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  1. 1. WHAT IS FDI • Foreign direct investment (FDI) is a direct investment into production or business in a country by an individual or company in another country, either by buying a company in the target country or by expanding operations of an existing business in that country.
  2. 2. TYPE OF FDI • Horizontal FDI arises when a firm duplicates its home country-based activities at the same value chain stage in a host country through FDI. • Platform FDI Foreign direct investment from a source country into a destination country for the purpose of exporting to a third country. • Vertical FDI takes place when a firm through FDI moves upstream or downstream in different value chains
  3. 3. • INDIA has allowed 75% to 100% foreign direct investment in telecom. • At a meeting held by the ministry of commerce and industry, chaired by the prime minister, there was agreement on allowing 100% FDI in “ BASIC and CIRCULAR SERVICES”, of which 49% FDI is allowed through the automatic route.
  4. 4. TELECOM COMPANIES Telecom majors RELIANCE communication , Russian conglomerate controlled Sistema controlled SSTL, Malaysion firms maxis controlled AIRCEL .
  5. 5. TELECOM ANALYSTS • Industry idea behind increasing the FDI limit in the telecom sector is to help the industry get fresh funds to lower financial burden. • In 2012, there have been disputes among foreign investors with their India patners in firms like UNINOR and ETISALAT DB. • Industry analysts belive 100% FDI in the telecom sector can attract investment of USD 10 billion in near to longterm.
  6. 6. WHY FOREIGN TELCO MAY STILL NOT ENTER ? • Corruption and policy not holding up in court. • Eg>The 2G scam, where in the telecom ministery , at the time led by A.RAJA allocated license along with spectrum under the first come first basis. BUT more pertinently , shifted the dates. • Regressive policies • Eg> the VODAFONE tax case . where in laws were changed to apply tax retrospectively.
  7. 7. Aggressive Regulatory Action • Eg> 3G roaming pacts have been under scrutiny .The Government recently sent a demand notice to AIRTEL with a Rs. 650 crore fine for subscriber local dialling between 2002 and 2005.
  8. 8. TELECOM IN VODAFONE • Vodafone headquarters in the UK is INDIA’s second biggest telecom operator . The company has operations in 30 countries. • The DIPP had put out a dissensions paper on relevance of FDI caps in different sectors. • Vodafone which had a JU with the ESSAR group saw a sour in phase over valuations. The RUIAS owned ESSAR group has since Exited.
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