foreign direct investment in india

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FOREIGN DIRECT INVESTMENT IN INDIA

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foreign direct investment in india

  1. 1. PRESENTED BY DEBABRATA DEB BARMA MBA (SOM,NIT AGARTALA)
  2. 2. Investment made in India
  3. 3. Foreign Direct Investment(FDI)  FDI is defined as cross-border investment by a resident entity in one economy with the objective of obtaining a lasting interest in an enterprise resident in another economy Ownership of at least 10% of the voting power, representing the influence by the investor, is the basic criterion used.
  4. 4. FDI IN INDIA  Foreign investment was introduced in 1991 under Foreign Exchange Management Act (FEMA), driven by then finance minister Manmohan Singh. As Singh subsequently became the prime minister, this has been one of his top political problems, even in the current times. India disallowed overseas corporate bodies (OCB) to invest in India. India imposes cap on equity holding by foreign investors in various sectors, current FDI limit in aviation sector is maximum 49% till 2012 BUT...
  5. 5. CONT..  Finally, after all that waiting & patience, the Indian government has rolled out the red carpet for international corporations to enter India. On 14 September 2012, the Government of India allowed FDI up to 100% in various sectors
  6. 6. 100% FDI permitted Sectors in India  Engineering & Manufacturing sectors  Roads & Highways, Ports and Harbors  Industrial model towns/industrial parks  Hotels & Tourism  Pollution Control and Management  Advertising & Film industry  Power generation (hydro-electric, coal/lignite, oil or gas based)  Information Technology including E-Commerce
  7. 7. Main Sectors with FDI Equity/Route Limit in India (Year 2011)  Insurance- 26%  Telecommunication- FDI is permitted up to 74% with FDI, beyond 49% requiring Government approval  Domestic airlines- 49%  Mining (Mining of Diamonds and precious stones)- 74%  Airports- 74%
  8. 8. Advantages of FDI  Increase investment level and thereby income & employment  Increase tax revenue of government  Facilitates transfer of technology  Increase exports and reduce import requirements  Increase competition and break domestic monopolies  Improves quality and reduces cost of inputs
  9. 9. Limitations of FDI  Flow to high profit areas rather than main concern areas  Through their power and flexibility, MNC can undermine economic autonomy and control  Sometimes interferes in the national politics  Sometimes engage in unfair and unethical trade practices  Sometimes result in minimizing / eliminating competition and create monopolies or oligopolistic structures
  10. 10. FDI inflow in India(2005-12) Year Amount(in billion $) 2005-06 6.05 2006-07 8.96 2007-08 17.59 2008-09 27.3 2009-10 24.2 2010-11 19.4 2011-12 35
  11. 11. Country-wise FDI inflow in India
  12. 12. Sector-Wise FDI inflow in India
  13. 13. Factors affecting FDI  Profitability  Costs of production  Economic Conditions  Government policies  Political factors
  14. 14. Links  1. http://www.onemint.com  2. http://www.investopedia.com  3. http://www.rbi.org.in  4. http://www.sebi.gov.in
  15. 15. .

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