It is said that India has put in place liberal policies in foreign direct investment. Yet, there are sectors where foreign direct investment is not allowed to the companies both under the automatic route as well as under

FDI is prohibited under the Government Route as well as the Automatic Route in the following sectors: Atomic Energy Lottery Business Gambling and Betting Business of Chit Fund Nidhi Company Agricultural (excluding Floriculture, Horticulture, Development of seeds, Animal Husbandry, Pisciculture and cultivation of vegetables, mushrooms, etc. under controlled conditions and services related to agro and allied sectors) and Plantations activities (other than Tea Plantations). Housing and Real Estate business (except development of townships, construction of residential/commercial premises, roads or bridges to the extent specified in Notification of RBI. Trading in Transferable Development Rights (TDRs). Manufacture of cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco substitutes. Rationale behind prohibition in the above mentioned sectors are: Protection of National and Strategic Interests; Safeguarding of territorial integrity and sovereignty of the country; Curbing of interference in national politics; To check creation of monopolies or oligopolistic structures; Protection against displacement of domestic producers; To safeguard national economic autonomy and control; and To minimize balance of payments problems due to servicing of foreign debt capital.