According to the Central Statistical Organization of India, the advance calculation of economic growth rate for 2006-2007 has already crossed the 9% mark. India has also secured the number one place globally as wealth creator – a position mainly contributed to by its dynamic stock market and handsome returns. With several Indian companies exceeding the previous year’s profit in 6 months flat and an impressive 44% of top Fortune 500 companies operating in India, there are opportunities galore here!

Investment opportunities aplenty

Other than the usual bank accounts and deposits, Non-Resident Indians (NRIs) have access to many other investment opportunities on both repatriation and non-repatriation basis. Government issued instruments, domestic mutual funds and shares, and convertible and non-convertible debentures issued by an Indian company are all available for NRI investment.

Those interested in setting up or expanding business in India can do so by forming a company according to the Indian Companies Act through a joint venture or subsidiary, or as a representative office or branch office of a foreign company.

The Foreign Direct Investment (FDI) Policy

Under the automatic approval route, FDI up to 100% is permitted in almost all business projects across all sectors except for few specific activities and segments. Investors opting for this route do not require prior permission from the Government of India or the Reserve Bank of India (RBI). However, on receipt of returns or remittances, investors are required to intimate RBI’s regional office and file necessary documents within 30 days.

Investments in shares issued by Indian companies are outside the scope of FDI and are subject to regulations specified by the Securities and Exchange Board of India (SEBI).

Under the Government route, FDI in activities other than those covered by the automatic route requires prior Government approval and has to be cleared by the Foreign Investment Promotion Board.

FDI in some segments is not allowed under either route – this includes retail trade, atomic energy, lottery, betting or gambling, chit funds, agriculture or plantations, certain activities related to real estate business, and transacting transferable development rights.

It is encouraging that profits earned on foreign investments can be easily repatriated through an authorized agent (an exception being instances where NRIs have specifically opted to invest in ‘non-repatriate’ schemes).