Year 2023 and onwards is being betted as India’s decade.

This would not just be India’s decade but also the decade of Investors who would be investing in India over this decade. As India eases up the operational hazards of doing business, legal regulations, and swiftness of transactions, more Investors are being drawn to India.

With IT sector attracting more than 34% of the total Investments from outside India, other services constituted 22%, and manufacturing appears to be the promising growth sector from investments and operations perspective in India.

Reserve Bank of India, which is the Central Bank, mandates certain sector to go via approval route to take approvals before entering the India market, while most sectors fall under the automatic route category where Business groups do not require specific approvals for entering the Indian market.

It is interesting to look at sectors covered under Automatic route of 100% FDI:

Sector:

1. Agriculture and Animal husbandry: It includes- Floriculture, Horticulture, and cultivation of fruits and vegetables.Production of seeds and planting material.Animal husbandry, pisciculture, aquaculture, apiculture. Agro services.
2. Air Transport Services: Non-scheduled air transport services Services under Aviation sector
3. Airports (Greenfield and Brownfield)
4. Asset Reconstruction Companies It means a company registered with the Reserve Bank of India (Section 3, Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002)
Auto components Subject to the provisions of FDI policy, investment in the manufacturing sector is under FDI automatic route.
5. Automobiles Subject to the provisions of FDI policy, investment in the manufacturing sector is under FDI automatic route.
6. Biotechnology (Greenfield)
7. Broadcasting Services (up-linking of Non-news and current affairs TV channels and Down linking of TV channels)
Broadcasting Carriage Services Teleports,DTH,Cable Networks (MSOs operating at National, State or district level),Mobile TV,Headend in the sky Broadcasting Service,Cable Networks (other MSOs that do not undertake up-gradation of networks).
8. Capital Goods Subject to the provisions of FDI policy, investment in the manufacturing sector is under FDI automatic route.
9. Wholesale Trading including sourcing from MSEs Cash and Carry wholesale Trading
10. Chemicals Subject to the provisions of FDI policy, investment in the manufacturing sector is under FDI automatic route.
11. Coal and Lignite Mining of coal and lignite for captive consumption by power projects, iron and steel and cement units;Other eligible activities under the provisions of the Coal Mines (Nationalization) Act, 1973.Setting up of coal processing plants such as washeries provided that the company shall not do coal mining, not sell washed coal or sized coal from the coal processing plants in the open market and shall supply the same to those who are supplying raw coal to coal processing plants for washing or sizing.
12. Construction Development- Townships, Housing, Built-up Infrastructure
13. Construction of Hospitals
14. Credit Information Companies
15. Duty-Free Shops It means shops set up in the custom bonded area at International Airports, Seaports, and Land Custom Stations, where there is International Passenger Transit.Foreign investment in such shops is subject to compliance of conditions under the Customs Act, 1962, and other rules and regulations.Duty-Free Shop entity shall not involve in any retail trading in the domestic tariff area of the country.
16. E-Commerce Activities Subject to FDI policy, e-commerce entities shall not engage in Business to Consumer e-commerce but would engage only in Business to Business e-commerce.
17. Electronic Systems Subject to the provisions of FDI policy, investment in the manufacturing sector is under automatic route.
18. Food Processing Subject to the provisions of FDI policy, investment in the manufacturing sector is under FDI automatic route in India.
19. Gems and Jewellery Subject to the provisions of FDI policy, investment in the manufacturing sector is under FDI automatic route in India.
20. HealthCare (Greenfield)
21. Industrial Parks (New and Existing)
22. IT and BPM
23. Leather Subject to the provisions of FDI policy, investment in the manufacturing sector is under automatic route.
Manufacturing Subject to the provisions of FDI policy, investment in the manufacturing sector is under FDI automatic route in India.
24. Mining and Exploration of metal and nonmetal ores Including gold, diamond, silver, and precious ores but not including titanium bearing minerals and its ores,Subject to the Mines and Minerals Act, 1957.
25. Other Financial Services Financial Services Activities regulated by the regulators of financial sectors such as RBI, SEBI, IRDA, NHB, or any other regulator of the financial sector as may be notified by the Government of India.
26. Services under the Civil Aviation sector such as Maintenance and Repair Organisations Including flying training institutes and technical training institutes.
27. Petroleum and Natural Gas Exploration activities of oil and natural gas fields;Infrastructure related to marketing of petroleum products and natural gas;Marketing of natural gas and petroleum products;Petroleum product pipelines, market study and formulation, and petroleum refining in the private sector.
28. Pharmaceuticals (Greenfield)
29. Plantation sector FDI is allowed in the Tea sector;Coffee Plantations;Rubber plantations;Cardamom Plantations;Palm oil tree plantation and olive oil tree plantation.Besides it, FDI is not allowed in any other plantation sector.
30. Ports and Shipping
31. Railway Infrastructure
32. Renewable Energy
33 Roads and Highways
34. Single Brand Product Retail Trading
35.Textile and Garments Subject to the provisions of FDI policy, investment in the manufacturing sector is under FDI automatic route in India.
36. Thermal Power
37. Tourism and Hospitality
38. White Label ATM Operations

Other sectors fall under approval or prohibited categories, most of them falling under the specific approval route process.

From a global standpoint, it has become imperative for Investors and Business groups to understand FDI regulations in India, including process of Setting up a company in India, Tax registrations, specific industry licenses, etc.

Authors:
Shreya Gupta & Anuj Bali
Team Anbac Advisors