Foreign investment policies of many economies have come a long way since 1990’s . briefly discuss as to how the present policy is different.

Foreign investment policies of many economies have come a long way since 1990’s . briefly discuss as to how the present policy is different from the past.

Ans. Foreign Investment Policy:-
The Ministry of Industry has expanded the list of industries eligible for automobile approval of foreign investments and in certain cases, raised the upper level of foreign ownership from 51 per cent to 74 per cent and further in certain cases to 100 per cent. In January, 1998, the RBI announced simplified procedures for automatic FDI approvals. The announcement further provided that Indian companies will no longer require prior clearance from the RBI for inward remittance of foreign exchange or for the issuance of shares to foreign investors.

Facilitating Foreign investment:-
In the recent budget the finance minister announced the governments commitment to a 90 day period for approving all foreign investments. Government officers will be assigned to larger foreign investment proposals and will facilitates central and state clearance in a time- bound manner. Unlisted companies with a good 3 year track record, have been permitted to raise funds in international markets through the issue of Global Depository Receipts (GDRs) and American Depository Receipts (ADRs). A number of recent policy changes have reduced the discriminatory bias against foreign firms.
The government has awended exchange control regulations previously applicable to companies with significant foreign participation.
• The ban against using foreign brand names / trademarks has been lifted.
• The FY 1994/95 budget reduced the corporate tax rate for foreign companies from 65 per cent to 55 percent. The tax rate for domestic companies was lowered to 40 percent.
• The long-term capital gains rate foreign companies was lowered to 20 percent; a 30 percent rate applies to domestic companies.
• The Indian Income tax Act exempts export earning from corporate income tax for both Indian and foreign firms.
Other policy changes have been introduced to encourage foreign direct and foreign institutional investment.
For instance, the securities and exchange Board of India (SEBI)recently formulated guidelines to facilitate the operations of foreign brokers in India on behalf of register Foreign Institutional Investors (FII’s). These brokers can now open foreign currency denominated or rupee accounts for crediting inward remittances, commissions and brokerage fees.

Relaxation:-
The condition of dividend balancing (off setting the outflow of foreign exchange for dividend payments against export earnings has been eliminating for all but 12 consumer goods industries. A 5 year tax holiday is extended to enterprise engaged in development of industrial facilities. Even without a registered office in India, foreign companies are allowed to start multinational transport services in India.
The Reserve Bank of India (RBI) now permits 100 percent foreign investment in the construction of roads/ bridges. The peak custom duty rate was reduced to 50 percent from 65 percent in the March 1995 budget. Import regime changes included enhancement of the scope of special Import License (SIL) programs and the expansion of freely importable items on the open general License (OGL) list to include some consumer goods.


Trade – Policy Year 2000:-
Special economic Zones to be set up export processing zones at Mumbai, Kandala, Vishakhapatnam and Cochin to be converted into special economic zones.
Quantitative restrictions on 714 items removed. Duty free replenishment certificate scheme for over 5,000 products introduced Major sector specific scheme initiatives in gems and jewellery agro-chemicals, bio – technology, pharmaceuticals, leather, garments, silk, etc.

Foreign Investment Policy of Nepal:-
Nepal has only recently opened the doors to foreign investment. The foreign Investment and Technology Act (1981) as amended in 1992 lays down the law governing foreign investment and the applicable rules and regulations. The New Industrial Policy of 1992 identifies foreign investment promotion as an important strategy in achieving the objectives of increasing industrial production to meet the basic needs of the people, create maximum employment opportunities and pave the way for the improvement in the balance of payments. Foreign investment is expected to supplement domestic private investment through foreign capital flows, transfer of technology, improvement in management skills and productivity and providing access to international markets. In this context HMG is encouraging foreign investments in Nepal by Providing attractive incentives and facilities within a liberal and open policy. The importance attached to foreign investment is clearly reflected in the new constitution adopted by Nepal in 1991.

China’s foreign investment politics:-
In 2008, china reversed its prior tax policy concerning FDI. Under the old policy, foreign investors were taxed at a lower rate than domestic investors. Investors in specific regions such as prolong were provided with various tax exemptions. All this was eliminated in the new income tax code, which mandates a neutral FDI investment framework, no incentives based on nationality or region, Incentives are instead provided for specific encouraged business activities. A limited exception to this policy is provided that allows for tax benefits for investment in the central and western regions.
The new investment policy in 2009: facing the global economic downturn. FDI in china saw a large down turn in 2008: as of November, approved projects were down by over 25%. An seven greater decline is expected in 2009.