Foreign Direct Investment :
Ph.no:9246536701
We help you in opening Office in India. We take care of all business registrations, tax planning, Payroll Processing, accounting, bookkeeping, Audit functions
100% foreign investment allowed in India in almost all the sectors except retail trading and realestate etc.
100% foreign ownership allowed in software companies:
a foreign company of foreign individual can open a fully owned software company in India and we can help you out in opening such a company.
Some details about India's policy towards Foreign Investment in Realestate:
India of today can be acknowledged as the one of the fastest growing economy in the world and in this current economic status, real estate has emerged as one of the most appealing investment areas for domestic as well as foreign investors. And this high growth curve in the real estate sector owes some credit to a booming economy and liberalized Foreign Direct Investments (FDI) regime in the real estate sector.The Government of India in March 2005 amended existing norms to allow 100 per cent FDI in the construction business. This liberalization act cleared the path for foreign investment to meet the demand into development of the commercial and residential real estate sectors. It has also encouraged several large financial firms and private equity funds to launch exclusive funds targeting the Indian real estate sector.
Until now, only Non Resident Indians (NRIs) and Persons of Indian Origin (PIOs) were permitted to invest in the housing and the real estate sectors. Foreign investors other than NRIs were allowed to invest only in development of integrated townships and settlements either through a wholly owned subsidiary or through a joint venture company in India along with a local partner.
Some of the foreign players who have already tied up with Indian real estate developers are Lee Kim Tah Holdings, CESMA International Pvt Ltd., Evan Lim, and Keppel Land from Singapore, Salim Group from Indonesia, Edaw Ltd., from USA, Emaar Group from Dubai, IJM, Ho Hup Construction Co., from Malaysia etc.
Indian Real estate is on the high growth path
In 2003-04, India received total FDI inflow of US$ 2.70 billion, of which only 4.5% was committed to real estate sector. In 2004-05 this increased to US$ 3.75 billion of which, the real estate shares was 10.6%.
However, in 2005-06, while total FDIs in India were estimated at US$ 5.46 billion, the real estate share in them was around 16%. The Study, nevertheless projects that in 2006-07, total FDIs will touch about US$ 8 billion in which the real estate share is estimated to be about 26.5%.
Source: ASSOCHAM reportGuidelines for FDI application in Indian real estate
The Government of India has set up certain guidelines for investors willing to apply in FDI in real estate, which have conditions like area, investment options and target for completion of a project.
1) Minimum area
- In case of development of serviced housing plots, 10 hectares (25 acres)
- In case of construction-development projects, built-up area of 50,000 sq m.
- In case of a combination project, any of the above two conditions
- Minimum capitalization
- for wholly owned subsidiaries - US$ 10 million
- for JV with Indian partners - US$ 5 million–, to be brought in within 6 months of commencement of business
- Original investment cannot be repatriated before a period of three years from completion of capitalization.
- The investor may exit earlier with prior approval from Foreign Investment Promotion Board (FIPB).
- At least 50 per cent of the project to be developed within five years from the date of obtaining all statutory clearances.
- Investor cannot sell undeveloped plots - where roads, water supply, street lighting, drainage, sewerage and other conveniences are not available.
One of the most anticipated promises for the Indian real estate sector, which in turn will benefit developments of hotels, has been the entry of Real Estate Mutual Funds (REMFs) or Real Estate Investment Trusts (REITs).Industry experts believe that REMFS and REITS will definitely ensure more availability of funds to the developers and faster growth of real estate sector. A few real estate entities like HDFC Real Estate Fund, ICICI-Tishman Speyer, Ascendas India IT Park Fund, Kotak Mahindra Realty Fund, IDFC, and Edelweiss Capital have received approval and started investing in real estate.
FDI in Indian Real Estate and Economic Growth
With this change in the government policy on FDI, all real estate sectors, residential, commercial and retail are currently witnessing huge growth in demand. India, during the first half of 2005-06 fiscal has attracted more than three times foreign investment at US$ 7.96 billion during making it amongst the "dominant host countries" for FDI in Asia and the Pacific (APAC).
India in the next five-year period is estimated to require investments worth US $ 25 billion with the urban housing sector. This again has opened up opportunities for foreign investments in the realty sector. The Central government allowed up to 100% FDI for setting up townships in 2002. However, the flow of FDI investments has been thwarted by the 100 acre criterion; since acquiring such a large chunk of land was impossible in metropolitan cities and even satellite cities and state capitals.
But a landmark decision taken by the Union government in 2005, where the minimum land area for development by foreign investors was lowered from the earlier floor of 100 acres to 25 acres has thrown open the lucrative parts of the Indian realty market to global investors. Another perceptible spin-off of the easing of FDI policies will be the impact on quality and inevitable acceleration in construction activities.
Foreign Direct Investments in the real estate sector in India would also contribute towards making the sector more organized. Besides increasing professionalism in the sector, it would bring in advanced technology and help in the creation of healthy and competitive market environment for both domestic and foreign investors.
Feel free to contact us on 9246536701 or log on to www.imamassociates.com. We are always available for our clients.
Sector Specific Foreign Direct Investment in India FDI in India for Foreign Investors Latest FDI updates in Small Scale Sector in India Further Liberalized India Further Opens Up Main Sectors to Foreign Investment Hotel & Tourism: FDI in the hotel & tourism sector in India 100% FDI is allowed in the automatic sector.
The word hotels includes restaurants, beach resorts, and other tourist complexes providing visitors with lodging and/or catering facilities. Tourism related industry includes travel agents, tour operating agents and tourism operating agencies, units providing tourists with cultural, adventure and wildlife experience facilities, road, air and water transport facilities for tourists, recreation, entertainment, sports and health units for tourists and Convention / Seminar units and organizations.
For international development agreements, automatic approval is given if up to 3% of the project's capital cost is expected to be charged for technical and consulting services, including architectural fees, design, supervision, etc. Up to 3% of net turnover is payable for franchising and marketing / publicity support fees, and up to 10% of gross operating income is payable.
Private Banking: Non-Banking Financial Companies (NBFC) 49% FDI is allowed from all sources on the automatic route subject to RBI guidelines from time to time.
FDI / NRI / OCB investments permitted in the following 19 NBFC activities are as shown below: Merchant Banking Underwriting Portfolio Management Services Investment Advisory Services Financial Consulting Stock Broking Asset Management Venture Capital Custodial Services Factoring Credit Reporting Agencies Rating Agencies Leasing & Finance Housing Finance International Services
c. Foreign investors may set up 100 percent operating subsidiaries without the condition of disinvesting at least 25 percent of their equity to Indian entities, subject to bringing in US$ 50 million as set out in (b) (iii) above (without restricting the number of operating subsidiaries without bringing in additional capital) e. Joint venture operating NBFCs with a foreign contribution of 75 percent or less than 75 percent will also be allowed to set up subsidiaries for other NBFC operations, subject to the relevant minimum capital inflow, i.e. (b)(i) and (b)(ii).
f. FDI in the NBFC sector is subject to comply with Reserve Bank of India guidelines. RBI will issue correct guidelines.
Insurance Sector: FDI in the insurance sector in India FDI in the insurance sector up to 26 percent is allowed on the automatic route subject to licensing from the Insurance Regulatory & Development Authority (IRDA) Telecommunications: FDI in the telecommunications sector Basic, cellular, value-added services and global mobile satellite personal communications FDI is limited to 49 percent.
ISPs with gateways, radio-pages and end-to-end bandwidth, FDI is enabled up to 74% with FDI, beyond 49% requiring government approval. These services will include licensing and protection.
No equity cap applies to manufacturing operations.
FDI up to 100% is permitted for the following activities in the telecommunications sector: ISPs not providing gateways (both for satellite and submarine cables); Network providers providing dark fiber (IP Category 1); Electronic mail; and Voice Mail Subject to the following conditions: FDI up to 100% is permitted subject to those companies being permitted
The above services will, where appropriate, be subject to licensing and security requirements.
FIPB will accept FDI proposals above 49% on a case-by-case basis.
Trading: FDI in Trading Companies in India Trading is permitted on an automatic route with FDI up to 51 percent, as long as it is primarily export operation, and the undertaking is an export house / trading house / super trading house / star. However, under the FIPB route:- 100% FDI is allowed in the case of trading firms for the following activities: exports; bulk imports with export / ex-bonded warehouse sales; cash and wholesale trading; other imports of products or services rendered by at least 75% are for the purchase and selling of goods and services between firms of the same company and not third parties.
Ii. Ii. Subject to the provisions of EXIM Policy, the following forms of trading are also allowed: companies offering after-sales services (that is not trading per se) Domestic trading of JV products is allowed at the wholesale level for those trading companies wishing to sell manufactured goods on behalf of their joint ventures in which they have equity interest in India.
Trading of hi-tech products / products requiring specialist after-sales service Trading of social sector goods Trading of hi-tech, medical and diagnostic items.
Trading of small-scale products in which a business can sell the item under its brand name, based on technology offered and set quality specifications.
Domestic export product sourcing.
Test marketing of those products for which a business has manufacturing approval given that such test marketing facility is for a duration of two years, and investment in manufacturing facilities starts concurrently with test marketing.
FDI allowed up to 100% for e-commerce activities subject to the condition that these companies must divest 26% of their equity in favor of the Indian public in five years if such companies are listed in other parts of the world. These businesses can participate only in business-to-business (B2B) e-commerce, not retail.
Power: FDI In India's Power Sector Up to 100% FDI allowed for projects related to electricity generation, transmission and distribution other than nuclear power plants. Project costs and foreign direct investment quantity are not reduced.
Drugs & Pharmaceuticals FDI is allowed on the automatic route for drug and pharmaceutical manufacturing, provided the operation does not trigger compulsory licensing or require recombinant DNA technology and complex cell / tissue targeted formulations.
FDI plans to manufacture licensable drugs and pharmaceuticals and bulk drugs developed by recombinant DNA technology and different formulations targeted at cells / tissues would require prior government approval.
In projects for the construction and maintenance of roads, highways, vehicle bridges, toll roads, vehicle tunnels, ports and harbors, FDI is authorized up to 100 percent under automatic route.
Pollution control and management FDI helps up to 100 percent in both manufacturing of pollution control equipment and consultancy to incorporate pollution control systems on the automated road.
Call centers in India / Call centers in India FDI is authorized up to 100% under certain conditions.
Business process BPO outsourcing in India FDI up to 100% is allowed under certain conditions.
The following special facilities are allowed for Special Facilities and Regulations for NRIs and OCBs: Direct Investment in Manufacturing, Trade, Services etc. Up to 100 percent equity with full capital repatriation facility and dividends in the following sectors: 34 High Priority Business Groups Export Trading Companies Hotels and Tourism-related Ventures Hospitals, Diagnostos.
Non-repatriation basis: up to 100 percent equity in any manufacturing, commercial or trading company owner or partnership.
Portfolio Repatriation investment: up to 1 percent of the Company's paid-up equity or convertible debentures by each NRI. Government Securities Purchase, UTI Groups, National Plan / Saving Certificates.
Based on Non-Repatriation: Acquisition of Indian Company shares by a General Body Resolution, up to 24% of the Company's Paid Up Value.
Other Facilities: Income Tax is 20 percent flat on an Indian Company's profits from shares or debentures.
Some terms and conditions apply.
See also India Opening Branch India Subsidiary Formation India Starting a Company Opening
Sector Specific Foreign Direct Investment in India FDI in India for Foreign Investors Latest FDI updates in Small Scale Sector in India Further Liberalized India Further Opens Up Key Sectors to Foreign Investment Hotel & Tourism: FDI in the Hotel & Tourism sector in India 100% FDI is permitted in the automatic sector.
The word hotels includes restaurants, beach resorts and other tourist resorts offering visitors lodging and/or catering and food facilities. Tourism related industry includes travel agencies, tour operating agencies and tourism operating agencies, units providing tourist cultural, adventure and wildlife experience facilities, surface, air and water transport facilities for tourists, leisure, entertainment, amusement, sports and health units for tourists and convention / seminar units and organizations.
For international development arrangements, automatic approval is given if up to 3% of the project's capital expense is expected to be charged for technical and consulting services like fees for architects, design, supervision, etc. Up to 3% of net turnover is payable for franchising and marketing / publicity support fees and up to 10% of gross operating income is payable.
Private Sector Banking: Non-Banking Financial Companies (NBFC) 49% FDI is permitted from all sources on the automatic route subject to RBI guidelines from time to time.
FDI / NRI / OCB investments permitted in the following 19 NBFC activities shall be as follows: Merchant Banking Underwriting Portfolio Management Services Investment Advisory Services Financial Consulting Stock Broking Asset Management Venture Capital Custodial Services Factoring Credit Reporting Agencies Rating Agencies Leasing & Finance Housing Finance International Services
c. Foreign investors may set up 100 percent operating subsidiaries without the condition of disinvesting at least 25 percent of their equity to Indian entities, subject to the introduction of US$ 50 million as set out in (b) (iii) above (without restriction on the number of operating subsidiaries without additional capital) e. Joint venture operating NBFCs with a foreign contribution of 75 percent or less than 75 percent would also be allowed to set up subsidiaries for other NBFC operations, subject to the relevant minimum capital inflows, i.e. (b)(i) and (b)(ii).
f. FDI in the NBFC sector is routed automatically according to Reserve Bank of India guidelines. RBI will issue correct guidance here.
Insurance Sector: FDI in the insurance sector in India FDI in the insurance sector up to 26 percent is permitted on the automatic route subject to licensing from the Insurance Regulatory and Development Authority (IRDA) Telecommunications: FDI in the telecommunications sector Basic, cellular, value-added services and global mobile satellite personal communications FDI is limited to 49 percent.
ISPs with gateways, radio-paging and end-to-end bandwidth, FDI is enabled up to 74% with FDI, above 49% needing government approval. Such programs will include licensing and protection.
No equity cap applies to manufacturing activity.
FDI up to 100% is permitted for the following activities in the telecommunications sector: ISPs not providing gateways (both for satellite and submarine cables); Infrastructure providers providing dark fiber (IP Category 1); Electronic mail; and Voice Mail Subject to the following conditions: FDI up to 100% is permitted subject to such companies being permitted.
The above facilities are subject to licensing and security standards, wherever possible.
FIPB would consider FDI proposals above 49% on a case-by-case basis.
Trading: FDI in Trading Companies in India Trading is allowed under automatic route with FDI up to 51 percent as long as it is primarily export operation and is an export house / trading house / super trading house / star trading house. However, under the FIPB route:- 100% FDI is permitted in the case of trading companies for the following activities: exports; bulk imports with export / ex-bonded warehouse sales; cash and wholesale trading; other imports of goods or services provided by at least 75% are for the procurement and sale of goods and services by companies of the same group and not by third parties.
ii. ii. Subject to the provisions of EXIM Policy, the following types of trading are also permitted: companies providing after-sales services (that is not trading per se) Domestic trading of JV products is permitted at the wholesale level for those trading companies wishing to market manufactured products on behalf of their joint ventures in which they have equity participation in India.
Selling of hi-tech items / products involving specialist after-sales service Trade of items for social sector Hi-tech, medical and diagnostic items trading.
Trading of small-scale products in which a business can sell the item under its brand name based on technology offered and set quality specifications.
Domestic export goods procurement.
Test marketing of such products for which a business has manufacturing approval for by test marketing facility is for a period of two years, and investment in developing manufacturing facilities starts concurrently with test marketing.
FDI allowed up to 100 percent for e-commerce activities under the condition that these companies will divest 26 percent of their equity in favor of the Indian public in five years if such companies are listed elsewhere in the world. These businesses would only operate in business-to-business (B2B) e-commerce, not retail.
Power: FDI In India's Power Sector Up to 100% FDI allowed for projects relating to electricity generation, transmission and distribution other than nuclear power plants. Project cost and foreign direct investment quantity are not reduced.
Drugs & Pharmaceuticals FDI is allowed on the automatic route for drug and pharmaceutical production, provided that the operation does not trigger compulsory licensing or require recombinant DNA technology and complex cell / tissue targeted formulations.
FDI plans for the manufacture of licensable medicines, pharmaceuticals and bulk medicines developed by recombinant DNA technology and different formulations aimed at cells / tissues would require prior government approval.
Roads, highways, ports and harbors FDI is allowed up to 100% on automatic route in road construction and maintenance projects, highways, vehicle bridges, toll roads, vehicle tunnels, ports and harbors.
Pollution control and management FDI helps up to 100 percent in the manufacture of pollution control equipment and consultancy to incorporate pollution control systems on the automated road.
Call centers in India / Call centers in India FDI is allowed up to 100% under certain conditions.
Company process BPO outsourcing in India FDI up to 100% is allowed under certain conditions.
The following special facilities are permitted for Special Facilities and Rules for NRIs and OCBs: Direct Investment in Industry, Trade, Infrastructure etc. Up to 100 percent equity with full capital repatriation facilities and dividends in the following sectors: 34 High Priority Industry Groups Export Trading Companies Hotels and Tourism-related Projects Hospitals, Diagnostos.
Non-repatriation basis: up to 100 percent Interest in any manufacturing, commercial or trading business owner or partnership.
Portfolio Repatriation-based investment: up to 1 percent of the Company's paid-up equity or convertible debentures by each NRI. Government Securities Investment, UTI Units, National Plan / Save Certificates.
On Non-Repatriation Base: Acquisition of Indian Company shares, by a General Body Resolution, up to 24% of the Company's Paid Up Value.
Other Facilities: Income Tax is at a flat rate of 20% on Indian Company shares or debentures profits.
All definitions are applicable.
See also Opening Branch in India Subsidiary in India Starting a business in India Opening