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  • 1. Foreign Investment In INDIA : 10/08/11 An Overview Presented By :- Mayank Gupta (Roll No.- 25) Sachin Wakankar(Roll No.- 68) Kanupriya tiwari (Roll No.- 72) Sanjay Singh ( Roll No.- 95) Batch – Xlll-B
  • 2. Foreign Direct Investment (FDI)
    • What is FDI
    • Why we need FDI
    • Process of the Inflow of FDI
    • Benefits
    • Types
    • Advantages and disadvantages
    • FII
    • Diff between FII and FDI
    10/08/11
  • 3. Modes of FDI
    • 1) By Direction
    • * Inward
    • *Outward
    • 2) By Target
    • * Mergers and Acquisitions
    • * Horizontal FDI
    • * Vertical FDI
    • (a) Backward Vertical FDI
    • (b) Forward Vertical FDI
    • 3 ) By Motive
    • * Resource-Seeking
    • * Market-Seeking
    • * Efficiency-Seeking
    10/08/11
  • 4. Factors Affecting FDI
    • Financial incentives (Funds from local Government)
    • Fiscal incentives (Exemption from import duties)
    • Indirect incentives (Provides land and
    • Political stability
    • Market potential & accessibility
    • Large economy
    • Market size
    10/08/11
  • 5. Why India?
    • Liberal, largest democracy, Political Stability
    • Second largest emerging market (US$ 2.4 trillion)
    • Skilled and competitive labors force
    • highest rates of return on investment
    • one hundred of the Fortune 500 have R & D facilities in India
    • Second largest group of software developers after the U.S.
    • lists 6,500 companies on the Bombay Stock Exchange (only the NYSE has more)
    10/08/11
  • 6. Why India (cont.)
    • World's fourth largest economy & second largest pharmaceutical industry
    • growth over the past few years averaging 8%
    • has a middle class estimated at 300 million out of a total population of 1 billion
    • Destination for business process outsourcing, Knowledge processing etc.
    • Second largest English-speaking, scientific, technical and executive manpower
    • Low costs & Tax exemptions in SEZ
    • Tax incentives for IT , business process outsourcing and KPO companies
    10/08/11
  • 7. Government policies
    • Automatic Route
    • Prior Permission (FIPB)
    10/08/11
  • 8. Investing in India – Entry Routes 10/08/11 Investing in India Automatic Route Prior Permission (FIPB) General rule No prior permission required Only information to the Reserve Bank of India within 30 days of inflow/ Issue of shares By exception Prior Government Approval needed Decision generally Within 4-6 weeks
  • 9. FDI Investment Sectors
    • Prohibited activities
    • Atomic energy
    • Arms and ammunition
    • Lottery business
    • Betting and Gambling
    • Aircraft and warships
    • Coal lignite
    10/08/11
    • Fully permitted Activities
    • Cigar and cigarettes of tobacco
    • Coal, Roads & Highways
    • Diamond, Gold, Silver , Minerals
    • Atomic minerals
    • Electricity
    • Hotel, hospitals
  • 10. 10/08/11
    • Retail
    • I.T
    • Oil & Energy
    • Power sector
    • Pharmaceuticals & Chemicals
    • Real state
    • Mining
    • Mobile Sector
    • Automobile
    • Telecommunication
    • FDI inflows In real estate US$ 5 Billion
    • FDI inflows Retail US$ 20 Billion by 2010
    • FDI inflows in Mining US$ 2,5 Billion per N.M.
    • FDI inflows in Telecommunication US$ 24 Billion
  • 11. Major Investments 10/08/11 Source: Companies Sector Investment Wal mart,Marks Retail US$ 10 Billion Intel Corp. I.T US$ 40 Billion British & cairn Oil & Energy US$ 2 Billion Essar power Power sector US$ 2 Billion Toyota Automobile US$ 10.51 Billion Panasonic Telecommunication US$ 200 million
  • 12. What is an FII??
      • An institution established outside India, which invests in securities traded on the markets in India e.g.
    • Pension Funds
    • Mutual Funds
    • Investment Trust
    • Insurance companies
    • Endowment Funds
    • University Funds
    • Foundations or Charitable Trusts
    • Asset Management Companies
    • Power of Attorney Holders
    • Bank
    10/08/11
  • 13. FII Vs FDI
    • FII is Foreign Institutional Investment: It is investment made by foreign Mutual Funds in the Indian Market. FDI is Foreign Direct Investment: It is the investment made by Foreign Multinational comapnies in India.
    10/08/11
  • 14.
    • Foreign Institutional Investors (FII)
    • Foreign investment banks are not permitted to directly invest in shares on the Indian stock exchange
    • Makes investments on behalf of foreign investors, referred to as “sub-accounts”
    10/08/11
  • 15.
    • Foreign Institutional Investors (FII)
    • FIIs may invest in:
      • securities in the primary and secondary markets (shares, debentures, warrants of listed and unlisted companies)
      • units issued by domestic mutual funds
      • dated Government securities
      • derivatives traded on a recognized stock exchange
      • commercial paper
      • debt instruments – provided a 70/30 equity/debt ratio is maintained
    10/08/11
  • 16.
    • Foreign Institutional Investors (FII)
    • Limits on the type and amount of investments apply to FIIs
      • no more than 10% of the equity in any one company
      • no more than 10% in the equity in any one company on behalf of a fund sub-account
      • no more than 5% in the equity in any one company on behalf of a corporate/individual sub-account
      • no more than 24% in the aggregate of the total issued capital of a company to be held by FIIs
    10/08/11
  • 17. 10/08/11 Thank You……