9th June 2025 (9 Topics)
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Foreign Direct Investment (FDI)
Context
As per the data released by the Department for Promotion of Industry and Internal Trade (DPIIT), Maharashtra and Karnataka together accounted for 51% of the total Foreign Direct Investment (FDI) inflows into India during the financial year 2024–25. Maharashtra led with USD 19.6 billion (31%), followed by Karnataka with USD 6.62 billion.
Foreign Direct Investment (FDI)
Definition & Nature
- FDI refers to investment by a person resident outside India:
- In an unlisted Indian company, or
- 10% or more equity in a listed Indian company (fully diluted basis).
- It is a long-term, non-debt creating capital flow.
Routes of FDI
- Automatic Route
- No prior government approval required.
- Post-investment notification to RBI is mandatory.
- Government Approval Route
- Prior approval needed from the relevant Ministry/Department.
- Typically applies to sensitive sectors (e.g., defence, telecom).
Regulatory Framework
- Governed by FDI Policy, 2020.
- Regulated under FEMA (Non-Debt Instrument) Rules, 2019.
- DPIIT: Drafts and oversees policy on FDI.
- RBI: Administers operational aspects and compliance of FDI.
Top FDI-Receiving States in FY 2024–25:
- Maharashtra – USD 6 billion (31% of total FDI).
- Karnataka – USD 62 billion.
- Delhi – USD 6 billion.
- Gujarat – USD 71 billion.
- Tamil Nadu – USD 68 billion.
- Haryana – USD 14 billion.
- Telangana – USD 3 billion.
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