FOREIGN DIRECTINVESTMENT
Foreign direct investment (FDI) is a type of investment thatinvolves the injection of foreign funds into an enterprisethat...
 India is the 2nd most important FDI destination (afterChina) for transnational corporations during 2010–2012according to...
• India: Fourth largest economy in terms of PurchasingPower Parity.• Tenth most industrialized economy.• FII inflows for t...
6/19/2013 FDI GROUP NO.-1 5Atomic EnergyHousing and Real EstatebusinessTrading in TransferableDevelopment RightsManufactur...
EconomicGrowthTradeEmploymentand skilllevelsTechnologydiffusion andknowledgetransferLinkages andspillover todomestic firms...
1. Economic growth- A remarkable inflow of FDI in variousindustrial units boosts the economic life of country and has arem...
Inflation increasesPositive pressure on pricesFDI has an adverse effect on competition.FDI will be make the host count...
FDI GROUP NO.-1 9AUTOMATIC ROUTE PRIOR PERMISSIONINVESTING IN INDIA•Inform RBI within 30 days ofinflow/issue of shares• Pr...
4,0296,1305,0354,3226,0518,96122,82634,84341,87337,74534,84746,55310,25705,00010,00015,00020,00025,00030,00035,00040,00045...
6/19/2013 FDI GROUP NO.-1 110.80.912.14 2.063.552.621.432.500.511.522.533.542004 2005 2006 2007 2008 2009 2010 2011FDI as ...
19%12%7%6%5%5%4%4%37%SERVICES SECTORCONSTRUCTIONDEVELOPMENTTELECOMMUNICATIONSCOMPUTER SOFTWARE& HARDWAREDRUGS &PHARMACEUTI...
6/19/2013 FDI GROUP NO.-1 13
For Single Brand Retail Trading (SBRT) sector –only 51% FDI permitted and no FDI in MultiBrand – subject to approvals and ...
6/19/2013 FDI GROUP NO.-1 15
 Job opportunities in areas like marketing, agro-processing,packaging, transportation, etc. will be created. Farmers wil...
• Contract farming-imposed on farmers with strictadherence to quality & schedule.• Will affect 50 million merchants in Ind...
32%19%6%5%5%4%1%1%28%MumbaiNew DelhiBangaloreChennaiAhmedabadHyderabadKolkataChandigarhothers6/19/2013 FDI GROUP NO.-1 18S...
37.4%10.2%9.6%7.2%6.1%4.4%25.2% MAURITIUSSINGAPOREUNITED KINGDOMJAPANU.S.ANETHERLANDSOTHERS100%=176760.696/19/2013 FDI GRO...
• The government should provide additional incentives to foreigninvestors to invest in states where the level of FDI inflo...
• The increased flow of FDI in a country has given a major boost to thecountrys economy.• FDI has provided better access t...
• http://rbidocs.rbi.org.in/rdocs/Content/PDFs/FDIST_110412.pdf Accessedon 24 Oct• http://www.indiainbusiness.nic.in/inves...
PRESENTED BY:-• UTKARSH GARG (121)• SANGAM LALSIVARAJU (138)• SUGANDHA ARORA (140)• DHRUV MAHAJAN (141)• MANASVI BANSAL (1...
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  1. 1. FOREIGN DIRECTINVESTMENT
  2. 2. Foreign direct investment (FDI) is a type of investment thatinvolves the injection of foreign funds into an enterprisethat operates in a different country of origin from theinvestor.6/19/2013 FDI GROUP NO.-1 2OUTWARDINWARDBYMOTIVEGREENFEILDINVESTMENTHORIZONTALFDIBYTARGETBYDIRECTIONTYPES OF FDIEFFICIENCYSEEKINGMARKETSEEKINGRESOURCESEEKINGVERTICALFDI
  3. 3.  India is the 2nd most important FDI destination (afterChina) for transnational corporations during 2010–2012according to a survey conducted by UNCTAD FDI in India in 2010 was $44.8 billion, and in 2011 there wasan increase of 25% to $50.8 billion. The sectors which attracted higher inflows weretelecommunication, construction activities andinformation technology. Mauritius, Singapore, US and UK were among the leadingsources of FDI for India.6/19/2013 FDI GROUP NO.-1 3
  4. 4. • India: Fourth largest economy in terms of PurchasingPower Parity.• Tenth most industrialized economy.• FII inflows for the period 2003 –2008 was more than US$35 billion, a good sign for the economy.• India is still quite behind China with China majorlyaccepting more of Green Field Investments.FDI GROUP NO.-1 46/19/2013
  5. 5. 6/19/2013 FDI GROUP NO.-1 5Atomic EnergyHousing and Real EstatebusinessTrading in TransferableDevelopment RightsManufacture of cigars ,cheroots, cigarillos andcigarettes , of tobacco or oftobacco substitutes.AgriculturalLottery BusinessGambling & BettingBusiness of Chit FundNidhi Company
  6. 6. EconomicGrowthTradeEmploymentand skilllevelsTechnologydiffusion andknowledgetransferLinkages andspillover todomestic firms6/19/2013 FDI GROUP NO.-1 6
  7. 7. 1. Economic growth- A remarkable inflow of FDI in variousindustrial units boosts the economic life of country and has aremarkable effect on the economic growth.2. Trade- FDI opens a wide spectrum of opportunities in thetrading of goods and services both in terms of import andexport production with the manufacture of superior qualityproducts.3. Employment and skill levels- FDI brings in a number ofemployment opportunities by aiding the setting up ofindustrial units.4. Technology diffusion and knowledge transfer- FDI helpsin the outsourcing of knowledge especially in the InformationTechnology sector in India. The foreign countries bring intechnological advancements in the foreign country.5. Linkages and spillover to domestic firms- Firms enter intojoint ventures with various domestic firms with both thecompanies getting the benefits.6/19/2013 FDI GROUP NO.-1 7
  8. 8. Inflation increasesPositive pressure on pricesFDI has an adverse effect on competition.FDI will be make the host country lose controlover domestic policy.Certain foreign policies are adopted that arenot appreciated by the workers of the recipientcountry.6/19/2013 FDI GROUP NO.-1 8
  9. 9. FDI GROUP NO.-1 9AUTOMATIC ROUTE PRIOR PERMISSIONINVESTING IN INDIA•Inform RBI within 30 days ofinflow/issue of shares• Pricing: FEMA Regulations•Unlisted – CCI•Listed – SEBI• Cap of Rs.600CroreBy exception•Approval of ForeignInvestment PromotionBoard needed.•Decision generallywithin 4-6 weeks6/19/2013
  10. 10. 4,0296,1305,0354,3226,0518,96122,82634,84341,87337,74534,84746,55310,25705,00010,00015,00020,00025,00030,00035,00040,00045,00050,000Amount of FDI Inflows %agegrowth over2 per. Mov. Avg. (Amount ofFDI Inflows %age growthover)6/19/2013 FDI GROUP NO.-1 10Source: dipp.nic.in/English/Publications/Figures in $millions
  11. 11. 6/19/2013 FDI GROUP NO.-1 110.80.912.14 2.063.552.621.432.500.511.522.533.542004 2005 2006 2007 2008 2009 2010 2011FDI as % of GDP• It was highest in year 2008 i.e. 3.55 % .• It decreased to 1.43 % in year 2010.• In year 2011, it increased to 2.5 % .Source: dipp.nic.in/English/Publications/
  12. 12. 19%12%7%6%5%5%4%4%37%SERVICES SECTORCONSTRUCTIONDEVELOPMENTTELECOMMUNICATIONSCOMPUTER SOFTWARE& HARDWAREDRUGS &PHARMACEUTICALSCHEMICALS (OTHERTHAN FERTILIZERS)POWERAUTOMOBILE INDUSTRYhttp://dipp.nic.in/English/Publications/SIA_Newsletter/2012/feb2012/monthSector.ht6/19/2013 FDI GROUP NO.-1 12100%=176760.71$mn
  13. 13. 6/19/2013 FDI GROUP NO.-1 13
  14. 14. For Single Brand Retail Trading (SBRT) sector –only 51% FDI permitted and no FDI in MultiBrand – subject to approvals and conditions suchas: FDI in (MBRT) is prohibited. Products to be under the same brand in one ormore countries if are sold outside India. ”Single Brand‟ products should be brandedduring manufacturing. The foreign investor should be the owner of thebrand.FDI in SBRT is permitted to 100% and up to 51%in MBRT with Government approval. Fresh agricultural produce, including fruits,vegetables, flowers, grains, pulses, fresh poultry,fishery and meat products, may be unbranded. FDI in MBRT may be permitted upto51% and 100% in SBRT. Minimum amount to be brought in, as FDI, bythe foreign investor, would be$100 million. At least 50% of total FDI brought in shall beinvested in “back-end infrastructure”. In respect of proposals involving FDI beyond51%, 30% sourcing would mandatorily have to bedone from SMEs. In case of “Single Brand” The foreign investorshould be the owner of the brand6/19/2013 FDI GROUP NO.-1 14EXISTING POLICY PRESENT POLICY
  15. 15. 6/19/2013 FDI GROUP NO.-1 15
  16. 16.  Job opportunities in areas like marketing, agro-processing,packaging, transportation, etc. will be created. Farmers will get a good price for their crops and theirexploitation will stop. Infrastructure facilities, refrigeration technology,transportation, etc. will be renovated. Foreign companies will create an improved and efficientsupply-chain in the Indian market.6/19/2013 FDI GROUP NO.-1 16
  17. 17. • Contract farming-imposed on farmers with strictadherence to quality & schedule.• Will affect 50 million merchants in India• Market places are situated too far which increasestraveling expenses.• FDI may lead to rise of inflation.• Multiple Indian companies are well entrenched into theIndian market with their organized multi brand retailofferings who may face tough challenges.• FDI in retail nowhere claims that the consumer will spendless from his/her pocket. The prices will largely remain thesame.6/19/2013 FDI GROUP NO.-1 17
  18. 18. 32%19%6%5%5%4%1%1%28%MumbaiNew DelhiBangaloreChennaiAhmedabadHyderabadKolkataChandigarhothers6/19/2013 FDI GROUP NO.-1 18Source.isca.in/IJMS/Archive/v1i2/5.ISCA-RJMgtS-2012-020.pdf
  19. 19. 37.4%10.2%9.6%7.2%6.1%4.4%25.2% MAURITIUSSINGAPOREUNITED KINGDOMJAPANU.S.ANETHERLANDSOTHERS100%=176760.696/19/2013 FDI GROUP NO.-1 19Source.isca.in/IJMS/Archive/v1i2/5.ISCA-RJMgtS-2012-020.pdf
  20. 20. • The government should provide additional incentives to foreigninvestors to invest in states where the level of FDI inflows is quite low.• Ensure equitable distribution of inflows among states and givefreedom to states to attract inflows at their own level.• Attract specific types of FDI that will be able to generate spilloverseffects in the overall economy like investing in human capital, R&Dactivities, environmental issues, productive capacity, sectors with highincome elasticity of demand.• The policy makers should focus more on attracting diverse types ofFDI and should design policies where foreign investment can be utilizedas means of enhancing domestic production, savings, and exports andalso as medium of technological learning and diffusion and also inproviding access to the external market.6/19/2013 FDI GROUP NO.-1 20
  21. 21. • The increased flow of FDI in a country has given a major boost to thecountrys economy.• FDI has provided better access to technologies for the local economy.• FDI has lead to indirect productivity gains through spillovers.• MNC’s have increased the degree of competition in host-country marketswhich will force existing inefficient firms to invest more in physical orhuman capital.• Service sector has been the most sought after sector in India for FDI.• India, with its skilled labor and manpower has the potential to overtakeChina as the most preferred destination for Foreign Investments.6/19/2013 FDI GROUP NO.-1 21
  22. 22. • http://rbidocs.rbi.org.in/rdocs/Content/PDFs/FDIST_110412.pdf Accessedon 24 Oct• http://www.indiainbusiness.nic.in/investment/for_dir_investment.htmAccessed on 26 Oct• http://planningcommission.gov.in/ Accessed on 6 Nov• http://finmin.nic.in/capital_market/capital_market.asp Accessed on 6 Nov• http://www.randstad.com/the-world-of-work/employment-rises-in-indias-service-sector?c=4374 Accessed on 11 Nov• http://business.mapsofindia.com/india-gdp/sectorwise/services-sectorgrowth-rate.html Accessed on 8 Nov6/19/2013 FDI GROUP NO.-1 22
  23. 23. PRESENTED BY:-• UTKARSH GARG (121)• SANGAM LALSIVARAJU (138)• SUGANDHA ARORA (140)• DHRUV MAHAJAN (141)• MANASVI BANSAL (143)PRESENTED TO:-PROF. K. M. KUMAR6/19/2013 FDI GROUP NO.-1 23
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