A Study of the Challenges Faced by Foreign Companies while Entering into the Indian Market: Regarding the New FDI Policy
Research Background and Scope
This report intends to provide the FDI landscape, regulatory frameworks and current status of FDIs in India. This report will help companies interested in investing in India. After the decision of going for economic reforms in 1991, the Indian government took many steps to bring in foreign direct investments (FDIs). As time proceeded there were many iterations to the original framework and today the reforms are at their peak. There were many challenges on this route and there are many more to come however the government is working on sorting them. Still, there are some areas an investor should take care of.
Statement of Problem
The Narasimha Rao-led Government introduced liberalization and allowed foreign companies to invest and do business in India. Despite making a favourable environment for the business and economy, there are certain issues and challenges which foreign companies/investors face while investing in India. The regulatory framework of the country creates a hindrance to a certain amount and impacts the decision of these investors in investing in India and expanding the business and economy of the country.
Hypothesis
The report assumes that after the economic policy of 1991 and the introduction of the liberalization policy, India opened the gates for foreign investors and companies to do business in India and invest in India. Many regulations and laws have been eased to attract and increase foreign direct investments and development the business market in India.
Research Questions
You will find answers for:
- How the foreign companies defined in India?
- What are the different methods of establishing foreign companies in India?
- What is the procedure for registering foreign companies in India?
- How can Indian laws and regulations impact foreign companies while doing business in India?
- What issues and concerns does a foreign investor face while investing in India?
- What is the present scenario of foreign investments after the COVID-19 Pandemic?
Research Objectives
The research objectives of the report are as follows:
- To understand the concept of foreign companies as per the Companies Act, 2013.
- To understand the different methods of establishing foreign companies in India.
- To list out the procedure of registering foreign companies in India.
- To analyze the impact of Indian laws and regulations on foreign companies while doing business in India.
- To critically analyze the issues and concerns faced by foreign investors while investing in India.
- To analyze the present scenario of foreign investments after the COVID-19 Pandemic.
Scope of the Study
The scope of the report is limited to analyzing the challenges faced by foreign investors while investing in India as per the prevailing regulatory framework. The report also discusses the impact of the regulatory framework and ease of doing business by foreign companies after the COVID-19 Pandemic.
Limitations of the Study
The report is limited to the study of issues and challenges faced by foreign investors or companies while investing in India. It only analyses the concerns and issues with the regulatory framework for investing in India. Due to the nature of the study interviews or interactions with foreign companies or investors were not conducted.
Research Methodology
The researcher has employed the Doctrinal Method of Explanatory Research Design for the in-depth study of what are the challenges which are faced by foreign companies while establishing their business in India.
The sources used for the research include;
- Ministry of Commerce and Industry
- The Department for Promotion of Industry and Internal Trade (DPIIT)
- Empowered Group of Secretaries (EGoS)
- Project Development Cells (PDC5)
- Investment Clearance Cell (ICC)
- Federation of Indian Chambers of Commerce & Industry (FICCI)
- The Confederation of Indian Industry (CII)
- The National Association of Software and Service Companies (NASCOM)
- Legal Resources;
- The Juvenile Companies Act of 2013, the Banking regulation act, of 1949
- The Payment of Wages Act of 1936, the Industrial Employment Act of 1946
- The Industrial Disputes Act of 1947
- The Payment of Bonus Act of 1965
- The Payment of Gratuity Act of 1972
- The Construction Workers Acts of 1996, the Workmen's Compensation Act of 1923 (as amended in 2000)
- The Industrial Disputes Act of 1946, and the Trade Unions Act of 1926
- Income-tax Act of 1961, Competition Act,2002
- Limited Liability Act, 2008
- Indian Contract Act of 1872
- Foreign Exchange Management Act, 1999
- Foreign Trade (Development and Regulation) Act, 1992
- Arbitration and Conciliation Act, 1996 and Information Technology act 2000
To make further research and understand the issues in depth, secondary sources have been referred to which include authoritative articles written by eminent scholars, case laws as well as websites for doctrinal collection. The researcher has critically studied and analyzed the findings to better understand the subject matter at hand.
