Comparision of India's FDI policy with other countries

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  • 1. Comparison of India's FDI policy with Other Countries Presented By Saurabh Subodh Arshdeep Singh Nikhil Tandon Pavan Singh Shefali Jain
  • 2. Top 20 Inward FDI Recipient According to World banks ease of doing business index which is based on the study of laws and regulatory frame work, India is at 132 place while china is at 91
  • 3. FDI Policy in Retail India Brazil China  FDI up  FDI up  FDI up to 100% in single brand retail 51% in multiband retail 30 % sourcing from SMEs Share of organized retail 6% to 100% in both single brand & multiband retail Share of organized retail 36% Market size $398 billion to 100%, up from 49% in 1992 in both sector Share of organized retail 20% Market Size $3.44 trillion Russia Indonesia USA  FDI up to 100% in both single brand & multiband retail Share of organized retail 33% Market size $600 billion FDI up to 100% in both sectors since 1998 Share of organized retail 30% Market size $150 billion  FDI up to 100% in both single brand & multiband retail Share of organized retail 36% Market size $5 trillion In China employment in both retail and wholesale trade increased from 4% in 1992 to about 7% in 2001 China experienced the creation of 26 million new jobs within 9 years, post China announcing FDI retail reforms
  • 4. Conti….  Since July 2012, the government has relaxed FDI norms in Multi-brand & single brand retail  But since last September government has not been able to attract FDI into the retail sector. “One reason is that investors are not sure whether the policy will continue as and when a new government comes in. Also, letting states set their own rules on such an international economic policy matter is basically unheard of elsewhere,  India can learn from China on this front. China started opening up its retail sector to FDI in 1992, initially with various restrictions, but ultimately allowing 100 percent FDI in 2004. This benefited them with foreign players bringing in new management practices along with supporting technology and investment capital.
  • 5. FDI in Privet sector banking INDIA FDI up to 74% (FDI+FII) FII not to exceed 49% FDI up to 49% in New Banks Up to 100% in NBFCs Market size $1.4 trillion BRAZIL  FDI up to 100% in Privet sector banking Restrict foreign ownership in big PSU banks 163 No of bank in the country Industry size 1.2 tr. CHINA RUSSIA USA  FDI up to 62.5 % Restrict foreign ownership in big PSU banks  370 No of banks in the country Industry size $5.86 trillion that is 69% of GDP  FDI up to  FDI up to 100% 100% Russia's laws allow foreign banks to operate subsidiaries  1007 No of Banks in the country Industry size $1.6 trillion USA does not allow any restrict on FDI in Banking 5,887 No of banks in US Industry size $14.5 trillion
  • 6. Conti…. • Foreign investment, in addition to technological innovation and expertise, brings with it a plethora of risks. An unwarranted increase in the size of foreign holding in the banking sector will inevitably expose the country to risks not commensurate with those that an emerging market economy such as ours is equipped to grapple with. • At the same time, it is important to recognize that FDI in banking can address several issues pertaining to the sector such as encouraging development of innovative financial products, improving the efficiency of the banking sector, better capitalization of banks and better ability to adapt to changing financial market conditions.
  • 7. FDI in PETROLEUM & NATURAL GAS INDIA BRAZIL CHINA RUSSIA Indonesia USA FDI up to 100% in (Pvt. Comp.) through automatic rout  49% in (PSUs) through FIPB permission  FDI up to  FDI up to  FDI up to  FDI up to 100% in Pvt. sector  FDI up to 75% in Pvt. sector companies Restriction Restriction on foreign ownership in PSUs foreign ownership in PSUs 97.5% in oil & gas No restriction on foreign ownership of business 100% in oil & gas No restriction on foreign ownership of business Industry Size $240 billion Industry size $221 billion 100% in oil & gas No restriction on foreign ownership in a company Industry size $425 billion Industry size $29.9 billion Industry Size $721 billion Industry size $270 billion
  • 8. FDI in Telecom INDIA FDI up to 100% ( FDI+FII) up to 49% through Automatic rout Market Size $60 billion 8 foreign player are already presented BRAZIL  FDI up to 100% No restriction on foreign ownershi p of local business Industry Size $117 billion CHINA  FDI up to 49% Major players in china are PSUs hence governme nt restrict foreign ownership Industry Size $157 billion RUSSIA Indonesia USA  FDI up to 100%  FDI up to 57% No restriction on foreign ownershi p of business Industry Size $43.4 billion Certain restriction on foreign ownership of business  FDI up to 100% Totally privatise sector no governme nt restriction Industry Size $16.9 billion Industry Size $750 billion
  • 9. Conti.....  MPACT AND ROAD AHEAD • Wireless is the Key Despite the massive growth in fiber-to-the-home networks, we believe that wireless networks will boost growth in the telecom industry. Mobile broadband has become the most lucrative source of revenue for the wireless operators. • • Spectrum Crunch & Market Saturation Mergers and Acquisitions to Continue  • • • WEAKNESSES Potential Business Slowdown Product Overlapping Increased Competition
  • 10. FDI in Aviation INDIA BRAZIL CHINA RUSSIA USA  FDI up to  FDI up to 20% Gove restrict foreign ownership in Aviation industry  FDI up to  FDI up to 49% is allowed for scheduled air transport services investment by NRIs is up to 100% under the automatic route Industry Size $12 billion  FDI up to 49% Because of security concerns governme nt restrict foreign ownership Industry Size $16.3 Industry Size $14 billion billion 100% No restriction on foreign ownership Industry size $18.1 billion 25% Because of security concerns governme nt restrict foreign ownership Industry Size $160 billion Allowing foreign airlines to invest in Indian carriers does not solve the problem. The tax structure is negatively impacting aviation. Why would any airline come to India unless it has a viable business model that would give a strategic advantage
  • 11. Conclusion • An analysis of the recent trends in FDI flows at the global level as well as across regions/countries suggests that in past India has generally attracted higher FDI flows in line with its robust domestic economic performance and gradual liberalization of the FDI policy as part of the cautious capital account liberalization process. • However, when the global FDI flows to EMEs recovered during 2010-12, FDI flows to India remained sluggish despite relatively better domestic economic performance ahead of global recovery. • The factors behind such moderation is the role of institutional factors (Government’s to implement quality policy regime) is causing the slowdown in FDI inflows to India despite robustness of macroeconomic variables
  • 12. Cont… • Recently government’s move to ease foreign investment norms in multibrand retail and increase limit for FDI in sectors such as telecom is likely to boost the confidence of foreign investors, which in turn will provide much needed impetus to the country’s economy, according to experts.
  • 13. Thank you