A recent UNCTAD survey projected India as the second most important FDI destination (after China) for transnational corporations during 2010-2012. A report by Ernst and Young, foreign direct investment in India has witnessed an eight fold increase in its FDI in March 2012. The FDI in 2010 was $44.8 billion, and in 2011 it experienced an increase of 25% to $50.8 billion. With the government initiating further reforms into the sector, India is set to attract major investments in the near future.
Registrars of Companies (ROC) in India, appointed under Section 609, are vested with the principal duty of registering companies established in the respective States and Union Territories in India.
The setting up of business in India is regulated by the Indian Companies Act, 1956. The Act lays down the guidelines for foreign companies that wish to set up their business in India. As per the law, these companies can:
To encourage FDI in India, the government has initiated a number of steps including allotting special land to major industries and service sectors. These include the Technology Park (both hardware and software), Special Economic Zones (SEZs), Export Promotion Zones (EPZs), etc. The Growth Center Schemes also aim to attract investors.
FDI is allowed in most of the sectors, as per the extant FDI Policy of India. Most of them are covered under the Automatic Route after the liberalization of the Forex Regulations of India and a few are still covered under the Approval Route. However FDI is prohibited under the Government Route as well as the Automatic Route in the following sectors:
An Indian company may receive Foreign Direct Investment under the following two routes: