Managerial economics ii presentationPresentation Transcript
Managerial economics-II presentationTopic :-Foreign Direct Investment(FDI)
Stewar tBhavesh Mo nitKaveshna Sor ab h Vika s Ari fChai
Overview of the project
WHAT IS FDI ? Foreign direct investment (FDI) in its classic form is defined as a company from one country making a physical investment into building a factory in another country. Include investments made to acquire lasting interest in enterprises operating outside of the economy of the investor. They are usually non volatile in nature. Preferred over other forms of external finance because they are non debt creating. Their returns usually depends on the performance of the project.
Benefits Economic GrowthLinkages and spillover to Trade domestic firms Technology Employment diffusion and and skill knowledge levels transfer
LimitationsFluctuation in Compromisingvalue of home Inflation with currency soveigernity Greater Environment competition and natural for small and cost. infant industries
Investing in India – Entry Routes Foreign Company has the following options to set up business operations in India :
100% FDIPermitted In India
Arms and ammunition. Housing and Atomic Real Estate Energy. Business Agriculturalor plantation FORBIDDEN Railway activities TERRITORIES Transport. Lottery Coal and Business lignite. Mining
Liberal, largest democracy, political stability India An FDIDestination Highest rates of return on investment
Worlds fourth largest economy & second largest pharmaceutical industryContd………..
Factors affecting FDIProfitability Costs Of Production Economic Conditions Government Policies Political Factors
Impact of FEMA on FDI As the third-largest economy India is a preferred destination for foreign direct investments (FDI). India’s recently liberalized FDI policy permits up to a 100% FDI stake in ventures. Industrial policy reforms have substantially reduced industrial licensing requirements, removed restrictions on expansion and facilitated easy access to foreign technology and FDI. During past few years number of changes was approved on the FDI policy to remove the cap in most of the sectors. Restrictions will be relaxed in sectors as diverse as civil aviation, construction development, industrial parks, commodity exchanges, petroleum and natural gas, credit-information services, Mining etc.
Contd………. The future of Indian economy is brighter because of its huge human resources, rapidly upcoming service sector, availability of large number of competent professionals, vast market for every product, increasing impact of consumerism, absence of controls and licenses, interest of foreign entrepreneurs in India and existence of four hundred million middle class people. Today, India provides highest returns on FDI than any other country in the world. Overall we can say that FEMA had a great influence on Economic growth of the country & it will remain for the coming years as well.
FDI policy in India FDI is not allowed in the sectors of arms and ammunitions, atomic energy, railway system, extraction of coal and lignite and mining industry In infra-structure development, FDI is allowed up to 100% equity participation, with the capping amount as Rs.1500 crores In finance sector, FDI is allowed up to 40% In telecom industry, FDI is allowed up to 49%
IMPACT OF FDI IN INDIA of growth and Enabled India to achieve a high degree development. A number of projects have been announced in areas such as electricity generation, distribution and transmission, as well as the development of roads and highways, with opportunities for foreign investors. The Indian national government also provided permission to FDIs to provide up to 100% of the financing required for the construction of bridges and tunnels, but with a limit on foreign equity of INR 1,500 crores, approximately $352.5m.
Sectors attracting highest FDI equity 2% inflows 2% SERVICES SECTOR 3% COMPUTER SOFTWARE& 4% HARDWARE 21% TELE- COMMUNICATIONS4% HOUSING & REAL ESTATES CONSTRUCTION ACTIVITIES7% POWER AUTOMOBILE INDUSTRY* 9% METALLURGICAL INDUSTRIES 8% PETROLEUM & NATURAL GAS 8% CHEMICALS
The Trends In FDI Inflow To India Since 1991 27329 25609 24573 15725 5975 5772 4222165 393 654 1374 2141 2770 3682 3083 2439 2908 3134 2634 3754 US $
REGIONS NOT INDICATED PATNA GUWHATI KANPUR BHUBANESHWAR BHOPAL COCHI Regional disparities JAIPUR PANAJI in FDI equity inflows CHANDIGARGH KOLKATTA HYDERABAD CHENNAI AHEMADABAD BANGLORE NEW DELHI MUMBAI 0% 5% 10% 15% 20% 25% 30% 35%