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Policy for Foreign Direct Investment |
Policy for Foreign Direct Investment
Furtherance of foreign direct investment constitutes an integral part of India’s economic policies. Foreign direct investment plays an important role in accelerating economic growth by way of infusion of capital, technology and modern management practices. The Government of India has initiated a liberal and transparent policy for Foreign Direct Investment where most activities are opened to foreign investment on automatic route without any limit on the extent of foreign ownership. Some of the recent initiatives taken to further liberalize the FDI regime, inter alia, include opening up of sectors such as Insurance (up to 26%); development of integrated townships (up to 100%); defense industry (up to 26%); tea plantation (up to 100% subject to divestment of 26% within five years to FDI); Enhancement of FDI limits in private sector banking, allowing FDI up to 100% under the automatic route for most manufacturing activities in SEZs; opening up B2B e-commerce; Internet Service Providers (ISPs) without Gateways; electronic mail and voice mail to 100% foreign investment subject to 26% divestment condition etc. Measures of investment facilitation have also been strengthened through Foreign Investment Implementation Authority.
The Industrial policy of India was announced by the Central Government in the Resolution No. 1(3)-44(13)48 on 6th April, 1948 and was later approved by the Central Legislature. It aimed to centrally control the development and regulation of a number of important industries which affected the economy of the whole country and the development of such industries needed to be governed by the economic factors of all-India import. Thus, the Industries (Development and Regulation) Bill was introduced to achieve this objective. After being passed by both the Houses of Parliament, the Bill received the assent of the President on 31st October, 1951. Finally, it came into force on 8th May, 1952 as The Industries (Development and Regulation) Act, 1951 (65 of 1951). This Act seeks to secure the planning of future development on healthy and balanced lines by the licensing of all new undertakings by the Central Government. The act confers power on the Government to make rules for the registration of existing undertakings to regulate the production and development of industries in the First Schedule and consultation with Provincial Governments on these matters. The Act also provides for the constitution of a Central Advisory Council. Prior consultation with the Central Advisory Council would be obligatory before the Central Government takes measures regarding revocation of a license or taking over the control and management of any industrial concern. The Industries (Development and Regulation) Act, 1951 has undergone several amendments from time to time which are mentioned hereunder:
- The Industries (Development and Regulation) Amendment Act, 1953 (26 of 1953).
- The Industries (Development and Regulation) Amendment Act, 1956 (71 of 1956).
- The Repealing and Amending Act, 1957 (36 of 1957).
- The Industries (Development and Regulation) Amendment Act, 1961 (51 of 1961).
- The Industries (Development and Regulation) Amendment Act, 1962 (37 of 1962).
- The Industries (Development and Regulation) Amendment Act, 1965 (6 of 1965).
- The Industries (Development and Regulation) Amendment Act, 1971 (72 of 1971).
- The Industries (Development and Regulation) Amendment Act, 1973 (67 of 1973).
- The Industries (Development and Regulation) Amendment Act, 1974 (32 of 1974).
- The Industries (Development and Regulation) Amendment Act, 1979 (17 of 1979).
- The Industries (Development and Regulation) Amendment Act, 1984 (4 of 1984).
- The Delegated Legislation Provisions (Amendment) Act, 1986 (4 of 1986).
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