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FOREIGN DIRECT INVESTMENT(FDI)
INTRODUCTION FDI is one of the       most important sources of foreign        investment in developing countries   like In...
MEANING FDI stands for Foreign Direct Investment, a component of a countrys national financial accounts. Foreign direct in...
Classification of FDI inflow frominvestors point of view Market seeking : The investors are attached  by the size of the ...
WHAT F.D.I REQUIRS ?  Important factors which foreign investors take into  consideration when entering a country are: Rel...
F.D.I Permitted in the followingforms of investments. Through financial collaborations. Through joint ventures and techn...
FDI is not permitted in thefollowing industrial sectors   Areas and ammunition .   Atomic energy .   Railway transport....
APPROVAL OF FDIs FDI in India are approved through two  routes: Automatic Approval by RBI. The FIPB Route
AUTOMATIC APPROVAL OF RBI     The RBI accords approval within two weeks    to all proposals involving:   Foreign equity u...
The FIPB Route The FIPB was constituted to promote foreign direct investment in India. FIPB stands for Foreign Investment ...
Factors that Attracts FDIs in IndiaI.     India has a well developed network and financial       institutions and an organ...
Factors that Discourage FDIs  High rates of taxation Lack of infrastructure facilities Favoritisms in the selection of ...
FDI investments allowed in the following 19NBFC activities shall be as per levels indicatedbelow:   Merchant banking   U...
FDI investments allowed in the following19 NBFC activities shall be as per levelsindicated below: (Continued)    Credit R...
100% FDI Allowed in Followingsectors.    Hotel & Tourism    Power Sector    Drugs and Pharmaceuticals    Roads, Highwa...
51% FDI allowed in followingsectors .   Trading .    49% FDI allowed in following    sectors .•   Private sector Banking ...
FDI Inflows in 2005-06 (In US $ mn)
FDI Inflows in India vis-à-visDeveloping Countries
FDI inflows into India from Japan
Total Foreign Investment Inflows inUS$ Million
SHARE OF TOP INVESTING COUNTRIES FDI        EQUITY INFLOWS (Financial year-wise):                                  Amount ...
SECTORS ATTRACTING HIGHEST FDI     EQUITY INFLOWS:                                                        Amount Rupees in...
FDI EQUITY INFLOWS DURING FINANCIAL    YEAR 2009-10:Financial Year 2011          Amount of FDI inflows*( Jan-Dec )        ...
FDI EQUITY INFLOWS (WITH COMPANY-WISEDETAILS) AVAILABLE 2000-2009:1        Cumulative amount of    Rs. 5,94,569   US$ 1,32...
News Relating to FDI   India FDI Inflow Dips 25% In 11 Months Of 2010-2011-    April 25 ,2011   India Allows 100% FDI in...
EFFORTS BY        PARTIK BANSAL
THANK YOU
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Foreign direct investment (f

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  1. 1. FOREIGN DIRECT INVESTMENT(FDI)
  2. 2. INTRODUCTION FDI is one of the most important sources of foreign investment in developing countries like India . It is seen as a means to supplement domestic investment for achieving a higher level of growth and development .
  3. 3. MEANING FDI stands for Foreign Direct Investment, a component of a countrys national financial accounts. Foreign direct investment is investment of foreign assets into domestic structures, equipment, and organizations. It does not include foreign investment into the stock markets. Foreign direct investment is thought to be more useful to a country than investments in the equity of its companies because equity investments are potentially "hot money" which can leave at the first sign of trouble, whereas FDI is durable and generally useful whether things go well or badly
  4. 4. Classification of FDI inflow frominvestors point of view Market seeking : The investors are attached by the size of the local market , which depends on the income of the country and its growth rate. Lower cost : Investors are most cost- conscious . They are influenced by infrastructure facilities and labour costs. Location and other factors : Technology status of a country , brand name , goodwill enjoyed by the local firms , favorable location , openness of the economy , policies of the government and intellectual property protection granted by the government are some of the factors that attract investors to undertake investments .
  5. 5. WHAT F.D.I REQUIRS ? Important factors which foreign investors take into consideration when entering a country are: Reliable access to economic information. The level of corruption. Stability of political and business environment . Ability to meet and comply with internationality acceptable standards and norms . Character of local market (size , growth , potential) or the distance and the access to neighboring markets. The existence of good and quality infrastructure.
  6. 6. F.D.I Permitted in the followingforms of investments. Through financial collaborations. Through joint ventures and technical collaboration. Through capital markets via euro issues. Through private placements or preferential allotment.
  7. 7. FDI is not permitted in thefollowing industrial sectors Areas and ammunition . Atomic energy . Railway transport. Coal and Lignite. Mining of iron , manganese , chrome , gypsum , gold , diamonds , copper , and zinc .
  8. 8. APPROVAL OF FDIs FDI in India are approved through two routes: Automatic Approval by RBI. The FIPB Route
  9. 9. AUTOMATIC APPROVAL OF RBI The RBI accords approval within two weeks to all proposals involving: Foreign equity up to 50% in 3 categories relating to mining activities(list 2); Foreign equity up to 51% in 48 specified industries(list 3) ; Foreign equity up to 74% in 9 categories(list 4); and Where list 4 includes items also listed in list 3, 74% participation shall be allowed.
  10. 10. The FIPB Route The FIPB was constituted to promote foreign direct investment in India. FIPB stands for Foreign Investment Promotion Board which approve all other cases where the parameters of automatic approval are not met. Normal processing time is 4 to 6 weeks. Its approach is liberal for all sectors and all types of proposals and rejection are few.
  11. 11. Factors that Attracts FDIs in IndiaI. India has a well developed network and financial institutions and an organized capital market open to foreign institutional investors that attracts them to undertake investments.II. Indian skills and competence is used as a base for carrying out production activities and export to neighbor countries.III. For the last few years there has been political stability in the country.IV. India enjoy good reputation among other countries as a honoring of its commitments about repayment obligations , remittance of dividends etcV. India has vast potential of unskilled labor available at cheap rates as compared to other countries, and vast natural resources that attract foreign investors.
  12. 12. Factors that Discourage FDIs High rates of taxation Lack of infrastructure facilities Favoritisms in the selection of investment Complicated legal framework ofrules, regulations, procedures for foreigndirect investment into India. Lack of transparency.
  13. 13. FDI investments allowed in the following 19NBFC activities shall be as per levels indicatedbelow: Merchant banking Underwriting Portfolio Management Services Investment Advisory Services Financial Consultancy Stock Broking Asset Management Venture Capital Custodial Services Factoring
  14. 14. FDI investments allowed in the following19 NBFC activities shall be as per levelsindicated below: (Continued)  Credit Reference Agencies  Credit rating Agencies  Leasing & Finance  Housing Finance  Foreign Exchange Brokering  Credit card business  Money changing Business  Micro Credit  Rural Credit
  15. 15. 100% FDI Allowed in Followingsectors. Hotel & Tourism Power Sector Drugs and Pharmaceuticals Roads, Highways, Ports and Harbors Pollution Control and Management Call centers Business Process Outsourcing Manufacturing Industries Designated as small scale Industries.
  16. 16. 51% FDI allowed in followingsectors . Trading . 49% FDI allowed in following sectors .• Private sector Banking .• Telecommunication .
  17. 17. FDI Inflows in 2005-06 (In US $ mn)
  18. 18. FDI Inflows in India vis-à-visDeveloping Countries
  19. 19. FDI inflows into India from Japan
  20. 20. Total Foreign Investment Inflows inUS$ Million
  21. 21. SHARE OF TOP INVESTING COUNTRIES FDI EQUITY INFLOWS (Financial year-wise): Amount Rupees in crores (US$ inRanks Country million) 2010-11 2011-12 (April-March) (for April 2011)1 MAURITIUS 31,855 4,332 (6,987) (976)2 SINGAPORE 7,730 5,214 (1,705) (1,175)3 U.S.A. 5,353 80 (1,170) (356)4 U.K. 3,434 19 (755) (4)5 NETHERLANDS 5,501 172 (1,213) (39)6 CYPRUS 4,171 754 (913) (170)7 JAPAN 7,063 1,043 (1,502) (235)8 GERMANY 908 231 (200) (52)9 U.A.E. 1,569 91 (341) (21)9 FRANCE 3,349 977 (734) (220)Total 88,520 13,846 (19,427) (3,121)
  22. 22. SECTORS ATTRACTING HIGHEST FDI EQUITY INFLOWS: Amount Rupees in crores (US$ in millionRank Sector 2010-11 2011-12s (April-March) (for April2011)1 SERVICES SECTOR 15,776 2,922 (financial & non-financial) (3,353) (658)2 COMPUTER SOFTWARE & HARDWARE 3,571 425 (784) (95)3 TELECOMMUNICATIONS 7,546 205 (radio paging, cellular mobile, basic telephone (1,665) (46) services)4 HOUSING & REAL ESTATE 5,149 167 (1,127) (38)5 CONSTRUCTION ACTIVITIES 5,077 (1,125) 1,381 (including roads & highways) (311)6 POWER 5,709 1,136 (1,252) (256)7 AUTOMOBILE INDUSTRY 6,008 (1,331) 1,182 (266)8 METALLURGICAL INDUSTRIES 5,055 229 (1,105) (52)9 PETROLEUM & NATURAL GAS 2,621 28 (574) (6)10 CEHMICALS 1,810 152 (other than fertilizers) (398) (34)
  23. 23. FDI EQUITY INFLOWS DURING FINANCIAL YEAR 2009-10:Financial Year 2011 Amount of FDI inflows*( Jan-Dec ) (In Rs. Crore) In US$ mn)1 January 2011 4,725 1,0422 February 2011 5,785 1,2743 March 2011 4,833 1,0744 April 2011 13,846 3,1212011 (Up to April 2011) # 29,189 6,5112010 (Up toApril2010) 32,535 7,147%age growth over last year (-)10% (---)09%
  24. 24. FDI EQUITY INFLOWS (WITH COMPANY-WISEDETAILS) AVAILABLE 2000-2009:1 Cumulative amount of Rs. 5,94,569 US$ 1,32,837 FDI inflows crore million (from August 1991 to April 2011)2 Amount of FDI inflows Rs. 13,846 US$ 3,121 during 2010-11 crore million (from April 2011)*
  25. 25. News Relating to FDI India FDI Inflow Dips 25% In 11 Months Of 2010-2011- April 25 ,2011 India Allows 100% FDI in Several Key Sectors –April 7 ,2011 India Releases Third Consolidated FDI Policy – April 5,2011 TRAI raises FDI limit for DTH, FM radio – June 30 ,2011 Real Estate FDI Worries may continue this Year - October 12, 2011 FDI in Multi Brand Retail will Increase Investment Opportunities in Organised Retail Sector -September 26, 2011 Changes in FDI Norms can Dampen Foreign Investments- Experts Govt Rules out Change in FDI Norms for Banks
  26. 26. EFFORTS BY PARTIK BANSAL
  27. 27. THANK YOU
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