Foreign investment plays an important role in the long-term economic development of a country by augmenting availability of capital, enhancing competitiveness of the domestic economy through transfer of technology, strengthening infrastructure, raising productivity, generating new employment opportunities and boosting exports. Foreign investment, therefore, is a strategic instrument of development policy.

In the wake of economic liberalisation policy initiated in 1991, the Government of India has taken several measures to encourage foreign investment, both direct and portfolio, in almost all sectors of the economy. However, the emphasis has been on foreign direct investment (FDI) inflows in the development of infrastructure, technological upgradation of industry and setting up Special Economic Zones (SEZs).

India has consistently been classified as one of the most attractive investment destinations by reputed international rating organisations. With a vast reservoir of skilled and cost-effective manpower, India offers immense opportunities for business process outsourcing (BPO), knowledge process outsourcing (KPO) and engineering process outsourcing (EPO).

In spite of the fact that India is strategically located with access to a vast domestic and South Asian market, its share in world`s total flow of direct/portfolio investment to developing countries is dismally low. China, with GDP size 2.2 times of India, is able to attract 20 times the FDI inflow to India. Similarly, Singapore, Indonesia, Philippines, and Thailand also attract greater amounts of foreign investment than India.

The current world scenario calls for further liberalisation of norms for foreign investment in India. The present book deals with almost all aspects of foreign investment in India. It particularly focuses on current policies and procedures for foreign direct investment as well as foreign portfolio investment. Foreign investment policies of other countries have also been highlighted to make suitable comparisons with India`s policies in order to underscore the measures that are needed to attract higher levels of foreign capital and technology.

1. Foreign Investment: Theoretical Settings - Foreign Direct Investment (FDI) versus Portfolio Investment; Macro-economic and Micro-economic Aspects of FDI; Resource-seeking and Market-seeking FDI; Crowding-in and Crowding-out Impacts of FDI; Advantages of FDI for the Host Country; Disadvantages of FDI for the Host Country; Determinants of FDI; FDI and Corporate Strategies; Advantages of Portfolio Investment Inflows; Disadvantages of Portfolio Investment Inflows; Tax Incentives to Attract Foreign Investment; Interaction between International Taxation and FDI; International Double Taxation; Bilateral Tax Treaties; Multilateral Tax Treaties; International Tax Conventions in Historical Perspective; Implications of Different Forms of Double Taxation Relief; Global Trends in Bilateral Tax Treaties; International Tax Avoidance and Evasion.

2. Foreign Investment: Global Experiences and Comparisons - Foreign Investment: New Strategy of Faster Growth; Global Trends in FDI; Foreign Investment for Privatisation; Foreign Investment: Comparison between India and China; Tax Treatment of Companies in Select Asian Economies; International Tax Competition to Attract FDI; Attempts towards International Tax Harmonisation; FDI Prospects: UNCTAD World Investment Prospects Survey, 2007-2009; Conclusion.

3. Foreign Investment in India: Post-Independence Policy Review - Foreign Exchange Regulation Act (FERA), 1947; First Five Year Plan (1951-52 to 1955-56) on Foreign Capital; Fourth Five Year Plan (1969-70 to 1973-74) on Foreign Capital; Foreign Exchange Regulation Act (FERA), 1973; Sixth Five Year Plan (1980-81 to 1984-85) on Foreign Technology/Capital; Seventh Five Year Plan (1985-86 to 1989-90) on Foreign Capital; FDI in Industrial Policy Statement, 1991; Eighth Five Year Plan (1992-93 to 1996-97) on Foreign Capital; Ninth Five Year Plan (1997-98 to 2001-02) on Foreign Capital; Foreign Exchange Management Act (FEMA), 1999; Tenth Five Year Plan (2002-03 to 2006-07) on Foreign Capital; Report of the Committee on FDI, 2002; Post-1991 Initiatives to Attract Foreign Investment; Conclusion.

4. Foreign Direct Investment in India: Current Policies and Procedures - FDI Policy Regime; Recent Initiatives to Attract FDI; Routes for Inward Flows of FDI; Post-approval Procedures; Entry Options for Foreign Investors; Entry Rules and Sectoral Caps on FDI; Foreign Technology Agreements; Mergers, Acquisitions and Disinvestment; Takeover Code; Competition Law and Mergers and Acquisitions; Important Legislations Governing Business in India; Important Rules/Regulations Governing Foreign Investments in India; Investment Promotion and Facilitation in India.

5. Foreign Direct Investment: Trends, Concerns and Outlook - India as an Investment Destination; India`s Performance in the Global Context; Foreign Investment Trends in India; FDI Performance of India and China: A Comparison; Issues and Concerns; Outlook.

6. Foreign Direct Investment in Infrastructure - Infrastructure Development: An Introduction; Infrastructure Finance: Nature and Options; Recent Policy Announcements on Infrastructure; Infrastructure: Sector Caps and Entry Routes; Power; Telecommunications; Roads; Ports; Civil Aviation and Airports; Petroleum and Natural Gas; Urban Infrastructure.

7. Foreign Direct Investment in Services - Growth of Service Sector in India; Services: Sector Caps and Entry Routes; Banking and Financial Services; Insurance; Real Estate and Construction; Retail Trade; Tourism.

8. Foreign Direct Investment in Manufacturing - Industrial Liberalisation; Manufacturing: Sector Caps and Entry Routes; Metals: Steel and Aluminium; Textiles and Garments; Electronics Hardware; Chemicals; Automobiles; Auto Components; Gems and Jewellery; Food and Agro Products.

9. Foreign Direct Investment in Natural Resources - Mineral Wealth of India; Tenth Five Year Plan (2002-03 to 2006-07) on Mineral Sector Policy; High Level Committee on the National Mineral Policy, 2006; Eleventh Five Year Plan (2007-08 to 2011-12) on Mineral Policy; Natural Resources: Sector Caps and Entry Routes; Coal; Metal Ores; Oil and Gas Exploration.

10. Foreign Direct Investment in Knowledge Economy - Information Technology; Knowledge Economy: Caps and Entry Routes; Pharmaceuticals and Biotechnology; Healthcare; IT and IT-Enabled Services.

11. Foreign Portfolio Investment - International Capital Market and Portfolio Investments; Liberalisation of Portfolio Investment Flows into India; Eligibility for Registration as FII; Restrictions on Foreign Portfolio Investments; Restrictions on Foreign Ownership in Select Asian Countries; Conclusion.

12. Taxation of Foreign Income and India`s Bilateral Tax Treaties - Post-liberalisation Tax Reforms in India; Main Features of Company Taxation in India; Tax Holiday Schemes; Tax Incentives for Infrastructure Development; Taxation of Non-residents in India; Indian Law on Double Tax Relief; India`s Tax Treaties with Various Countries; Salient Features of Tax Treaties between India and Other Countries; Double Taxation Relief Where no Tax Treaty Exists; Issues Relating to Indo-Mauritius Tax Treaty; India-Singapore Comprehensive Economic Cooperation Agreement (CECA); Transfer Pricing Regulations in India; Assessment and Collection of Tax from Non-residents in India.

13. Foreign Exchange Regulation and Management in India - Introduction; Foreign Exchange Policy Initiatives since 1991; Conclusion.

14. India`s Export-Import (EXIM) Policy - Introduction; EXIM Policy, 1992-97; EXIM Policy, 1997-2002; Modified EXIM Policy, April 1998; EXIM Policy, 1999-2000; EXIM Policy, 2000-2001; EXIM Policy, 2001-2002; EXIM Policy, 2002-2007; EXIM Policy, 2003-04; Mini EXIM Policy, January 2004; Foreign Trade Policy (FTP) 2004-09.

15. India`s Financial System - From Financial Repression to Financial Liberalisation (1991 onward); India`s Approach to Financial Sector Reforms; Strategy of Financial Sector Reforms; Achievements and Areas of Concern; Reserve Bank of India (RBI): New Role; Recent Initiatives to Strengthen Financial System; Future of India`s Financial Sector; Conclusion.

16. Capital Market in India - Meaning and Importance; Capital Market in the Pre-reforms (i.e. Pre-1991) Period; Reforms in the Capital Market since 1991; Capital Market in the 2007-08 Union Budget; Conclusion.

17. India`s Industrial Policy - Pre-liberalisation Industrial Policy (1947 to 1980); Disillusionment and Rethinking; Pressure for Industrial Liberalisation; New Economic Policy and Industrial Liberalisation, 1985; Industrial Policy Statement, 1991: The Turning Point.

18. Special Economic Zones (SEZs) in India - Meaning and Types of SEZs; SEZs in India; Main Features of the SEZ Policy in India; Criteria for Approval; Conversion of EPZs into SEZs; Performance of SEZs in India; Apprehensions and Concerns; SEZs and National Security; Lessons from China.

19. Industrial Relations and Labour Laws in India - Introduction; Economic Reforms and Labour Policy; Contract Labour; Industrial Disputes Act, 1947; National Commission on Labour, 2002; Labour Reforms: A Touchy Issue; Conclusion.

20. Measures to Improve Foreign Investment Climate in India - Deterrents to FDI Flows into India; Measures to Improve FDI Environment; Indian Economy and FDI: Outlook 2010; Summing Up.