The report said, while most sectors of the Indian economy are now partially open to foreign investment, the government continues to prohibit or severely restrict FDI in certain politically sensitive sectors, such as agriculture, retail trading, railways and real estate. But the Indian government’s stringent and non-transparent regulations and procedures governing local shareholding inhibit inward investment and increase risk to new entrants.

Regulation Troubles

•l In September last year, the government introduced new merger control amendments to its Competition Act

•l The M&A provisions, once notified, would require foreign companies to seek approvals from the regulator for M&As made anywhere in the world

•l A report prepared by the Office of US Trade Representatives states that while most sectors are partially open to foreign investment, the government continues to prohibit or severely restrict FDI in politically sensitive sectors, including agriculture, retail, railways and real estate.