New FDI Road To Make In India
As a part of economic liberalization, India brought forth economic reforms during 1966 and 1985 in the crude form and 1991 in relatively refined form.
WHO CAN INVEST UNDER THE NEW FDI POLICY
FDI Policy of June, 2016 para 3.1 explains the eligible investors.
1. Any non-resident entity can invest in India, subject to DRI Policy except the sectors are prohibited the citizen of Pakistan, Bangladesh can invest only under Government route. The citizen of Pakistan can invest in all sectors / activities other than hour defence, space and atomic energy.
2. Non-resident Indian resides in Nepal and Bhutan as well as citizen of Nepal and Bhutan can invest on repatriation basis, subject to the condition that the amount of reconsideration shall be paid only by way of inward remittances in free foreign exchange through normal banking channels.
3. Erstwhile Overseas Corporate Body (OCB) incorporated outside India and are not under the adverse notice of RBI can make fresh investment under FDI Policy with prior approval of Government of India if the investment is through Government route and with the prior approval of RBI if the investment is through Automatic route.
4. NRI owned and controlled company, trust and partnership firms.
5. Foreign Institutional Investor (FII) and partnership firms.
6. Registered FIIs / and NRI, can invest / trade through a registered broker in the capital of Indian companies on recognized India stock exchanges.
7. A SEBI registered Foreign Venture investor (FVCI)
8. A non-resident Indian may invest after subscribing National Pension System administered by Pension Fund Regulatory and development Authority.
Another peculiar feature of FDI policy is downstream investment. The critics of Foreign Investment generally state that foreign investment will have negative impact on the investing country and its domestic investment and dim the opportunity of investors in host country.
But the new FDI Policy provides for investment by an eligible Indian entity into another Indian company / LLP by way of subscription or acquisition. This is called indirect foreign investment or downstream investment.