A:

The primary way for an individual to get involved in foreign direct investments (FDIs) in India is as a foreign venture capital investor.

Foreign direct investments, as opposed to merely buying stocks traded on foreign exchanges, involve directly investing – and usually purchasing a controlling interest – in a business located in another country. India's growing economy has made it an attractive area for foreign investment, and both the Indian government and private enterprise in India encourage FDIs. The Indian government offers tax incentives and import/export subsidies to foreign direct investors to encourage FDIs.

Popular sectors for investment in India include telecommunications, the retail industry (especially computer hardware and software) and the transportation sector, railway construction being one of the more common foreign direct investment areas. Prohibited sectors include gambling and professional services, such as those provided by attorneys or accountants.

Individuals may indirectly invest in India through a pension fund that makes foreign direct investments, but the more direct manner is for an individual to act as an incorporated foreign venture capitalist and register with the Securities and Exchange Board (SEBI) of India. Registering with the SEBI enables the investor to make stock purchases of Indian companies or acquire Indian companies through direct purchase. Registration also provides the investor with the ability to purchase Indian companies at a mutually agreeable price rather than having to pay net asset value (NAV). Individual investors are advised to locate a good corporate attorney established in the field of FDI and specifically one who can provide easy access to investment opportunities in India.

FDI in emerging market countries has become increasingly popular. India, with its skilled workforce and excellent growth prospects, ranks second only to China in the amount of FDI capital inflows to the country.

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