1. What are the main reasons foreign investors invest in your jurisdiction?

India has emerged as one of the most attrac­tive destinations for foreign investment from around the globe. The United Nations Conference on Trade and Development's World Investment Report 2017 ranks India within the top ten countries around the world for attracting foreign direct investment (''FDI'') inflows and fourth amongst the Asian countries. According to the said report, India's total FDI inflow in the year 2016 was USD 44,486 bn. As per the statistics made available by the Department of Industrial Policy and Promotion, the FDI into India during the period from April-September 2016 rose 30% year on year with the most investments in the service sector industries followed by telecom­munications and trading.

There are several reasons for India to remain as a top-notch destination for FDI inflow. While some of these are specific to different business sectors, many are common to all sectors. One of the key attraction across the board remains the low cost of labour intensive set up ranging from manufacturing units (which require both unskilled and skilled labour) to any service industry such as information technology (which needs an expert and technically skilled workforce).

Essentially the initiatives of the Government of India, have persistently worked towards liberalizing the FDI regime, and succeeded in boosting the growth of FDI over the years.

2. What foreign investment legislation is in place in your jurisdiction (e.g. Foreign Investment Law or Foreign Investment Catalogue)? Please provide a brief overview of such legislation.

Foreign investments into India are gov­erned by the Foreign Direct Investment Policy (''FDI Policy'') of India issued by the Ministry of Commerce and Industry through the Department of Industrial Policy and Promotion.

With liberalization being the focus of the gov­ernment of India for over two decades, FDI in most of the sectors except few is permitted up to 100% under the automatic route. FDI in cer­tain sectors is still reserved under the approval route either up to 100% or over and above the prescribed sectoral cap for strategic or security reasons. Broadly, the FDI Policy lays down the sectoral cap on FDI in various business/indus­try sectors and terms and conditions relating to FDI in each of the said sectors.

Although there is no prior approval required in relation to the FDI except in few sectors, post investment notification is required to be provided to the Government of India. The FDI Policy prescribes various reporting requirements, including notification of receipt of remittance in foreign currency as FDI and allotment of shares to a foreign resident.

Additionally, a transaction involving foreign currency is governed by the Foreign Exchange Management Act 1999 (''FEMA'') and regu­lations issued thereunder the central bank of India namely, the Reserve Bank of India. FEMA regulations play a vital role in governing FDI transactions.

3. What restrictions are placed on foreign investment? Does this differ at local levels of government?

Over the last few years, the government of India has revised the FDI norms to open the gates for FDI in most of the sectors and has been persistently making efforts to liberalize the FDI Policy to the greatest extent. The sectoral caps and restrictions are reviewed and revised from time to time with the aim of liberalization of the regime unless justified for the larger public interest and security reasons.

The current FDI Policy prohibits foreign investment in the sectors of lottery business, online lotteries, manufacturing of cigarettes or tobacco or tobacco related products, atomic energy, railways, gambling and betting includ­ing casinos, chit funds, 'nidhi' companies, trading in transferable development rights and the business of real estate or construction of farmhouses. Broadly, the restriction in terms of sectoral caps is 49% for most of the capped sectors. Investment that is over and above 49% of FDI in the capped sectors requires prior government approval.

The FDI Policy is applicable across India and the above described sectoral caps are applicable across all states. Among these sectors, it is only in relation to the sector of multi-brand retail that the state governments have been given discretion to permit FDI even up to 51%.

4. What are the most common business vehicles for foreign investors? How long do they take to be set up? What are the key requirements for the establishment and operation of these vehicles?

The current FDI Policy permits FDI through various business vehicles which primarily include a company, sole proprietorship and a limited liability partnership.

Conventionally, FDI has always been brought into India to be infused in a company which may either be a private or a public limited com­pany. A major consideration for foreign entities looking to bring FDI into India is whether to set up a wholly owned subsidiary to carry out business operations in India independently or to form a joint venture company with an expe­rienced Indian partner. In our experience, the decision between a wholly owned subsidiary and a joint venture company is influenced by the nature of business activity that is to be carried out and the level of local assistance that will be required to run the business effectively.

FDI in more recently liberalized business vehi­cles such as sole proprietorships and limited liability partnerships, are not common ways of infusing foreign direct investment into India at present.

The government of India, has recently integrated and simplified the process for incor­porating a company for foreign investors who are incorporating a joint venture company or a wholly owned subsidiary. Upon filing a single form, a company can be incorporated within 6-7 working days. The main requirements for incorporating a company are a minimum of two shareholders and two directors (one director being an Indian national).

5. Under what circumstances are foreign investments subject to government approvals? What is the process and timeline for such approvals?

There are very few sectors in which FDI can be brought in only with prior government approval. These are mining and mineral sep­aration of titanium bearing minerals and ores, publishing/printing of scientific and technical magazines/specialty journals/ periodicals, publication of facsimile edition of foreign news­papers, private security agencies, multi brand retail trading, pharmaceutical (brownfield) and satellites.

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