FDI is a direct investment into production or business in a country by an individual or company of another country, either by buying a company in the target country or by expanding operations of an existing business in that country.
In India, under the FDI Scheme, investments can be made in shares, mandatorily & fully convertible debentures and mandatorily & fully convertible preference shares of an Indian company by non-residents through two routes:
- Automatic Route: Under the Automatic Route, the foreign investor or the Indian company does not require any approval from the Reserve Bank or Government of India for such investment.
- Government Route: Under the Government Route, the foreign investor or the Indian company should obtain prior approval of the Government of India – (FIPB), (DEA), (MOF) or (DIPP), as the case may be.
Did you know that – “Payments against import of capital goods into India, can also be converted into FDI”!!!