fdi in india and its growth linkages - Department Of Industrial Policy ...
fdi in india and its growth linkages - Department Of Industrial Policy ...
fdi in india and its growth linkages - Department Of Industrial Policy ...
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Secretariat for <strong>Industrial</strong> Assistance (SIA)<br />
The Secretariat for <strong>Industrial</strong> Assistance (SIA) has been set up by the Government of India <strong>in</strong> the <strong>Department</strong> of<br />
<strong>Industrial</strong> <strong>Policy</strong> <strong>and</strong> Promotion, M<strong>in</strong>istry of Commerce & Industry to provide a s<strong>in</strong>gle-w<strong>in</strong>dow service for<br />
entrepreneurial assistance, <strong>in</strong>vestor facilitation, receiv<strong>in</strong>g <strong>and</strong> process<strong>in</strong>g all applications which require government<br />
approval, convey<strong>in</strong>g government decisions on applications filed, assist<strong>in</strong>g entrepreneurs <strong>and</strong> <strong>in</strong>vestors <strong>in</strong> sett<strong>in</strong>g up<br />
projects (<strong>in</strong>clud<strong>in</strong>g liaison with other organisations <strong>and</strong> state governments) <strong>and</strong> monitor<strong>in</strong>g the implementation of<br />
projects. It also notifies all government policy decisions relat<strong>in</strong>g to <strong>in</strong>vestment <strong>and</strong> technology, <strong>and</strong> collects <strong>and</strong> publishes<br />
monthly production data for select <strong>in</strong>dustry groups. The SIA website 2 provides chat time dur<strong>in</strong>g fixed hours when all<br />
questions are answered. Dur<strong>in</strong>g other times, <strong>in</strong>vestors are encouraged to write e-mails <strong>and</strong> the Secretariat assures a reply<br />
with<strong>in</strong> 24 hours.<br />
Foreign Investment Implementation Authority (FIIA)<br />
The Government of India has set up the Foreign Investment Implementation Authority (FIIA) to facilitate quick<br />
translation of Foreign Direct Investment (FDI) approvals <strong>in</strong>to implementation, <strong>and</strong> to provide a pro-active one-stop<br />
after-care service to foreign <strong>in</strong>vestors by help<strong>in</strong>g them obta<strong>in</strong> necessary approvals, sort out operational problems <strong>and</strong><br />
meet with various government agencies to f<strong>in</strong>d solutions to their problems. The proforma for mak<strong>in</strong>g a reference to the<br />
Foreign Investment Implementation Authority (FIIA) can be downloaded from the website. 3 The Secretariat for<br />
<strong>Industrial</strong> Assistance (SIA) <strong>in</strong> the <strong>Department</strong> of <strong>Industrial</strong> <strong>Policy</strong> & Promotion (DIPP) functions as the Secretariat of<br />
the FIIA.<br />
2.3 Foreign Investment <strong>Policy</strong><br />
Foreign <strong>in</strong>vestment is permitted <strong>in</strong> virtually every sector, except those of strategic concern such as defence (opened up<br />
recently to a limited extent) <strong>and</strong> rail transport. Foreign companies are permitted to set up 100 per cent subsidiaries <strong>in</strong><br />
India. No prior approval from the exchange control authorities (RBI) is required, except for certa<strong>in</strong> specified activities.<br />
Accord<strong>in</strong>g to the current policy, FDI can come <strong>in</strong>to India <strong>in</strong> two ways.<br />
Automatic route: FDI <strong>in</strong> sectors/activities to the extent permitted under the automatic route does not require any prior<br />
approval either by the government or the Reserve Bank of India (RBI). The <strong>in</strong>vestors are only required to notify the<br />
concerned regional office of the RBI with<strong>in</strong> 30 days of receipt of <strong>in</strong>ward remittances <strong>and</strong> file the required documents<br />
with that office with<strong>in</strong> 30 days of issue of shares to foreign <strong>in</strong>vestors.<br />
Prior Government Approval route: In the limited category of sectors requir<strong>in</strong>g prior government approval, the proposals<br />
are considered <strong>in</strong> a time-bound <strong>and</strong> transparent manner by the Foreign Investment Promotion Board (FIPB) under the<br />
<strong>Department</strong> of Economic Affairs, M<strong>in</strong>istry of F<strong>in</strong>ance. Approvals of composite proposals <strong>in</strong>volv<strong>in</strong>g foreign <strong>in</strong>vestment/<br />
foreign technical collaboration are also granted on the recommendations of the FIPB. 4<br />
Legal Framework<br />
Foreign Direct Investments under Automatic Approval <strong>and</strong> Government Approval are regulated by the Foreign<br />
Exchange Management Act, 1999 (FEMA vide Reserve Bank’s Notification FEMA. 20/2000-RB dated May 3, 2000<br />
as amended from time to time).<br />
If a foreigner or foreign company or a person resident outside India wants to <strong>in</strong>vest <strong>in</strong> India either <strong>in</strong> the manufactur<strong>in</strong>g<br />
sector or service sector, <strong>in</strong>clud<strong>in</strong>g the hous<strong>in</strong>g sector, <strong>in</strong>surance, bank<strong>in</strong>g, telecommunications, etc., the foreigner, foreign<br />
2. http://siadipp.nic.<strong>in</strong>/publicat/pub_mn.htm<br />
3. http://siadipp.nic.<strong>in</strong>/sia/fiia.htm<br />
4. See RBI Master Circular No. 5/2005-06: Foreign Investments <strong>in</strong> India, Section 6.1.1.<br />
FDI SCENARIO IN INDIA: TRENDS AND POLICIES<br />
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