Investment Opportunities in India

Investment Opportunities in India/ Why to Investment in India

Introduction/ Few Facts about India from Investment Point of View:

• India's population will (probably) overtake China's in 2028.
• According to UN estimates, India will become the most populous country in the world in just 14 years' time, when it will have about 1.45 billion inhabitants.
• India has, arguably, greater linguistic diversity than any other large country.
• The 1961 census of India listed 1,652 languages, though some of these may have effectively been dialects, and a few languages have died out since then.
• India doesn't have a national language. Hindi and English are both official languages, though the writers of the constitution envisaged a transitional status for English, but opposition to Hindi hegemony from speakers of other languages, particularly Tamil, mean that English remains an official language.
• More than 1,100 movies are produced, on average, each year - that's slightly ahead of Nigeria, twice as many as the American film industry and ten times as many as Britain produces.
• India is the world's biggest producer and consumer of mangoes
• According to the International Monetary Fund (IMF), India's growth is expected to rebound to 7.2 % in the 2017-18 fiscal and 7.7 per cent in 2018-19. India has one of the fastest growing service sectors in the world with annual growth rate of above 9% since 2001, which contributed to 57% of GDP in 2012-13.
• Talking about stock markets On May 26 Sensex has Breached a mark of 31000 with all time of 31034 and Nifty touched all time high of 9592 in Day trading. Also there is large amount of foreign capital inflow on the ground of bigger opportunities than other countries. A Just one year back Sensex and Nifty Index were at around the level of approx. 24500 and 7500 levels respectively. There is a huge increment in Market Capitalization.

Major sectors of Indian Market:

Automobile, Automobile components, Aviation, Biotechnology, construction, chemicals, Defence manufacturing, Electrical machinery, Electronic systems, Food Processing, It and BPM, Leather, Media and entertainment, mining, oil and gas, Pharmaceuticals, ports and shipping, Railways, Renewable energy, Roads and Highways, Space, Textiles and Garments, Thermal Power, Tourism and hospitality, Wellness.

Foreign Direct Investments:

India has already marked its presence as one of the fastest growing economies of the world. It has been ranked among the top 10 attractive destinations for inbound investments. Since 1991, the regulatory environment in terms of foreign investment has been consistently eased to make it investor-friendly.

The measures taken by the Government are directed to open new sectors for foreign direct investment, increase the sectoral limit of existing sectors and simplifying other conditions of the FDI policy. FDI policy reforms are meant to provide ease of doing business and accelerate the pace of foreign investment in the country.

Some Important Recent Policy measures in Regard to FDI:

•   49% FDI under automatic route permitted in Insurance and Pension sectors
• Foreign investment up to 49% in defense sector permitted under automatic route. The foreign investment in access of 49% has been allowed on case to case basis with Government approval in cases resulting in access to modern technology in the country or for other reasons to be recorded.
• FDI limit of 100% (49% under automatic route, beyond 49% government route) for defense sector made applicable to Manufacturing of Small Arms and Ammunitions covered under Arms Act 1959
• FDI up to 100% under automatic route permitted in Teleports, Direct to Home, Cable Networks, Mobile TV, Headend-in- the Sky Broadcasting Service
• FDI up to 100% under automatic route permitted in Up-linking of Non-‘News & Current Affairs’ TV Channels, Down-linking of TV Channels
• In case of single brand retail trading of ‘state-of-art’ and ‘cutting-edge technology’ products, sourcing norms can be relaxed up to three years and sourcing regime can be relaxed for another 5 years subject to Government approval
• Foreign equity cap of activities of Non-Scheduled Air Transport Service, Ground Handling Services increased from 74% to 100% under the automatic route
• 100% FDI under automatic route permitted in Brownfield Airport projects
• FDI limit for Scheduled Air Transport Service/ Domestic Scheduled Passenger Airline and regional Air Transport Service raised to 100%, with FDI upto 49% permitted under automatic route and FDI beyond 49% through Government approval
• Foreign airlines would continue to be allowed to invest in capital of Indian companies operating scheduled and nonscheduled air transport services up to the limit of 49% of their paid up capital
• In order to provide clarity to the e-commerce sector, the Government has issued guidelines for foreign investment in the sector. 100% FDI under automatic route permitted in the marketplace model of e-commerce
• 100% FDI under Government route for retail trading, including through e-commerce, has been permitted in respect of food products manufactured and/or produced in India
• 100% FDI allowed in Asset Reconstruction Companies under the automatic route
• 74% FDI under automatic route permitted in brownfield pharmaceuticals. FDI beyond 74% will be allowed through government approval route
• FDI limit for Private Security Agencies raised to 74% (49% under automatic route, beyond 49% and upto 74% under government route)
• For establishment of branch office, liaison office or project office or any other place of business in India if the principal business of the applicant is Defense, Telecom, Private Security or Information and Broadcasting, approval of Reserve Bank of India would not be required in cases where FIPB approval or license/permission by the concerned Ministry/Regulator has already been granted
• Requirement of ‘controlled conditions’ for FDI in Animal Husbandry (including breeding of dogs), Pisciculture, Aquaculture and Apiculture has been waived off

For above points one should know the meaning of automatic route and Government route , for that one should consider the following meanings:

·       

Automatic Route:

If no Central Government Permission is required for such Investment and to such extent as prescribed above.

Government Route:

· Under this route applications are considered by the Foreign Investment Promotion Board (FIPB). Approval from Cabinet Committee on Security is required for more than 49% FDI in defense. The proposals involving investments of more than USD 769.23 million are considered by Cabinet committee on economic affairs.

· The Indian company receiving FDI either under the automatic route or the government route is required to comply with provisions of the FDI policy including reporting the FDI and issue of shares to the Reserve Bank of India.

Steps Involved in such Investment:

· Identification of structure

· Central Government approval if required
· Setting up or incorporating the structure
· Inflow of funds via eligible instruments and following pricing guidelines
· Meeting reporting requirements of RBI and respective Act
· Registrations/obtaining key documents like PAN etc.
· Project approval at State/UT level
· Finding ideal space for business activity based on various parameters like incentives, cost, availability of man power etc.
· Manufacturing projects are required to file Industrial Entrepreneur’s Memorandum (IEM), some of the industries may also require industrial license.
· Construction/renovation of unit.
· Hiring of manpower.
· Obtaining licenses if any.
· Other state & central level registrations.
· Meeting annual requirements of a structure, paying taxes etc.

Incentives to Investors:

Central Government Incentives:

• Investment allowance (additional depreciation) at the rate of 15 percent to manufacturing companies that invest more than INR 1 billion in plant and machinery available till to 31.3.2015.
• Incentives available to unit’s set-up in Special Economic Zones (SEZ), National Investment & Manufacturing Zones (NIMZ) etc. and Export Oriented Units (EOUs).
• Exports incentives like duty drawback, duty exemption/remission schemes, focus products & market schemes etc.
• Areas based incentives like unit set-up in north east region, Jammu & Kashmir, Himachal Pradesh, Uttarakhand.
• Sector specific incentives like Modified Special Incentive Package Scheme(M-SIPS) in electronics.

State Government Incentives:

•  Each state government has its own incentive policy, which offers various types of incentives based on the amount of investments, project location, employment generation, etc. The incentives differ from state to state and are generally laid down in each state’s industrial policy. 
• The broad categories of state incentives include: stamp duty exemption for land acquisition, refund or exemption of value added tax, exemption from payment of electricity duty etc.

Need More Info about Investment Policy refer the Link :

http://dipp.nic.in/English/Investor/FDI_Policies/FDI_policy.aspx

                                                              Industrial Corridors:

  

• Five industrial corridor projects across India have been identified, planned and launched by the Government of India. These projects are seen as critical in raising the share of manufacturing in India's Gross Domestic Product (GDP) from the current levels of 15% to 25% by 2025.

• Smart Industrial Cities are being developed along the Corridors. These cities are being developed to integrate the new workforce that will power manufacturing and will lead to planned urbanization. 

• These five Industrial Corridors are Delhi- Mumbai Industrial Corridor, Amritsar-Kolkata Industrial Corridor, Bengaluru- Mumbai Economic corridor, Chennai- Bengaluru Industrial Corridor and Vizag- Chennai Industrial Corridor.

Disclaimer: These are the certain interesting points that I found during my web research . For some Investors these points might be helpful so I am going to post here after summarising. Please do let me know in Comments for any Info or article which you are seeking, I will help to figure out.