FOREIGN DIRECT INVESTMENT:

Foreign Direct Investment today, plays a huge role in uplifting the economy of any country. Foreign Direct Investment is an investment made by an individual, a firm or a company in another country by way of investing in the equities or obtaining interest in the foreign company or by creating a subsidiary company for the purpose of expansion of business and exploring new markets. FDIs have been a boon to specially the developing countries.

ENTRY ROUTES FOR FDI IN INDIA:

Automatic Route:
In Automatic Route, prior approval need not be taken from the Government of India prior to making the investment.

Government Route:  
In Government Route, approval must be taken from the Government of India before investing.

Why invest in India?

India being the world’s fifth largest economy by nominal GDP and third largest by Purchasing Power Parity (PPP) has been an attraction for people looking to invest from across the world. India has been given the first rank is amongst all the South Asian countries for providing Business Conducive Environment. The campaign “Make in India” has increased the flow of FDI in India by approximately 49.94%. As on today, India remains a part of the top 100-club on Ease of Doing Business (EoDB) and also holds the 1^st rank in the Greenfield FDI ranking. India has come out as the FDI destination exceeding US and China. By the end of March 2022, India had received the highest FDI approximately $83.57 billion.

Following are a few reasons why India should be a more favored destination:

• Availability of workforce and operational manpower at a much lower cost compared to other countries.
• Government incentives.
• Region specific policies for industries.
• Single Window Clearances.
• The expenditure of the essential amenities necessary for business is comparatively lower in India.
• The taxation system in India being steady gives clarity to foreign investors to finalize their plans of doing business or investing in India.
• India is a centre for startups, from e-commerce to technology to financial services, etc.

For acquiring the land in India one can invest by opting for Greenfield Investment or Brownfield Investment:

Greenfield Investment:
Greenfield investment is a type of investment wherein a business entity starts its business in a foreign country from scratch on an undisturbed land parcel. In this type of investment no equipment or structure is available with the investor, one needs to build everything from ground up.

A few advantages of Greenfield investment are as follows:

1. The level of control over the business by the parent company is higher.
2. Creates job opportunities.
3. This type of FDI is encouraged by developing countries by giving the companies various incentives/ subsidies and tax benefits.

Brownfield Investment:
Brownfield Investment is when a company instead of buying an entirely new land and building everything from ground up, either acquires or leases an already existing structure.

A few advantages of Greenfield investment are as follows:

1. Expenditure is lower since there is already existing structure, facilities, network, etc.
2. If activity remains the same, the already existing licenses and consents from the Government makes it easier for the business to commence.
3. Training costs can be saved where there is already existent staff.

Eligibility for Investing In India:

1. A trust, company or partnership firm which is incorporated on foreign land and is owned and controlled by Non Resident Indian.
2. A Non- resident entity.
3. A Foreign Venture Capital Investor (FVCI) which is registered with the Securities and Exchange Board of India (SEBI) can invest up to 100% of the capital of an Indian company engaged in any activity mentioned in the Schedule 6 of Notification No. FEMA 20/2000.
4. Overseas Corporate Body (OCBs) through the Government route can invest with beforehand permission from the Gov. of India and with the prior approval of the Reserve Bank of India in the case of Automatic route.
5. Foreign Institutional Investors (FII), Foreign Portfolio Investors (FPI) and NRIs can invest in the capital of Indian company under the Portfolio Investment Scheme or trade through a registered broker in capital of Indian Companies on recognised Indian Stock Exchanges as per the terms and condition of FEMA regulations.

One can commence business in India by the following ways:

• One can form a whole owned subsidiary of a foreign company.
• One can set up offices of a foreign entity.
• One can collaborate with an Indian Company or a Joint Venture (JV)

Activities that can be carried out by Foreign Companies via their Indian Offices:

1. Research work can be carried out of which, the parent company is a part.
2. Providing consultancy services or professional services.
3. Aiding financial or technical collaboration among the Indian company and the overseas group/ parent company.
4. Import and Export of goods.
5. Providing development or software in India and services in Information Technology (IT).
6. Acting on behalf of the parent company in as India as buying/selling agents.
7. Providing technical support to the products supplied by the parent company.
8. Foreign airline/ shipping company.

Investors for the purpose of carrying out business operations like manufacturing/ services can enter the Indian Market by:

1. Forming a whole subsidiary which is entirely owned by a Foreign Company.
2. Having a Joint Venture by any Indian Company.

Following offices of Foreign Entity can be established:

• Branch Office:
  Branch Offices are permitted to carry out all business activities mentioned above subject to RBI clearances. There is permission to Non- resident companies to establish Branch Offices in the Special economic Zones (SEZs). Such Branch Offices will not be allowed to operate or carry out businesses or transactions outside the SEZs. Approval from RBI will not be necessary for setting up a branch in SEZs subject to specified conditions.
  
• Project Office:
  RBI grants permission to foreign companies for establishing Project Offices in India given that they must have secured a contract from an Indian entity for the purpose of executing a project in India and that the project shall be funded by inward remittance from overseas or that the project is funded by a bilateral or multilateral International Financing Agency or the project must have been cleared by an relevant authority or an entity or company in India awarding the contract has been granted Term Loan by a Public Financial Institution or a bank for the project.
  
• Liaison Office:
  Liaison office represent the parent company and does the job of developing the network. A liaison office cannot earn any income in India.  Before opening a company should have earned profit subsequently for 3 years which shouldn’t be amounting less than USD 50,000. One must open an office within 3 years as per the validity which can be renewed.

Following are the investees eligible for investing in India:

1. Private Limited Company
2. Proprietorship
3. Partnership Firm
4. Limited Liability Partnerships (LLPs)
5. Start Up companies
6. Trusts
7. Investment vehicle

Why invest in Maharashtra?

Maharashtra is the preferred number one destination for investment in the country. Industrial conditions which also include the infrastructure and policies offered by the Government of Maharashtra is comparatively better than that which is offered by the other states. Having 4 International Airports and 7 Domestic Airports, over 303,300 km of road network and 6,165 km of rail network, the connectivity through Road, Rail, Air and Water ways is unmatched. The state’s coastline stretched up to 720 km. Maharashtra being the largest economy of India contributes to the GDP (Gross Domestic Product) by a total share of 15%.

The Maharashtra Industrial Development Corporation (MIDC) has a total of 289 industrial areas with approximately 89000 hectors of land all over Maharashtra. MIDC has the largest water supply network. Maharashtra has about 9 Special Economic Zones (SEZs) and about 13 Chemical zones.

Following are the key industrial areas in Maharashtra:

1. Mumbai, Raigad & Thane:- IT and ITES, Gems & Jewellery, Logistics, Pharma / Chemical, Engineering.
2. Aurangabad:- Engineering, Auto, Pharma, Chemical.
3. Solapur:- Food Processing, Textile.
4. Ahmednagar/ Nashik:- Food Processing, Engineering, Winery
5. Pune:- Engineering, Chemical, Auto, Defense, IT / ITES and ESDM, FMCG
6. Nagpur / Amravati :- Logistics, Food Processing,  IT, Textile

Maharashtra Government offers the following incentives:

• Industrial Promotion Subsidy (IPS) in form of ‘Gross SGST’ Abatement
• Power Tariff Subsidy
• Stamp Duty Exemption
• Electricity Duty Exemption
• Additional incentives for Thrust Sectors, Green Energy and Industry 4.0
• 20% additional incentive for food processing units, agro units processing units and Farmer Producer Organizations (FPOs)
• Special Incentives for SC/ST and Women Entrepreneurs
• Special Incentives for underdeveloped areas

MIDC Consultants can help you in following:

1. Allotment / Transfer of MIDC plots
2. Statutory permits and licenses required for the industrial activity
3. Services related to Building Plan Approval, BCC & Fire NOC
4. Audits, Compliance and Consulting
5. Benefits under Director of Industries (DIC) polices
6. Title Search & Title report of the property
7. Preparation of Deed documents
8. Conversation of Land from Agriculture to Non Agriculture