How to File Foreign Direct Investment in India
FDI – Foreign Direct Investment is a segment of investing by one company to different economy with the aim of earning profit. It is a form of direct investment in a country by a company which is situated at different country. Most of the well reputed and prominent entrepreneurs usually followed this strategy of foreign direct investment in India in order to raise their business operations for business growth. This is because of several business advantages that target countries offered to FDI investors like tax exemptions, cheap wages and many more. Many developing countries like India follow the procedure of FDI as to boost their different segments of the economy. Here, below we bring you with detail aspect of Foreign Direct Investment about hoe to file FDI in India, scope of FDI in India, higher authority's deals in FDI, ways of receiving FDI and lots more.
Why Country approach to FDI:
- Usually when the domestic capital is not sufficient for economic growth and to accompany the economy with scarce productive factors like latest technology, expertise knowledge; countries approach to FDI.
- For raising an employment opportunities.
- Improves the situation of foreign exchange market.
- Generating capital while welcoming capital from outside country.
- Helps the economy by getting familiar with latest technology and top rated management skills.
- Helps in transfer of intellectual property
- Raising tax revenues and increasing export as well.
Procedure for filing FDI in India
Filing of FDI in India before crediting of funds:
Before the Indian company receives foreign investment from any of the foreign bank account the following details need to be approved under Reserve Bank of India.
- Need to submit FDI intimation forum within the 30 days from the date of crediting amount that must include covering letter, FDI initiation forum with details of both company and foreign inward remittance certificate.
- And within 180 days from the date of receiving foreign funds; FCGPR FORM need to file through the bank. For which following documents are to be needed like :
- Form FCGPR with Part A
- Covering letter
- Company Secretary Certificate that mentions the particular company receives foreign investment.
- Original FIRC
- Copy of application of received funds to RBI.
- Need to submit KYC which we already followed in above as sent by remitting bank to Beneficiary bank.
- Memorandum of Association
- Board Resolution that allow FDI in India
There are two ways of receiving Foreign Direct Investment in an Indian company
Government Route :
Sectors and activities which are not covered under the respective FDI policy need to apply for FDI approval from government of India that control, maintain and administered by Ministry of Finance, Foreign Investment Promotion Board and Department of Economic Affairs.
Automatic Route :
For all activities and sectors which are specified under the consolidated FDI Policy which is issued from time to time by Government of india. For those sectors and activities do not require approval from RBI or from government for carrying FDI.
There are certain sectors of the economy that really attracted by FDI and revert with best contribution as mentioned below:
- Information Technology
- Auto Parts
With the rising of all these sectors India has become 3rd largest country to attract FDI across the world. Whereas if we talk about Asian side; then India is one of the major segment of FDI in the Asia pacific region that support the maximum scope of foreign direct investment in India. India with huge business network, best technical resources and highly skilled man power; welcome companies from all across the world to invest with Indian economy.
But there are certain sections where FDI in India is not allowed like:
In India you will find different esteem authorities deals in controlling, maintaining and administered the applications of FDI and related concepts of foreign direct investment. Different authorities handle different aspects of FDI as mentioned below.
- Gambling and Betting Company, Products, Services or related Business.
- Nidhi Company
- Atomic Energy Company, Products, Services or related Business.
- Chit Fund and Lottery Company, Products, Services or related Business
- Trading in Transferable Development Rights
- Manufacture of cigarettes, tobacco substitutes, cheroots, cigars and cigarillos.
- Agricultural (excluding Floriculture, mushrooms, Animal Husbandry, Horticulture, Pisciculture and cultivation of vegetables, Development of seeds etc) and Plantations activities (instead of Tea Plantations)
- Real Estate business and Housing (except construction and development of roads, townships or bridges and construction of residential or commercial premises to the extent specified in notification)
- Investment Commission
- Reserve Bank of India
- Foreign Investment Promotion Board – FIPB
- Project Approval Board
- Secretariat for Industrial Assistance (SIA)
- Foreign Investment Implementation Authority (FIIA)