
Get free Consultant With out Experts.
Notice: File your Company Audit before the 30th September deadline. Talk to our expert

Complete FDI compliance support – FEMA & RBI filings done within deadlines.
India’s highest-rated
legal tax and compliance platform.
Talk to our experts to kickstart your business registration process.
Foreign Direct Investment (FDI) in India is governed by the Foreign Exchange Management Act (FEMA) of 1999, the FDI Policy, and rules and regulations issued by the Reserve Bank of India (RBI).
Foreign Direct Investment (FDI) is a pivotal component of the global economy, encompassing the direct investment made by a business or individual in one country into business interests located in another. Unlike portfolio investments, which involve passive investments in stocks or bonds, FDI implies a significant degree of control or influence over the foreign enterprise, usually defined as ownership of 10% or more of its equity. FDI can manifest in several forms, including greenfield investments, where a company builds new facilities from the ground up; brownfield investments, where a company purchases or leases existing facilities; and joint ventures, where a local company and a foreign entity collaborate to create a new business entity.
FDI plays a crucial role in promoting economic development in the host country by infusing capital, advanced technology, and expertise into local markets. This influx of investment can lead to job creation, increased productivity, and improved infrastructure, contributing to the overall growth of the economy. Furthermore, FDI can enhance a country’s export capabilities by integrating local industries into global supply chains, thereby improving trade balances.
The legal liability of a private limited company's stockholders is restricted. You will be responsible for paying the liabilities of the company as a shareholder to the extent of your contribution. This protects your personal assets to cover the company's debts.
It generates employment opportunities in the host country, helping to reduce unemployment rates and improve living standards for local populations.
FDI often involves the transfer of advanced technology and managerial skills from foreign companies to local firms, enhancing productivity and competitiveness.
Foreign companies can help boost the host country’s export capacity by integrating local firms into global supply chains and providing access to international markets.
FDI can lead to significant investments in infrastructure, such as roads, utilities, and telecommunications, which benefit both the investing company and the local economy.
By attracting foreign investment, host countries can diversify their economies, reducing dependence on a limited number of industries and enhancing resilience against economic downturns.
Checklist for Foreign Direct Investment (FDI)
Documents Required for Foreign Direct Investment (FDI)
Business Registration Documents:
Foreign Investment Approval:
Proof of Identity:
Financial Statements:
In India, Foreign Direct Investment(FDI) are differentiated into different types based on share distribution and other aspects.
Involves establishing new facilities or operations from scratch in a foreign country, such as building new factories, offices, or distribution centers. Greenfield investments often result in significant job creation and infrastructure development in the host country.
Refers to acquiring or leasing existing facilities in the host country. Instead of building from scratch, the investor buys or merges with a local company, which can accelerate market entry and reduce setup costs.
A foreign investor partners with a local company to create a new business entity. Each party contributes assets and shares control, risks, and profits. Joint ventures are common in sectors where foreign ownership is restricted.
Involves purchasing an existing company or merging with a local firm in the host country. This approach provides immediate market access, local expertise, and established operations, which can reduce the investment’s overall risk.
Investment in a foreign company that is part of the supply chain, either upstream (e.g., raw materials) or downstream (e.g., distribution). Vertical FDI allows companies to secure resources or improve the distribution network for their products.
Involves investing in a foreign business that operates in the same industry as the investing company. For example, a car manufacturer may establish a production facility in another country to serve that market.
Characteristics of Foreign Direct Investment (FDI)
How to Register for Foreign Direct Investment (FDI)
Identify and Define Investment Type
Market Research and Feasibility Study
Prepare Business Registration Documents
Obtain Required Approvals and Permits
Open a Local Bank Account
Comply with Tax and Legal Requirements
Submit FDI Documentation and Investment Proposal
Establish a Local Office or Partnership
Adhere to Reporting and Transparency Requirements
Receive Investment Approval and Begin Operations
By continuing past this page, you agree to our Terms and conditions , Cookie Policy, Privacy Policy and Refund Policy © – DAV Business Services Pvt. Ltd. All rights reserved.
Copyright © 2010-2024, All Right Reserved DAV Business Services Pvt. Ltd.