FDI limits in India

Before proceeding to sector wise FDI limits in India, let’s understand what is FDI?

FDI i.e. Foreign Direct Investment means an investment made to acquire ownership or interest in an enterprise residing outside the country of investor. Foreign direct investment includes “mergers and acquisitions, building new facilities, reinvesting profits earned from overseas operations and intra company loans”. It generally refers to the building new facilities in the host country.

FDI in India was allowed in year 1991 under Foreign Exchange Management Act by then Finance Minister Manmohan Singh. FDI in an Indian company is allowed under two routes:

• Automatic route: FDI is allowed under the automatic route without prior approval either of the Government or the Reserve Bank of India in all activities/sectors as specified in the consolidated FDI Policy, issued by the Government of India from time to time.
• Government route: FDI in activities not covered under the automatic route requires prior approval of the Government which is considered by the Foreign Investment Promotion Board (FIPB), Department of Economic Affairs, Ministry of Finance.

With recent regime change at Centre government, there has been push to FDI in many sectors. Let’s see FDI limit in various sectors in India.

These limits are asked in many banking exams, so cram it.