FDI to India since 2014
The Union Finance Minister Piyush Goyal in the interim budget 2019 stated that India has received massive foreign direct investment worth USD 239 billion in the last five years.
FDI: From Where to Where?
The Union Finance Minister attributed this increased FDI inflow to a stable and predictable regulatory regime, growing economy, strong fundamentals and liberalisation of the FDI policy allowing most FDI to come through the automatic route. The important aspects of these FDI inflows are:
- The sectors which received maximum foreign inflows include services, computer software and hardware, telecommunications, trading, construction, automobile, and power.
- Mauritius, Singapore, Netherlands, the US and Japan were the top source of FDI’s for India.
Automatic Route and Approval Route of FDI
The automatic and approval routes are designed with an aim to have a monitoring over the investment activities and to ensure the robustness of the economy is not compromised due to outside capital.
Under the Automatic Route, neither the investor nor the Indian company requires any approval from the Reserve Bank or Government of India for the investment. The sectors for the Automatic Route are specified under the FDI policy updated from time to time.
Under the Approval Route, the foreign investor or the Indian company is required to obtain prior approval from the Government of India agencies or bodies specified.
The relaxation of the foreign investments norms in several sectors, including single-brand retail, defence, airlines and food processing had a contributory effect in increasing the FDI inflows to the country.