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Investment

The salient features of the investment potential of India are listed below which make Brand India an attractive destination.

  • Fourth largest economy in the world (over $3 trillion) based on Purchasing Power Parity (World Bank)
  • Rated as the best BPO destination and 3rd most likely FDI destination in the world (AT KEARNEY - http://www.atkearney.com/main.taf?p=1,5,1,151
  • Best technology licensing regime (WEF’s Global Competitiveness Report, 2003)
  • Rated among the most favourite investment destinations (UNCTAD, JETRO, JBIC, Deutsche Bank, EIU, etc.)
  • Major destination for foreign venture capital funds (Far Eastern Economic Review)
  • 250+ Fortune 500 companies have made India a base for R&D and other BPO activities. GE’s largest R&D Center outside US
  • Large pool of world class scientific and technical manpower - 350,000 Engineers, 2 Million other graduates, 200,000 Post Graduates and 9000 PhD's every year
  • Among the only three Asian countries with super computing competence
  • Committed to the rule of law - 1/6th of Humanity knit together in an open and democratic polity.
  • English as the working/legal language
  • Will have the largest and youngest working population in the world in the next few decades
  • Among the top 5 Tourist Destinations.
  • Almost all areas in the Services, Infrastructure and Manufacturing sectors open to 100% FDI under Automatic Route
  • Strong Manufacturing Base

Foreign Investment

  • FDI approved in 2003 is US$ 3.1 billion.
  • The major investor countries are US, Mauritius, UK, Japan, South Korea, Germany, Netherlands, Australia, France, Malaysia, Singapore and Italy.
  • Even Chinese firms have started investing in India. For example, ZTE of China is investing $ 50 million in the telecom sector. Haier is investing 200 million dollars to manufacture refrigerators and set up a Rand D facility.
  • Sector-wise break-up of FDI is as follows: fuels -26.7%, telecom-19.6%, electrical equipments-9.9%, transportation-7.5%, services-6.5% and metallurgical industry-5.3%
  • Major FDI destinations are Maharashtra-17.4%, Delhi-12%, Tamilnadu-8.6%, Karnataka-8.2%, Gujarat-6.5%, and Andhra Pradesh- 4.6%
  • MNCs , which have invested in India include GE, Dupont, Eli Lily, Monsanto, Caterpillar, GM, Hewlett Packard, Motorola, Bell Labs, Daimler Chrysler, Intel, Texas Instruments, Cummins, Microsoft, IBM, Toyota, Mitsubishi, Samsung, LG, Novartis, Bayer, Nestle, Coca Cola and McDonalds.
  • FII investment increased by almost ten times in 2003 reaching a record US$ 7.59 billion. FII investment in the first quarter of 2004 stood at $ 4 billion. Cumulative FII investment since the equity market was opened in the early 1990s is $ 25 billion. The number of registered FIIs in India is 540.
  • CALPERS (California Public Employees Retirement System ), the world's biggest pension fund with a base of US$ 165 billion has recently decided to include India in their list of countries for investment.
  • US$ 6.5 billion of the FII funds in 2003 went into equities FIIs have 50 percent stake in one third of the 30 companies which make up the BSE-30 Index and hold about 10 percent of the stakes in public sector undertakings.

Policies and Procedures

  • The Common Minimum Programme of the government states that "FDI will continue to be encouraged and actively sought particularly in areas of infrastructure, high technology and exports where local assets and employment are created on a significant scale. The country needs and can easily absorb at least two to three times the present level of FDI inflows".
  • Foreign investment can be done in all sectors except 3 sectors: retail trade, agriculture plantation except tea plantation and gambling, betting & lottery. In most of the sectors foreign investors can go through the Automatic Route without need for any approvals. The investor has to merely keep the Reserve Bank of India informed of the flow of funds and issue of shares. In some sectors ( examples: courier services, gas pipelines and trading ), prior approval is needed
  • There are maximum limits on foreign investment in some sectors. Examples: telecommunications (49%), insurance (26%), banking (74%), mining (74%) aviation (49%),defence equipments(26%), cable network(49%),trading (51%),print media(26%) and small-scale industries (24%). FDI in excess of 24% is permitted in small-scale industry at 50% export obligation.
  • Prior approval of the government is needed for those cases, which need industrial license (examples: alcoholic beverages, cigarettes, defence equipments, gunpowder and hazardous chemicals) and those involving investment beyond the maximum limits. Such cases are cleared by the Foreign Investment Promotion Board in a transparent, efficient, time-bound and predictable manner. The FIPB meets once a week.
  • The Department of Industrial Policy and Promotion is the nodal agency for information and assistance to foreign investors. Their website www.dipp.nic.in has comprehensive information for foreign investors and gives weekly update on proposals for foreign investment under consideration. It also gives information on projects available for foreign investors and contains online applications for clearances.
  • The various state governments in India offer competitive incentives and attractions to foreign investors.
  • ntellectual Property Rights Laws of India are well on track with the rest of the world. With the third amendment to the already substantially revised Patents Act by end 2004, India would be TRIPS-Compliant before the deadline of 1st January, 2005.
  • Capital account convertibility for foreign investors.

Special Economic Zones

It is an initiative taken by India to provide a boost to foreign investment. These zones are like foreign territories where the raw material imports are freely allowed for manufacturing. State-of-the-art infrastructure is available for the companies along with all other facilitation required for faster project realisation. http://sezindia.nic.in/

Belgium

Relevant information on Belgian investment climate can be sourced at the following links.

Luxembourg

Relevant information on investment climate in Luxembourg can be sourced at the following links.

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