The reform process has deregulated the economy and stimulated domestic and foreign investments, moving India firmly into the forefront of investment destinations. The Government, keen to promote investment in the country, has radically simplified and rationalised policies, procedures and regulatory aspects. Foreign investment is welcome in almost all sectors except those of strategic concern, for example defence, atomic energy, etc. An increasing number of sectors have been brought under the automatic approval route, under which FDI is permitted upto 50/51/74/100 per cent, as the case may be, without prior Government approval. The Foreign Investment Promotion Board has been set up for the purpose of expediting the approval process for foreign investments.

A series of incentives have been announced to promote investments. These include import of capital goods at concessional customs duty, subject to fulfilment of certain export obligations, liberalisation of external commercial borrowing norms for infrastructural projects, tax holiday and concessional tax treatment for certain sectors, etc. In addition, several state governments offer incentives, such as reduced rates of local taxes, loans at concessional rates of interest, attractive power rates, etc. While several incentives are project specific, a number of firms have been successful in negotiating favourable investment terms with state governments.

Since the initiation of the liberalisation process in 1991, sectors such as automobiles, chemicals, food processing, oil and natural gas, petrochemicals, power, services sectors, telecommunications, etc. have attracted considerable investments. Today, in a changed climate of investment, India offers exciting business opportunities in virtually every sector of the economy. Investment framework in a few have been profiled.