FDI IN INDIA

Hinzugefügt: 2026-05-30

[00:01:11]Good morning, friends.

[00:01:13]Welcome for the today's class.

[00:01:16]Let me introduce the class for today.

[00:01:20]This topic which we are going to discuss is business environment and law.

[00:01:27]It is one of the important topic which is covered as BBA and MBA courses.

[00:01:36]Now, let's get into the topic.

[00:01:43]Now, before starting this class, I would like to give the importance and significance of business environment and its impact.

[00:01:53]Now, particularly, whenever you are thinking about business environment from the business perspective, so it should focus more on economic growth. So, the major issue which the every business organization has to think is its economic growth. Now, what exactly the economic growth case? So, economic growth provides capital for infrastructure, manufacturing, and services.

[00:02:22]Particularly, it boost gross domestic product GDP and national income. Now, coming to second important point, employment generation. So, this is there from many years. When India got independence in 1947, many policies has been thinking about employment generation because this is one of the major drawback of Indian economy. So, every policy they keep it as employment generation. Now, how this way focus more on it creates a direct and indirect job opportunities.

[00:02:56]Encourages skill development and training for the workforce. And third important point is the technology transfer. So, the technology transfer brings advanced technology, innovation, and management practices. Improves productivity and competitiveness of Indian industries. And coming to fourth and most important significant point is it improves balance of payments. So, inflow of foreign currency strengthen forex reserves.

[00:03:23]Reduces dependency on external borrowings. So, these are the most important significant things. So, before we enter into this class. So, with this we would like to go with the the next and continuation.

[00:03:41]Right. Now, fifth one. Most important fifth one. So, this by this we can also develop the infrastructure. So, particularly when India got independence in 1947, India is facing a major problem of investment in telecom.

[00:03:56]And that is particularly the infrastructure growth roads, power, and urban infrastructure. It supports long-term sustainability development, and it boosts particularly exports. So, when India got independence, India is more dependent. India is more dependent. So, it it focused only on imports. So, it it focused only only on imports. But what PV Narasimha Rao showed that no, if you want to develop, we should stop imports.

[00:04:27]Imports need to be reduced. So, always try to focus more on boosting the exports. So, many foreign firms use India as a manufacturing hub. And imports exports increase exports earning the global market business. So, coming to next point, market efficiency.

[00:04:45]Increase competition, reducing monopolies, improves quality of goods and services for consumers, and particularly the next and most important is regional development.

[00:04:57]How these regional development is going to be increased? So, with this these are the major things what we need to consider as far as the business environment is concerned.

[00:05:09]Now, we'll move to the next part.

[00:05:13]Yes.

[00:05:14]Now, FDI.

[00:05:17]Now, how important FDI is as of that data. So, this is the data what we got from 2025.

[00:05:24]So, now coming to foreign direct investment. Now, gross FDI inflows has been increased to 8.8 billion in April 2000 25. Now, out of that 5.9 billion is from March 2025, and 7.2 billion is from April 2024.

[00:05:45]So, net FDI inflows is 3.9 billion. So, global perspective on investment, India has been ranked the 16th globally in FDI inflows.

[00:05:57]First greenfield investment in the digital era economy among the top countries. So, these are the statistical data where clearly it says that how India is as far as the FDI in India is concerned.

[00:06:25]Now, the next one.

[00:06:27]So, who will do all these FDI? Foreign investment in the market entry is a strategic basis for subject to the policy in India. So, the government of India through and development or Department of Industrial Policy and Formation formulates a consolidated the process of FDI on yearly basis, which is defined a framework for FDI. So, most recently reforms were made for FDI policy in 2019. So, foreign investors can invest directly in India either on their own or through joint ventures in virtually all the sectors except in a very small list of activities where foreign investment is prohibited. So, this is the uh how the foreign investments will flow to India.

[00:07:30]I coming to the next one.

[00:07:33]What is the routes? How this can be uh done. So, now if we talk about how to invest in India, so what are the entry routes? What are the entry routes? So, particularly, we have two routes where you can enter into India through India.

[00:07:53]That is automatic route, and second one is pre-approval mission route. Now, under automatic route, what is the general rule says that so, no priority permission is required.

[00:08:03]No priority permission is required, and inform RBI within 30 days. 30 days of inflow or issue of shares. So, what is this automatic route means? Automatic route general rule general rule says that so, we no need to take any pre-approval mission from the government of India or anyone, but within 30 days, you should inform the Reserve Bank of India in two inflow or the issue of the shares. So, this is the the mode where we can call it as an automatic route, and this is by this we can give more opportunity to the global markets.

[00:08:43]Now, the second one is the getting the information getting the permission pre-approval. You should get the permission pre-approval before you enter into India in the form of foreign direct investment. So, government approval is needed, and decision we should get normally within 4 to 6 weeks. So, that you need to understand. And the FIPB Foreign Investment Promotion Board being replaced by Foreign Investment Facilitation Portal in May 2017.

[00:09:14]So, this is what the two routes we have.

[00:09:16]One is an automatic route, and another one is a pre-approval mission route.

[00:09:36]So, now, when we started understanding the FDI particularly we divide into four categories. Now category one is a sectors in which the FDI is permitted up to 100%.

[00:09:50]So you may ask a doubt sir under automatic route how much percentage of amount can be included here means the answer is there are certain sectors under category one FDI is permitted up to 100%. But there is one more category two it is permitted FDI is permitted 100% but through government rule. Means you should get permission. You should get permission from the government in the period. And category three is a sector in which FDI is permitted beyond certain limit with the the government. Now sector four. Now sector wherein FDI is permitted up to certain limit under both the government and automatic rules subject to to applicable laws.

[00:10:36]So this is what you need to understand.

[00:10:37]So investors are advised to check the government approval and other related the sector conditions in the latest FDI circular [clears throat] in section five. So this you need to check it.

[00:10:50]So this are the various categories category one category two category three and category means India is open the gates. India is opening its gates.

[00:11:00]India is opening its gates.

[00:11:02]So and open the gates and inviting the foreign investors to invest in India by two routes. One is an automatic route one is a government route. So government route needs approval.

[00:11:14]Government route needs an approval and the automatic route does not require the prior approval but within 30 days you should inform the Reserve Bank of India.

[00:11:28]The information should be given to the organization.

[00:11:38]Right. Now, what are allowed?

[00:11:42]In this slide, we are going to see what are allowed in the the government.

[00:11:47]FDI automatic Now, if you see that, so in automatic route, in automatic route, foreign entity does not require the prior approval of the government.

[00:11:59]RBI prior approval, but RBI you should inform RBI within how many days you should inform? You should inform 30 days. That that 30 days period clause is there particularly under the automatic route. Now, these are a few examples where I can quote here. So, medical devices under medical devices, you can go FDI up to 100%. Thermal power under thermal power also, you can go up to 100%. But under insurance, it was up to 49%, but recently it has been changed to 100% also. Infrastructure companies, particularly in the securities market, it is up to 49%. Ports and shipping is also there. Railway infrastructure is there. Pension up to 49%.

[00:12:47]Power exchanges and petroleum refining etc. Petroleum refining particularly by public sector units up to 49%. So, all these are the various sectors. So, all the various sectors where you can invest in India under medical devices, thermal power, insurance, infrastructure, ports and ships, railway infrastructure, pensions up to 49%, power exchange up to 49% and petroleum refining to 49%. Under all these categories, you can uh invest in India through which route?

[00:13:23]Through automatic route. So, automatic route does not require any prior approval of the government or RBI. But what RBI you should do within 30 days 30 days you should inform our issue of the shares and the information should be given to the RBI. This is what the automatic rule.

[00:14:02]All right. Now, next one government.

[00:14:06]Now, under the government route the foreign entity should compulsory take the approval.

[00:14:13]Should compulsory take the approval of the government. It should file the application through the foreign investment registration portal which facilitates single window clearance.

[00:14:24]Single window clearance. The application is forwarded to the respective ministry or department which then approves or rejects the application after after consultation with DIPP. Now, under the government route the foreign entity should compulsory take the approval of the government.

[00:14:42]It should file an application through the portal. So, it facilitates a single window maximum in three to four weeks you will get the approval. Now, coming to examples under government approval what are the things what we can do under broadcasting content services we can be more with that. Banking and public sector also we can do that. Food products, retailing and trading is also up to 100% you can encourage. Core investment companies also you can invest. Multi-branded retail trading is also up to 51% but single retail outlet you can go with 100%. Like mining and mineral separation of titanium bearing minerals and ores and satellite etc. So, these are the various categories where you can have the the automatic uh sorry, government approved.

[00:15:35]Right.

[00:15:36]Now, if you see the diagram here, easily you can see that automobile, IT, pharma, manufacturing, and airports. So, FDI is allowed via automatic route. So, approval uh from government is need not So, under automobile, you can have you can get approval easily.

[00:16:01]Isn't it? You'll get approval easily. In IT also, you will get approval easily.

[00:16:05]Pharma also, you will get approval easily. And airports, airports also, and manufacturing. Particularly, under these categories, you will get the approval.

[00:16:15]And because FDI is allowed through automatic route through automatic route, what we doesn't required we doesn't required any government approval. But what is most important is in 30 days, you should get you should inform to Reserve Bank of India. Isn't it? Information should be given to Reserve Bank of India. That you should keep it in the mind whenever any country they want to introduce it into the market.

[00:16:44]Right. Now, FDI is limited. FDI is limited and government approval from government is needed is telecom is there, defense is there, and media is there. Particularly, these are the things where we need the clear clearance.

[00:17:08]All right. So, if you see this diagram, FDI is not at all allowed.

[00:17:13]FDI is not at all allowed under lottery, gambling, tobacco, nuclear power. So, this FDI is not allowed. So, government of India, the government of India either with automatic route or the government approval will not accept will not accept the the foreign direct investment particularly in the lottery category or in the gambling category or the tobacco category.

[00:17:44]The government will not give the approval. So, these are the few sectors. These are the few sectors where you can have that FDI is So, friends, I'd like to recap what we studied in this this class.

[00:18:01]So, we started understanding the FDI in India, how important the foreign direct investment in India. And coming to the foreign direct investment when India got independence in 1947, many industrial policies and many five-year plans was taken by initiated by the government.

[00:18:24]So, majority of the government has focused more on the public sector investments, public sector undertakings.

[00:18:30]Priority was given to public sector. But when India faced a big problem in the year 1990, so India has a huge crisis, economic crisis. So, at that time P.V.

[00:18:41]Narasimha Rao and Manmohan Singh, these two intellectuals has brought a policy called new economic policy. And out of that new economic policy, we got one of the important concept called foreign direct investments. So, before that India has also opened the gates for foreign direct investment, but there are a lot of restrictions and then there are a lot of limitations are there for them. So, they we have lot of limitations for that particular concept. So, in 1990, when Nehru and the P.V.

[00:19:16]Narasimha Rao observed that, "No, if India want to develop, India want to come out from the situation, we need to open the gates. We need to open the gates by two different routes. One is an automatic route, one is a free of route." So, under automatic route, you can you can get approval. The automatic route you should you can get an approval within that two days, but initially, you can start your investment either directly or else you can start it with a joint venture or maybe mergers or acquisition. So, with the positive note, the Indian government in 1991 has introduced new industrial policy. So, in that new industrial policy, one of the important point was foreign direct investment in India. How well India can capitalize on the direct investment. So, India has done very well. India has done and India got very good foreign direct investments from the foreign countries, particularly from Mauritius, from Singapore, and USA. And all these top countries, we got the more number of FDI inflow to India.

[00:20:24]Because the policy makers believes that if India want to achieve if India want to achieve the targeted gross domestic product GDP, so focus should be more on focus should be more on how we meaning we can improve our gross domestic product. How Indian national income can be developed. So, to do that, most important is always a country's growth depends on exports. How good you are doing the exports at global level. How good you are doing the exports and how these exports will help you in achieving your and the targets of the government. So, this FDI in India played a key role and these are the various issues but and now I want to show but I want to show some statistical data from the government of India where you can get the data from this website. So, this website is very very important DI PP PIB. So, from this data I want to show how in which area we can have the DI's small as far as so Department of Industrial Policy and Promotion. So, I want to show Yes, this is the website.

[00:22:03]Yeah, go with publications.

[00:22:09]So, publication data is officially printed.

[00:22:14]Right, so here you can see a lot of data is there but here you can see the FDI.

[00:22:21]Foreign direct investment. You can see that we have foreign direct investment fact sheet. So, this is from 2025 to 2026. So, I want to show this particularly make the students to understand how good this data is useful how good the data is useful and how useful this data is there. So, I want to show them as a view mode.

[00:22:46]Yes.

[00:22:48]This is the view mode. We can see here.

[00:22:56]All right, so if you see the data here you see the data here?

[00:23:11]If you see the data here yeah?

[00:23:20]So country wise so share of top investing countries FDI inflow for the financial year. So here we can see that we have a data 2023-24 data is there. 24-25 is there. 25-26. So this is how we can show them. So if you see that country wise the good number of amount from 25 up to December 25 we are getting FDI from Singapore. Singapore is the top country where we are getting more FDIs. That is overall it is from 25% of the amount we are getting from Singapore. And the second it is followed by Mauritius. So Mauritius is getting 24%.

[00:24:07]And US in the third rank US is getting you from US we are getting 10% of the inflow. And the fourth position is Netherlands. Fifth position is Japan.

[00:24:18]Sixth is United Kingdom. Seventh is UAE.

[00:24:22]Eighth one is Cayman Islands.

[00:24:26]Ninth one is Cyprus and tenth one is Germany. So these are the top 10 countries. These are the top 10 countries where the FDI is flowing from their country to India.

[00:24:37]So it it shows clearly that FDI inflows cumulative wise it has been given in here. So this is data clearly indicates that so top five countries Singapore is number one. Mauritius is number two. But Singapore and Mauritius all together they are contributing almost 50%.

[00:24:58]We talk about Singapore and Mauritius.

[00:25:00]So, they are almost contributing They are almost contributing 50% of FDI in India as per 2025 26 April-December data.

[00:25:13]So, you see that how important the FDI is we're getting from Singapore Mauritius. And next is USA.

[00:25:21]Now, coming to next one.

[00:25:24]Yes, next and most important is sector.

[00:25:27]Now, first we have discussed about the country that Now, which sector we are getting more inflows. Now, coming to that, as per the official data from Department of Foreign Promotion and Industry Trade. So, this is the data where you can get clearly.

[00:25:44]Right now, you get that service sector.

[00:25:48]Service sector is a top sector which we are getting 16% of 16% of its FDI is from the service sector.

[00:25:57]So, what we can say that the service sector Now, what service sector Service sector includes You see the data here.

[00:26:07]Now, here there is a clear data is given here at the bottom. Service sector includes financial banking insurance non-financial or business outsourcing R&D courier and testing and analysis. So, these are all the things which you will comes under the service sector. Service sector is a very big sector, but 60% of the contribution we are getting from the service sector. Now, after service sector, it is followed by computer and software and hardware. Now, computer software hardware is also almost it is contributing equal to the service sector.

[00:26:46]>> [clears throat] >> Now, coming to third one is the trading.

[00:26:48]So, trading is contributing 7% of inflows in India. Now, coming to next fourth one, it goes with telecommunication. As we all know that from the last 15 years, 20 years, the telecommunication is growing like anything.

[00:27:02]So that you need to focus on telecommunication. And fifth one is automobile.

[00:27:07]Now automobile industry is ruling in India with 5% and construction infrastructure is also with 5% and particularly construction development like townships, housing, building, build up infrastructure and other things. Our eighth position is followed by drugs and pharmaceuticals. Now in Indian pharmaceutical companies are also doing well. So with 3%. Now ninth one is non-conventional energy and tenth one is chemicals other than fertilizers. So all these are top 10 friends. So top 10 sectors.

[00:27:41]So we are discussing the data, the attracting sectors, the most attracting sectors.

[00:27:48]Yeah, in the previous slide we have discussed about countries. So Mauritius is spending, Singapore is spending, USA, Japan. All these countries are investing in India. Now where they are investing?

[00:28:00]Either they are investing in service sector, either they are investing in computer software and hardware sector, either sometimes they are investing in telecommunication or automobiles. So whatever. So these are the top 10 attracting sectors for the developing countries where they can easily they can put their money into. So if you see that service sector and the computers and hardware, almost they are crossing 37% of FDI is only through service sector.

[00:28:29]And service sector means not only one sector, friends. As just now I said, it can be banking, it can be financial, it can be insurance, it can be R&D, it can be outsourcing and sometimes it can be testing and analysis also.

[00:28:42]So this can be done in India. So these are the top 10 sectors where uh the world is thinking that this is the most attracting destination in India where we can put our money in the Indian economy. Now, next after that I want to show Yes, very very important. State-wise data.

[00:29:05]So, if the country like India, we want to see that country is a most prominent country at the global map, so each and every state should also develop. Each and every state should also develop.

[00:29:19]Now, coming to top 10 states. Now, Maharashtra is a dominating state. Maharashtra is a dominating state which is attracting highest FDI inflow.

[00:29:31]Because Maharashtra government is providing certain policies, encouraging certain certain things where these things are more important.

[00:29:47]Where we should focus more on highest inflow. Now, if you see that 31% 31% of FDI, 31% of FDI is focusing more on 31% of FDI is focusing more on in Maharashtra. Means companies from Mauritius, companies from Singapore, companies from Japan and USA, they want to invest in particularly in India in Maharashtra state of 31% means policies and the government encouragement there is more than compared with the other states.

[00:30:22]Now, next is followed by Karnataka. Even common Karnataka government is also encouraging more FDI close 21%.

[00:30:30]Next, the third one Gujarat. Gujarat is attracting 15% and which is followed by Delhi, Tamil Nadu, Haryana and Telangana. Now, Telangana is in seventh place.

[00:30:43]Now, Telangana government is not that much attracting when compared with the Maharashtra because uh the Telangana government should make certain policies which attracts more number of uh inflows, particularly more number of inflows to uh India.

[00:31:00]In in particularly India and particularly to Telangana. So, Telangana it is only a a 4% This is very less, but it should grow high. It should increase in the coming years. Now, after Telangana, it is followed by Rajasthan, Uttar Pradesh, and Jharkhand. So, these are the top These are the top 10 states. Top 10 states are union union territories which is attracting more FDIs to India. So, friends, till now we have discussed about uh the top 10 countries from where the money is flowing. Number one. Number two is which sector is attracting more like telecommunication, automobile, computer software and hardware service sector.

[00:31:46]Which sector is attracting more? Now, coming to third and most important is which state.

[00:31:53]Which state has more number of uh inflows? Which state has more number of inflows? Isn't it? So, that is what you need to understand. So, Maharashtra is leading top. Maharashtra is leading top here. Maharashtra is leading top here.

[00:32:13]Maharashtra is leading top. Isn't it?

[00:32:16]So, here what you need to understand is other states and other states which was not there in the top 10 also think their state should also invite certain encourage certain FDIs uh like how Maharashtra and Karnataka and Gujarat is doing.

[00:32:37]So, uh like uh states like Telangana and states should also focus more on inviting uh more of these to their state.

[00:32:48]Right. Now, if you see that this is year-wise. Year-wise data is a most important data here. Uh so, all the years previous from 2000 to 2001 to 2025 since data is given here. So, statistical data. This is how the amount of uh FDI inflow equity-wise also data is given.

[00:33:11]And even amount of amount. Now, I have said that Singapore Mauritius, USA they are getting more amount. And in that more amount, how the government is getting the money.

[00:33:24]Singapore as we said, they are getting more amount from Singapore, Mauritius, and USA. And here we have all the controls. We we does not I'm not only focusing on 10, but here we can get all the uh uh countries which India is doing.

[00:33:40]Great. So, we have data of all the data.

[00:33:43]And all these data you'll get from Department of uh Promotion and uh Industry and Internal. So, this is the data I want to show share with you.

[00:33:54]Now, even you can also get the data in the graphical mode also.

[00:33:58]If you want any data, that you can also get it from the uh the graph graphical way also. If you want to get any bar chart or diagram, you can also look it. And even you can get the annual FDI graphs. Isn't it? Graphs also. I want to show is as follows. This is the graph.

[00:34:19]So, these are the graph in graphical way also we can present. Like how calendar year-wise the data can be presented.

[00:34:27]Yes, this is how the countries wise. Isn't it? like how Mauritius, Singapore And this is the data like which sector is doing more.

[00:34:41]Like I said, service sector and computers are almost doing neck to neck.

[00:34:45]This is the share of manufacturing sector in the FDI inflows.

[00:34:52]Yes.

[00:34:53]Like you show that how the equity inflow and the total inflow. So, this data will give a clear picture about how equity is doing and this blue line This blue line indicates equity inflow and this red line indicates total inflow. So, this is the data clearly mentioned in USD dollars.

[00:35:15]So, and this data is there from 2000 to 25 data is available. So, data is available in the website, friends. And officially, you can also get this data.

[00:35:28]And it's free of cost. You can get the data. So, these are the data here.

[00:35:34]And even all the data you will get it.

[00:35:38]So, friends, this is how the FDI and how well the Indian government is encouraging Indian government is encouraging the FDI policy.

[00:35:56]FDI policy and what are the routes.

[00:35:59]So, quickly I want to recap what we studied in today's class. So, friends, we started understanding what is foreign direct investment in India and what are the various routes of foreign direct direct investments in India. How countries are believing India in investing their money in India. And what are the routes? How from 1947 to till now how the Indian government has opened the gates. Now Indian government is encouraging the policies and how the Indian government is more from the traditional way to the distillation way. But when India faced a big problem in 1990, thanks to P.V. Narasimha Rao and Manmohan Singh and they they made a very good economic reforms and industrial policies 1991 where they they came with a concept called foreign direct investment and one more concept they also discussed was LPG, liberalization, privatization, globalization.

[00:37:03]This particular concept has opened the gates and has opened the gates uh the Indian Indian economy to the world that come to India and support India in building economically if India want to strong, so India is inviting other countries to open and inviting them and asking them to uh not to get in So, these are what we have discussed and we also focused on the entry routes. We have discussed automatic route and pre-approval. Under automatic route, we need not to get any permission earlier permission. But 30 days we need to inform to RBI. But under pre-approval, we should get uh definite approval from the government because there are certain sectors where you can't close your eyes and give the permission because it will be which shows impact on India security system, Indian uh other security issues will arise. So, the government of India has kept certain sectors with them only in promoting the international growth. So, the basic idea was to export. The basic idea why the government of India is encouraging the foreign direct investment means encourage more exports to other countries where our foreign reserves will also will develop. Foreign reserves will grow. If foreign reserves will grow, there is a possibility that uh Indian government uh focus more on uh to enter into the global markets. So, it's a two-way means if other countries are investing in India means even we got an opportunity, we can also invest in the other countries. So, it's a two-way process where two countries like country like developing nations like India can easily uh enter into the international markets.

[00:38:54]This is how uh the foreign direct investment. And immediately after that, after theoretical part, we also uh entered into the uh the government website and we have seen some statistical data 2020 26 data. So, in which country and which area the government of India is getting more money, the inflow of FDI inflow. So, particularly when we when we talk about the FDI, so we have discussed the top 10 countries from where these top 10 countries were getting the money like Singapore, Mauritius, uh USA, uh Japan. Like these these are the few countries where they are getting almost 50 to 60% of FDI inflow to India through these countries. Now, in the second next category, we also discussed that in which sector uh the it is more attracting because if someone want to invest in India, that sector should attract more or sector should attract more. So, uh like that, we have discussed in many issues uh which are more important which are more important particularly which are more important particularly in building India. So, friends, thank you so much for patient listening.

[00:40:18]So, tomorrow we'll come with another topic. Thank you so much for joining today's class. Thank you.

[00:40:29]We'll meet again in the next class.

[00:40:32]Thank you so much.