India is a vibrant economy:

• Self-sufficiency in agriculture
• High domestic savings and investment rates
• Buoyant industrial growth (rise from 0.6 percent in 1990-91 to 6% percent in 2000-01).
• Large and diversified infrastructure and industry, spread across the country
• Strong and mature private sector
• Current account convertibility
• Partial capital account convertibility
• High exports growth rate and a comfortable balance of payments situation
• Developed banking system and financial markets
• Low inflation.

India has certain fundamental strengths that assure and facilitate foreign investment:

• One of the largest economies in the world.

• Strategic location - access to the vast domestic and South Asian market.

• A large and rapidly growing consumer market up to 300 million people, constitute the market for branded consumer goods - estimated to be growing at 8% per annum. Demand for several consumer products is growing at over 12% per annum.

• Skilled man-power and professional managers are available at competitive cost.

• One of the largest manufacturing sectors in the world, spanning almost all areas of manufacturing activities.

• One of the largest pools of scientists, engineers, technicians and managers in the world.

• Rich base of mineral and agricultural resources.

• Sophisticated financial sector.

• Vibrant capital market with over 9,000 listed companies and market capitalization of US$ 154 billion (March,1996)

• Well developed R&D infrastructure and technical and marketing services.

• Policy environment that provides freedom of entry, investment, location, choice of technology, production, import and export.

• Well balanced package of fiscal incentives.

• A sophisticated legal and accounting system.

• English is widely spoken and understood.

• Rupee is convertible on Current Account at market determined rate.

• Free and full repatriation of capital, technical fee, royalty and dividends.

• Foreign brand names are freely used.

• No income tax on profits derived from export of goods.

• Complete exemption from Customs Duty on industrial inputs and Corporate Tax Holiday for five years for 100 per cent Export Oriented units and units in Export Processing Zones.

• Corporate Tax applicable to the foreign companies of a country with which agreement for avoidance of Double Taxation exists, can be one which is lower between the rates prevailing in any one of the two countries and the treaty rate.

• A long history of stable parliamentary democracy.

  FDI up to 100% is allowed under the automatic route in all activities/sectors except the following which require approval of the Government :

  • Activities/items that require an Industrial Licence

  • Proposals in which the foreign collaborator has an existing venture/tie up in India in the same field

  • Proposals for acquisition of shares in an existing Indian company in some cases

  • All proposals falling outside notified sectoral policy/caps or under sectors in which FDI is not permitted

  Government Approval Route

  All activities which are not covered under the automatic route , require prior Government approval. Areas/sectors/activities hitherto not open to FDI/NRI investment shall continue to be so unless otherwise notified by Government.