ASSIGNMENT- 1

Foreign Direct Investment(FDI)

ACADEMIC SESSION: 2020-2023

SUBMITTED BY: SUBMITTED TO:

SUBMITTED TO:
JOSEPH SCHOOL OF BUSINESS STUDIES & COMMERCE

Sam Higginbottom University of Agriculture, Technology and

an investor, company, or government from another country. Generally, the term is used to

describe a business decision to acquire a substantial stake in a foreign business or to buy it

outright to expand operations to a new region. The term is usually not used to describe a stock

investment in a foreign company alone. FDI is a key element in international economic

integration because it creates stable and long-lasting links between economies.

Companies or governments considering a foreign direct investment (FDI) generally consider

target firms or projects in open economies that offer a skilled workforce and above-average

growth prospects for the investor. Light government regulation also tends to be prized. FDI

frequently goes beyond mere capital investment. It may include the provision of management,

technology, and equipment as well. A key feature of foreign direct investment is that it

establishes effective control of the foreign business or at least substantial influence over its

decision making. The net amounts of money involved with FDI are substantial, with more than

$1.8 trillion of foreign direct investments made in 2021. In that year, the United States was the

top FDI destination worldwide, followed by China, Canada, Brazil, and India. In terms of FDI

outflows, the U.S. was also the leader, followed by Germany, Japan, China, and the United

Kingdom. FDI inflows as a percentage of gross domestic product (GDP) is a good indicator of a

nation’s appeal as a long-term investment destination. The Chinese economy is currently

smaller than the U.S. economy in nominal terms, but FDI as a percentage of GDP was 1.7% for

China as of 2020, compared with 1.0% for the U.S. For smaller, dynamic economies, FDI as a

percentage of GDP is often significantly higher: e.g., 110% for the Cayman Islands, 109% for

Hungary, and 34% for Hong Kong (also for 2020).

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FDI is an investment in the form of a controlling ownership in a business, in real estate or in

productive assets such as factories in one country by an entity based in another country. It is

thus distinguished from a foreign portfolio investment or foreign indirect investment by a

notion of direct control.

The origin of the investment does not impact the definition, as an FDI: the investment may be

made either "inorganically" by buying a company in the target country or "organically" by

expanding the operations of an existing business in that country.

Broadly, foreign direct investment includes "mergers and acquisitions, building new facilities,

reinvesting profits earned from overseas operations, and intra company loans". In a narrow

sense, foreign direct investment refers just to building new facility, and a lasting management

interest (10 percent or more of voting stock) in an enterprise operating in an economy other

than that of the investor. FDI is the sum of equity capital, long-term capital, and short-term

capital as shown in the balance of payments. FDI usually involves participation in management,

joint-venture, transfer of technology and expertise. Stock of FDI is the net (i.e., outward FDI

minus inward FDI) cumulative FDI for any given period. Direct investment excludes investment

through purchase of shares (if that purchase results in an investor controlling less than 10% of

the shares of the company). FDI, a subset of international factor movements, is characterized

by controlling ownership of a business enterprise in one country by an entity based in another

country. Foreign direct investment is distinguished from foreign portfolio investment, a passive

investment in the securities of another country such as public stocks and bonds, by the element

of "control". According to the Financial Times, "Standard definitions of control use the

internationally agreed 10 percent threshold of voting shares, but this is a grey area as often a

smaller block of shares will give control in widely held companies. Moreover, control of

technology, management, even crucial inputs can confer de facto control."

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Working of FDI
Organizations looking forward to FDI will select only those businesses that have an efficient and

skilled workforce. Usually, organizations look for such businesses in countries with an open

economy. This is because, in such open markets, investor growth prospects are above average.

Another important factor to select a foreign location for FDI is tax regulations. Naturally, those

places where tax regulations are light are preferred.

The scope of foreign direct investment is wider and bigger than capital investment. It includes

the following:

 Provision of management

 Provision of technology

 Provision of equipment

 Establishment of a substantial level of control over foreign business

 Ability to impact the decision-making of the foreign business

Significance of FDI
Foreign direct investment is very important for developing nations. In order to expand

internationally, the organizations of such nations need foreign funding. Such funding allows

these organizations to spread sales internationally. Moreover, with foreign direct investment,

the developing nations get funding for the following:

 Infrastructure

 Energy

 Water

 Combating climate change effects

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That’s not all; FDI opens up the pathway for developing trade agreements. One of the best

examples here is NAFTA, the North Atlantic Free Trade Agreement (NAFTA).

Foreign direct investment examples can be:

 Mergers

 Acquisitions

 Partnerships

The partnerships in FDI can be in various sectors such as follows:

 Retail

 Services

 Logistics

 Manufacturing

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FDI in India
The investment climate in India has improved tremendously since 1991 when the government

opened up the economy and initiated the LPG strategies.

 The improvement in this regard is commonly attributed to the easing of FDI norms.

 Many sectors have opened up for foreign investment partially or wholly since the

economic liberalization of the country.

 Currently, India ranks in the list of the top 100 countries in ease of doing business.

 In 2019, India was among the top ten receivers of FDI, totaling $49 billion inflows, as per

a UN report. This is a 16% increase from 2018.

 In February 2020, the DPIIT notifies policy to allow 100% FDI in insurance

intermediaries.

 In April 2020, the DPIIT came out with a new rule, which stated that the entity of Nay

Company that shares a land border with India or where the beneficial owner of

investment into India is situated in or is a citizen of such a country can invest only under

the Government route. In other words, such entities can only invest following the

approval of the Government of India

 In early 2020, the government decided to sell a 100% stake in the national airline’s Air

India.

FDI is an important monetary source for India's economic development. Economic liberalization

started in India in the wake of the 1991 crisis and since then, FDI has steadily increased in the

country. India today is a part of top 100-club on Ease of Doing Business (EoDB) and globally

ranks number 1 in the Greenfield FDI ranking.

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Regulatory Framework for FDI in India
In India, there are several laws regulating FDI inflows. They are:

 Companies Act

 Securities and Exchange Board of India Act, 1992 and SEBI Regulations

 Foreign Exchange Management Act (FEMA)

 Foreign Trade (Development and Regulation) Act, 1992

 Civil Procedure Code, 1908

 Indian Contract Act, 1872

 Arbitration and Conciliation Act, 1996

 Competition Act, 2002

 Income Tax Act, 1961

 Foreign Direct Investment Policy (FDI Policy)

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Routes through which India gets FDI:-
Automatic route: The non-resident or Indian company does not require prior nod of the RBI or

government of India for FDI.

Govt route: The government's approval is mandatory. The company will have to file an

application through Foreign Investment Facilitation Portal, which facilitates single-window

clearance. The application is then forwarded to the respective ministry, which will

approve/reject the application in consultation with the Department for Promotion of Industry

and Internal Trade (DPIIT), Ministry of Commerce. DPIIT will issue the Standard Operating

Procedure (SOP) for processing of applications under the existing FDI policy.

Sectors which come under the ' 100% Automatic Route' category are
Agriculture & Animal Husbandry, Air-Transport Services (non-scheduled and other services

under civil aviation sector), Airports (Greenfield + Brownfield), Asset Reconstruction

Companies, Auto-components, Automobiles, Biotechnology (Greenfield), Broadcast Content

Services (Up-linking & down-linking of TV channels, Broadcasting Carriage Services, Capital

Goods, Cash & Carry Wholesale Trading (including sourcing from MSEs), Chemicals, Coal &

Lignite, Construction Development, Construction of Hospitals, Credit Information Companies,

Duty Free Shops, E-commerce Activities, Electronic Systems, Food Processing, Gems & Jewelers,

Healthcare, Industrial Parks, IT & BPM, Leather, Manufacturing, Mining & Exploration of metals

& non-metal ores, Other Financial Services, Services under Civil Aviation Services such as

Maintenance & Repair Organizations, Petroleum & Natural gas, Pharmaceuticals, Plantation

sector, Ports & Shipping, Railway Infrastructure, Renewable Energy, Roads & Highways, Single

Brand Retail Trading, Textiles & Garments, Thermal Power, Tourism & Hospitality and White

Label ATM Operations.

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Sectors which come under up to 100% Automatic Route' category are

 Infrastructure Company in the Securities Market: 49%

 Insurance: up to 49%

 Medical Devices: up to 100%

 Pension: 49%

 Petroleum Refining (By PSUs): 49%

 Power Exchanges: 49%

Government route
Sectors which come under the 'up to 100% Government Route' category are

 Banking & Public sector: 20%

 Broadcasting Content Services: 49%

 Core Investment Company: 100%

 Food Products Retail Trading: 100%

 Mining & Minerals separations of titanium bearing minerals and ores: 100%

 Multi-Brand Retail Trading: 51%

 Print Media (publications/ printing of scientific and technical magazines/ specialty

journals/ periodicals and facsimile edition of foreign newspapers): 100%

 Print Media (publishing of newspaper, periodicals and Indian editions of foreign

magazines dealing with news & current affairs): 26%

 Satellite (Establishment and operations): 100%

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FDI prohibition
There are a few industries where FDI is strictly prohibited under any route. These industries are:

 Atomic Energy Generation

 Any Gambling or Betting businesses, Lotteries (online, private, government, etc)

 Investment in Chit Funds

 Agricultural or Plantation Activities (although there are many exceptions like

horticulture, fisheries, tea plantations, Pisciculture, animal husbandry, etc)

 Housing and Real Estate (except townships, commercial projects, etc)

 Trading in TDR’s

 Cigars, Cigarettes, or any related tobacco industry

FDI inflow
During the fiscal ended March 2019, India received the highest-ever FDI inflow of $64.37 billion.
The FDI inflows were $45.14 billion during 2014-15 and $55.55 billion in the following year.

Types of Foreign Direct Investment

Horizontal FDI- a company establishes the same type of business operation in a foreign country

as it operates in its home country. A U.S.-based cell phone provider buying a chain of phone

stores in China is an example.

Vertical FDI- a business acquires a complementary business in another country. For example, a

U.S. manufacturer might acquire an interest in a foreign company that supplies it with the raw

materials it needs.

Conglomerate FDI- a company invests in a foreign business that is unrelated to its core

business. Because the investing company has no prior experience in the foreign company’s area

of expertise, this often takes the form of a joint venture.

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Difference between foreign direct investment (FDI) and foreign portfolio
investment (FPI):-
Foreign portfolio investment (FPI) is the addition of international assets to the portfolio of a

company, an institutional investor such as a pension fund, or an individual investor. It is a form

of portfolio diversification, achieved by purchasing the stocks or bonds of a foreign company.

Foreign direct investment (FDI) instead requires a substantial and direct investment in, or the

outright acquisition of, a company based in another country, and not just their securities. FDI is

generally a larger commitment, made to enhance the growth of a company. But both FPI and

FDI are generally welcome, particularly in emerging nations. Notably, FDI involves a greater

responsibility to meet the regulations of the country that hosts the company receiving the

investment.

Advantages of FDI:
The following are the key advantages of foreign direct investment in India

1. FDI stimulates economic development

It is the primary source of external capital as well as increased revenues for a country. It often

results in the opening of factories in the country of investment, in which some local equipment

– be it materials or labor force, is utilized. This process is repeated based on the skill levels of

the employees.

2. FDI results in increased employment opportunities

As FDI increases in a nation, especially a developing one, its service and manufacturing sectors

receive a boost, which in turn results in the creation of jobs. Employment, in turn, results in the

creation of income sources for many. People then spend their income, thereby enhancing a

nation’s purchasing power.

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3. FDI results in the development of human resources

FDI aids with the development of human resources, especially if there is transfer of training,

technology and best practices. The employees, also known as the human capital, are provided

adequate training and skills, which help boost their knowledge on a broad scale. But if you

consider the overall impact on the economy, human resource development increases a

country’s human capital quotient. As more and more resources acquire skills, they can train

others and create a ripple effect on the economy.

4. FDI enhances a country’s finance and technology sectors

The process of FDI is robust. It provides the country in which the investment is occurring with

several tools, which they can leverage to their advantage. For instance, when FDI occurs, the

recipient businesses are provided with access to the latest tools in finance, technology and

operational practices. As time goes by, this introduction of enhanced technologies and

processes get assimilated in the local economy, which make the fin-tech industry more efficient

and effective.

5. Second order advantages

Apart from the above points, there are a few more we cannot ignore. For instance, FDI helps

develop a country’s backward areas and helps it transform into an industrial centre. Goods

produced through FDI may be marketed domestically and also exported abroad, creating

another essential revenue stream. FDI also improves a country’s exchange rate stability, capital

inflow and creates a competitive market. Finally it helps smoothen international relations.

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Investment climate in India has improved considerably since the opening up of
the economy in 1991.
This is primarily attributed to ease in FDI rules in India. India today is a part of the top 100 clubs

on Ease of Doing Business (EoDB).FDI inflows in India stood at $45.15 billion in 2014-15 and

have consistently increased since then. Moreover, total FDI inflow grew by 65.3%, i.e. from

$266.21 billion in 2007-14 to $440.01bn in 2014-21 and FDI equity inflow also increased by

68.6% from $185.03 billion during 2007-14 to $312.05 billion (2014-21).

India received the highest annual FDI inflows of $84,835 million in FY 21-22 overtaking last

year’s FDI by $2.87 bn. Also, FDI equity inflow in FY 2021-22 was $ 59,825 million.

FDI Equity inflows in Manufacturing Sectors have increased by 76% in FY 2021-22 ($ 21.34 bn)

compared to previous FY 2020-21 ($ 12.09 bn).

Total FDI inflows in the country in the last 22 years (April 2000 - March 2022) are $ 847 bn while

the total FDI inflows received in the last 8 years (April 2014- March 2022) was $ 523 bn which

amounts to nearly 40% of total FDI inflow in last 22 years.

In FY 2014-15, FDI inflow in India stood at mere $ 45.15 bn, which increased to $ 60.22 bn in

2016-17 and further to the highest ever annual FDI inflow of $ 83.57 bn reported during the FY

2021-22.

Total FDI inflows in the country in the FY 2022 (April - December) is $ 55.27 Bn and total FDI

equity inflows stands at $ 36.74 Bn.

Singapore (27.01%), USA (17.94%), Mauritius (15.98%), Netherland (7.86%) and Switzerland

(7.31%) emerge as top 5 countries for FDI equity inflows into India FY 2021-22.

Top 5 sectors receiving highest FDI Equity Inflow during FY 2021-22 are Computer Software &

Hardware (24.60%), Services Sector (Fin., Banking, Insurance, Non Fin/Business, Outsourcing,

R&D, Courier, Tech. Testing and Analysis, Other) (12.13%), Automobile Industry (11.89%),

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Trading 7.72% and Construction (Infrastructure) Activities (5.52%).

Top 5 States receiving highest FDI Equity Inflow during FY 2021-22 are Karnataka (37.55%),

Maharashtra (26.26%), Delhi (13.93%), Tamil Nadu (5.10%) and Haryana (4.76%).

Limitations of FDI:-
Disappearance of cottage and small scale industries:

Some of the products produced in cottage and village industries and also under small scale

industries had to disappear from the market due to the onslaught of the products coming from

FDIs. Example: Multinational soft drinks.

Contribution to the pollution:

Foreign direct investments contribute to pollution problem in the country. The developed

countries have shifted some of their pollution-borne industries to the developing countries. The

major victim is automobile industries. Most of these are shifted to developing countries and

thus they have escaped pollution.

Exchange crisis:

Foreign Direct Investments are one of the reason for exchange crisis at times. During the year

2000, the Southeast Asian countries experienced currency crisis because of the presence of

FDls. With inflation contributed by them, exports have dwindled resulting in heavy fall in the

value of domestic currency. As a result of this, the FDIs started withdrawing their capital leading

to an exchange crisis. Thus, too much dependence on FDls will create exchange crisis.

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Cultural erosion:

In all the countries where the FDls have made an inroad, there has been a cultural shock

experienced by the local people, adopting a different culture alien to the country. The domestic

culture either disappears or suffers a setback. This is felt in the family structure, social setup

and erosion in the value system of the people. Importance given to human relations, hither to

suffers a setback with the hi-fi style of living.

Political corruption:

In order to capture the foreign market, the FDIs have gone to the extent of even corrupting the

high officials or the political bosses in various countries. Lockheed scandal of Japan is an

example. In certain countries, the FDIs influence the political setup for achieving their personal

gains. Most of the Latin American countries have experienced such a problem. Example: Drug

trafficking, laundering of money, etc.

Inflation in the Economy:

The presence of FDIs has also contributed to the inflation in the country. They spend lot of

money on advertisement and on consumer promotion. This is done at the cost of the

consumers and the price is increased. They also form cartels to control the market and exploit

the consumer. The biggest world cartel, OPEC is an example of FDI exploiting the consumers.

Trade Deficit:

The introduction of TRIPs (Trade Related Intellectual Property Rights) and TRIMs (Trade Related

Investment Measures) has restricted the production of certain products in other countries. For

example, India cannot manufacture certain medicines without paying royalties to the country

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which has originally invented the medicine. The same thing applies to seeds which are used in

agriculture. Thus, the developing countries are made to either import the products or produce

them through FDIs at a higher cost. WTO (World Trade Organization) is in favor of FDIs.

World Bank and lMF Aid:

Some of the developing countries have criticized the World Bank and IMF (International

Monetary Fund) in extending assistance. There is a discrimination shown by these international

agencies. Only those countries which accommodate FDIs will receive more assistance from

these international institutions.

Convertibility of Currency:

FDIs are insisting on total convertibility of currencies in under-developed countries as a

prerequisite for investment. This may not be possible in many countries as there may not be

sufficient foreign currency reserve to accommodate convertibility. In the absence of such a

facility, it is dangerous to allow the FDIs as they may withdraw their investments the moment

they find their investments unprofitable.

Hindrance of domestic investment:

Sometimes FDI can hinder domestic investment. Because of FDI, countries’ local companies

start losing interest to invest in their domestic products.

The risk from political changes:

Other countries’ political movements can be changed constantly which could hamper the

investors.

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Negative exchange rates:

Foreign direct investments can sometimes affect exchange rates to the advantage of one

country and the detriment of another.

Higher costs:

When investors invest in foreign counties, they might notice that it is more expensive than

when goods are exported. Often times, more money is invested into machinery and intellectual

property than in wages for local employees.

Economic non-viability:

Considering that foreign direct investments may be capital-intensive from the point of view of

the investor, it can sometimes be very risky or economically non-viable.

Expropriation:

Constant political changes can lead to expropriation. In this case, those countries’ governments

will have control over investors’ property and assets.

Modern-day economic colonialism:

Many third-world countries, or at least those with history of colonialism, worry that foreign

direct investment would result in some kind of modern-day economic colonialism, which

exposes host countries and leave them vulnerable to foreign companies’ exploitation.

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Poor performance:

Multinationals have been criticized for poor working conditions in foreign factories.

Danger to comparative advantage:

Foreign direct investment is not appropriate for major industries that are strategic to a nation.

In case a nation allows foreign ownership in such industries, it could lose its comparative

advantage.

There may be no real value:

The aim of many organizations with FDI is to seek the maximum value out of the foreign

business while adding no real value in return. For example, these foreigners could sell off less

profitable organizational aspects to inferior non-worthy investors.

Most investors lack high ethical standards:

In order to seek access to a foreign market, investors go for immoral ways. For example, they

can find lower-cost local loans by making use of the organization’s collateral. Now, they may

lend these funds to the parent organization rather than reinvest.

Impediment in domestic investment:

At times, FDI can interfere with domestic investments. Due to FDI, countries’ local businesses

begin losing interest in financing their household assets.

Nugatory exchange valuations:

Foreign direct investments can seldom affect exchange rates to the benefit of one country and

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the disadvantage of another.

More expensive costs:

When investors invest in businesses in foreign counties, they may notice the increased expense

than domestic exported goods. Frequently, more money is invested into motors and intellectual

resources than in earnings for local workers.

Financial non-viability:

Acknowledging that foreign direct investments may be capital-intensive from the point of view

of investors, they can at times be very dangerous or economically non-reliable.

Modern commercial colonialism:

Third-world with a history of colonialism is often troubled that foreign direct investment would

end in modern economic colonialism, revealing host countries and leaving them defenseless to

oppression by foreign companies.

Impact of FDI on economy:-

about technology transfer to the domestic companies. Organic growth or expansion takes place

in the companies. Employment too rises. FDI strengthens the balance sheet as it raises the

assets of the companies. Profits of the businesses increase and labor productivity too increases.

Per capita income increases and consumption improves. Tax revenues increase and

government spending rises.

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GDP increases and there is also a lagged effect due to which subsequent years GDP too

increases.

Furthermore investment has gestation period and returns increase after few years.

FDI puts the companies and hence the economy on higher growth mode and the right process

of FDI is selection of the strategic sectors in the economy that generate highest RoI.

Balanced and unbalanced growth theories of Development economics too harp on this. So is

Leibenstein’s minimum effort hypothesis.

FDI also acts as a solid complement to domestic stock of investment which is low ( about 32%)

in India because of low savings. This investment raises competitiveness among the businesses,

breeds innovation and efficiency and increases standard of living through better products and

services in the market.

Exports get a fillip and balance of payments show surplus which causes rupee to appreciate vis

a vis the Dollar. Forex reserves rises significantly and this causes RBI ‘s assets to increase due to

which money supply rises and thus inflation too rises according to Quantity Theory of Money.

So according to Mundell Fleming model in the open economy context, bond prices go up,

interest rates go down, investment escalates further and growth rises.

FDI is better than Foreign Institutional Investment (FII) or hot money which is volatile in nature

and moves to the stock and bond markets. Because of FDI, there is solid growth in the

companies and hence stock market rallies and attracts more capital which raises more funds for

the businesses.

In FDI there is technology transfer or the movement of technical know how to the domestic

country due to which skill development takes place and together with higher capital this raises

productivity and profitability.

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Total FDI inflows in the country in the last 20 years (April 2000 – September 2020) are $729.8

bn while the total FDI inflows received in the last 5 years (April 2014- September 2019) was

$319 bn which amounts to nearly 50% of total FDI inflow in last 20 years.

FDI Examples:-
Over the last decade, India has witnessed a steady flow of Foreign Direct Investment. From

pharmaceuticals to automobiles, textiles to railways, nearly every sector has received

significant sums of foreign investment.

The Importance of FDI cannot be undermined. It has resulted in infrastructure improvements,

Led to job creation, increased exports, and helped the formal sector to a great extent.

Here are some notable examples of recent foreign investments in India -

 Byju's, an online Ed-Tech firm, raised USD 500 million in a Silver Lake-led funding round

in September 2020. Silver Lake is a noted US equity and VC firm.

 Also, in September 2020, Unacademy- a competitor of Byju's in the same niche - raised a

total of USD 150 million. Japan's Softbank Group led the round.

 Google picked up 7.73% of Reliance's 'Jio Platforms' for USD 4.5 billion, making it one of

the biggest deals in recent Indian corporate fundraising sessions.

 General Atlantic, one of New York's most respected equity firms, invested more than

USD 900 million for a stake in Reliance's 'Jio Platforms' in June 2020.

Data show that the majority of Foreign Direct Investment in India came from 5 countries-

Singapore, the USA, Japan, the Netherlands, and Mauritius.

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FDI STOCKS
Foreign Direct Investment (FDI) stocks measure the total level of direct investment at a given

point in time, usually the end of a quarter or of a year. The outward FDI stock is the value of the

resident investors' equity in and net loans to enterprises in foreign economies. The inward FDI

stock is the value of foreign investors' equity in and net loans to enterprises resident in the

reporting economy. FDI stocks are measured in USD and as a share of GDP. FDI creates stable

and long-lasting links between economies.

FDI FLOWS
Foreign Direct Investment (FDI) flows record the value of cross-border transactions related to

direct investment during a given period of time, usually a quarter or a year. Financial flows

consist of equity transactions, reinvestment of earnings, and intercompany debt transactions.

Outward flows represent transactions that increase the investment that investors in the

reporting economy have in enterprises in a foreign economy, such as through purchases of

equity or reinvestment of earnings, less any transactions that decrease the investment that

investors in the reporting economy have in enterprises in a foreign economy, such as sales of

equity or borrowing by the resident investor from the foreign enterprise. Inward flows

represent transactions that increase the investment that foreign investors have in enterprises

resident in the reporting economy less transactions that decrease the investment of foreign

investors in resident enterprises. FDI flows are measured in USD and as a share of GDP. FDI

creates stable and long-lasting links between economies.

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FDI restrictiveness

FDI restrictiveness is an OECD index gauging the restrictiveness of a country’s foreign direct
investment (FDI) rules by looking at four main types of restrictions: foreign equity restrictions;
discriminatory screening or approval mechanisms; restrictions on key foreign personnel and
operational restrictions. Implementation issues are not addressed and factors such as the
degree of transparency or discretion in granting approvals are not taken into account. The index
here shows the total and nine component sectors taking values between 0 for open and 1 for
closed.

What happens if the equity capital by FDI falls below 10% in a listed company?
In case an existing investment by a person resident outside India in capital instruments of a
listed Indian company falls to a level below ten per cent, of the post issue paid-up equity capital
on a fully diluted basis, the investment shall continue to be treated as FDI.

Which are the entities which can invite FDI in India?

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The current list of companies allowed to attract investments from FIIs/NRIs/PIOs with their

respective ceilings is:

List of companies in which NRIs/PIOs investment is allowed up to 24% of their Paid-up Capital:-

1. Alembic Chemical Works Co. Ltd

2. Amar Investments Ltd, Calcutta.

3. Anglo-India Jute Mills Co.Ltd

4. Arvind Mills, Ahmedabad

5. Ashima Syntex Ltd, Ahmedabad

6. Ashoka Viniyoga Ltd

7. Bharat Nidhi company Ltd

8. BLB Shares & Financial Services Ltd

9. BPL Ltd

10. Burr Brown (India) Ltd

11. Camac Commercial Company Ltd

12. Ceenik Exports (India) Ltd

13. Cifco Finance Ltd, Mumbai

14. Classic Financial Services & Enterprises Ltd, Calcutta

15. CPPL Ltd,(Reliance Ind. Infrastructure Ltd), Mumbai

16. CRISIL

17. DCM Shriram Consolidated Ltd

18. Dharani Sugars & Chemicals Ltd.

19. Dolphin Offshore Enterprises (I) Ltd

20. Essar Oil Ltd.

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