South-East Asian markets
- Current account convertibility, capital account convertibility for foreign investors
- Primacy of rule of law and independent judiciary
- Strong and transparent legal and accounting system
- Free, vocal and active media
- Legal protection for intellectual property rights
- Largest democracy with stable, mature, vibrant and exemplary democratic governance and institutions
- Vast domestic market and growing middle class with substantial purchasing power
- Availability of skilled and semi-skilled manpower at economical rates
- Liberal investment regime with almost all sectors open to foreign investment via automatic route
- Strong economic indicators.
- Fastest growing economy in the world.
- Foreign exchange reserves of US $ 134 billion as of January 2006.
- Fourth largest economy in the world, based on Purchasing Power Parity
- World's largest democracy with well established legal and accounting systems, independent judiciary, free and vibrant press
- Lucrative investment opportunities in infrastructure development ? energy, telecommunications, roads, transport, urban development , pharmaceuticals, food processing, information technology, bio-technology & many more.?
- No quantitative restrictions on import / export
- Rationalized tariff levels
- Export growth target of 11.9 % per annum for the period 2002-2007
- New incentives for Special Economic Zones
- Simplified procedures to reduce transaction costs
- Abundant natural resources and strong manufacturing sector
- Large domestic market of over one billion people and re-export market for other South Asian counties
- Over 60 of the 80 companies in the world who have acquired SEI CMM level 5 maturity are located in India
- Over half of Fortune 500 companies are outsourcing their software requirements to India
- Indian software is exported to over 100 countries
- Vast pool of IT professionals is quickly moving up the value chain
- World-class educational institutions and the largest number of English languages graduates in the world outside the United State
- Business Processing Outsourcing and Call Centre Services recording tremendous growth
- Fast growing telecom infrastructure
- Liberal investment policy, tax incentives and fast track clearance of goods imported by manufacturers of electronic goods
REVIEW OF FOREIGN DIRECT INVESTMENT POLICY FOR FURTHER LIBERALIZATION
The Union Cabinet today reviewed and approved the FDI policy for further liberalization as follows:
I Civil Aviation:
(i) To continue with the existing FDI cap at 49% on the automatic route and 100% for NRI, subject to no direct or indirect participation by foreign airlines and reclassifying it as Domestic Scheduled Passenger Airline Sector.
(ii) To allow FDI up to 74% on the automatic route for Non Scheduled airlines; Chartered airlines; and Cargo airlines with no direct or indirect participation by foreign airlines in non-scheduled airlines and chartered airlines. NRI investment would be allowed up to 100% on the automatic route
(iii) To allow FDI up to 74% on the automatic route for Ground Handling Services subject to sectoral regulations and security clearance. NRI investment would be allowed up to 100% on the automatic route.
(iv) To allow FDI up to 100% on the automatic route for Maintenance and repair organizations; flying training institutes; technical training institutions; and helicopter services / seaplane services in the aviation sector requiring DGCA approval.
II Petroleum & Natural Gas:
(i) to delete the condition of compulsory divestment of up to 26% equity in favour of Indian partner (s) / public within 5 years for actual trading and marketing of petroleum products.
(ii) To increase the equity cap from 26% to 49% with prior approval of FIPB in petroleum refining by PSUs. However, it does not envisage or contemplate disinvestment or dilution in the existing PSUs.
III Commodity Exchanges:
(a) To allow FDI upto 26% and FII upto 23% in Commodity Exchanges and subject to no single investor holding more than 5%.
IV Credit Information companies:
(i) To allow foreign investment up to 49% with prior government approval in Credit Information Companies subject to following conditions:
(a) FDI up to 49% will be allowed with specific approval of the Government and regulatory clearance from RBI
(b) FII investment will be permitted up to 24% only in the CICs listed at the Stock Exchanges, within the overall limit of 49% for foreign investment.
(ii) To delete ‘Credit Reference Agencies’ from the list of Non Banking Finance Companies (NBFC) activities permitted for FDI up to 100% on the automatic route.
V. FDI in Mining of Titanium bearing minerals and ores and its value addition:
(i) To allow FDI up to 100% with prior Government approval in Mining and mineral separation of titanium bearing minerals and ores, its value addition and integrated activities subject to the sectoral regulations (including Mines and Minerals (Development & Regulartions) Act 1957) and the following conditions for mineral separation:
(a) FDI up to 100% shall be allowed for mineral separation only if value addition facilities are set up within India alongwith transfer of technology;
(b) Disposal of tailings during the mineral separation shall be carried out in accordance with regulations framed by the Atomic Energy Regulatory Board such as Atomic Energy (Radiation Protection ) Rules, 2004 and the Atomic Energy (Safe Disposal of Radioactive Wastes) Rules, 1987.
VI Industrial Parks :
Clarifications will be issued that provisions of Press Note 2(2005) would not apply to Industrial Parks.
VII Applicability of conditions for FDI in construction development projects as per Press Note 2(2005) for registered FIIs:
To issue a clarification to the effect that investments by registered FIIs under the Portfolio Investment Scheme, would be distinct from FDI and as such would be outside the purview of conditionalities specified in Press Note 2(2005).
The approval would help in higher FDI inflows through liberalization of the FDI policy and reduction of levels of approvals, which are no longer worthwhile.
| For more information |
Ministry of External Affairs: http://www.indiainbusiness.nic.in |
| Department of Industrial Policy and Promotion: http://dipp.gov.in |
| Department of Commerce: http://commerce.nic.in |
| Ministry of Finance: http://www.finmin.nic.in |
| Investment Commission of India: http://www.investmentcommission.in |
| India Brand Equity Foundation: http://www.ibef.org/ |
| Reserve Bank of India: http://www.rbi.org.in |
| Confederation of Indian Industry: http://www.ciionline.org/ |
| Federation of Indian Chambers of Commerce and Industry: http://www.ficci.com |
| National Stock Exchange: http://www.nseindia.com |
| Bombay Stock Exchange: http://www.bseindia.com |
| Securities and Exchange Board of India: http://www.sebi.gov.in |
| Public Private Partnerships in India: http://www.pppinindia.com |