Foreign Direct Investment (FDI) is an investment
made directly into any production or business in India by a company or an
individual from another country, either by purchasing the company or expanding
the operations of an existing company or business. Foreign Direct Investments
include acquisitions & mergers, building of new facilities, reinvesting
profits from overseas, or any kind of property investment in India.
In India, foreign investment was introduced in 1991 under the
Foreign Exchange Management Act (FEMA), by the then-finance minister Manmohan
Singh. India has been ranked in second place by the Global Foreign Direct
Investments, and is said to remain among the top destinations for international
investors, according to the United Nations Conference on Trade &
Development (UNCTAD). A foreign direct investor acquires the voting power in
any enterprise by incorporating a completely-owned subsidiary or company in India
or by acquiring the shares in that enterprise or by participating in equity
joint venture with another investor etc. An NRI buying property in India is also considered to be an example of real estate foreign
investment.
Foreign Investment Promotion Board (FIPB)
The Foreign Investment Promotion Board or otherwise known as the
FIPB is a government body which offers single window clearance of proposals on
all the Foreign Direct Investment in India which do not have the
access of getting approval through automatic routes. FIPB plays a mandatory
role in the implementation and administration of Government’s Foreign Direct Investment Policy in India. It is said to have an excellent record of actively encouraging
the FDI into the country via quick and transparent processing of all the
documents and also in providing proper clarification.
Latest Updates on FDI Policy in India
The Indian government has liberated FDI limits and rules in
several sectors including telecom, oil & gas etc. This relaxation on most
of the FDI has been made in order to bring in more capital inflows and also to
prop up the sliding currency in India. The government of India has allowed 100%
of FDI in Telecommunications, Commerce and other Industries. This move has
allowed companies like Vodafone Group, Telenor, and Sistema etc to operate in
India without having to form a partnership with an Indian citizen. Apart from
this, the Indian government has been taking up initiatives for relaxation in
FDI policies pertaining to real estate in India. With the reviving financial
markets, and strong economic growth, India is slowly transforming into an investor-friendly
property destination. It is estimated that FDI in India will rise by more than
15% in coming times, with regards to the policy initiatives undertaken by the
Indian Government. Foreign Investment in India has increased by 6%
year-on-year. Therefore, property investment in India is estimated to go up in the near future.
Indian Economy and Benefits of Foreign Investment
Foreign Direct Investment brings in
lots of growth opportunities and advantages of cheap wages, tax exemptions etc.
FDI inflow speeds the growth of GDP in India as huge foreign investments inject
big cash flow in Indian economy. Foreign investment decreases the government’s
expenditure as foreign companies with huge cash inflows invest in backend
infrastructures and their business needs etc.
FDI usually increased the employment
opportunities in India as with high FDI, the growth rate of industrial sector of
India also increases as a result of huge employment opportunities.
FDI also brings in more & more real
estate growth in India owing to the developing economy and as a result many
properties in India are being purchased by NRI’s and other foreign investors.
FDI Trends in Delhi Real Estate
Real estate in Delhi has been attracting huge investments with the
recent developments of FDI rules and events and it is estimated that the prices
may shoot up in the near future. The Indian government is said to be working on
2 main bills, namely the Real estate regulation bill and also the Land
acquisition bill. Apart from this, the government has also approved FDI in many
multi-banded retail outlets and other investments in India. Therefore with the new foreign investments coming up, the prices
are bound to rise, especially in the commercial property sector, which will
directly impact on the residential property sector in India.
Even though most of the prominent cities in India have been
experiencing a price appreciation with regards to residential properties,
Delhi, being the capital city has experienced the highest rise in property
prices. It is said that real estate in Delhi has increased by up to 5 times
within the past few years, with the more number of properties being purchasedby NRI in Delhi and its surroundings. The
metro rail network in Delhi and excellent infrastructural developments has also
been the major factors for booming real estate in Delhi. The real estate in
Delhi is considered as the hottest property in the Indian market attracting
more & more foreign investments in near future.
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