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Foreign Direct Investment in India
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  • 1. CONTENTS Introduction. Types Of Investments in INDIA by Foreigners. Entry Routes. Retail trade- Backbone of Indian Economy. Failure of Local Government . Criteria for FDI . Advantages of FDI. Sectors where 100% FDI permitted in INDIA. Its turn for India – Our Country. FDI –a big benefit. MNC Regime. Conclusion.
  • 2. Portfolio investment:Investment that does not involve obtaining a degree of control in a company Foreign Direct Investment : Purchase of physical assets or a significant amount of the ownership (stock) of a company in another country to gain a measure of management control
  • 3. INVESTING IN INDIA – ENTRY ROUTES Investing in India Prior Permission Automatic Route (FIPB)General Rule By ExceptionNo prior permission Prior GovernmentRequired. Inform Reserve Bank Approval needed.within 30 days of Decision generallyinflow/issue of shares. within 4-6 weeks
  • 4. RETAIL TRADE : BACKBONE OF INDIAN ECONOMY After agriculture, Retail trade provides employment to maximum number ofpersons.1.25 crore shops - employed 4 crore people. contributes 10% - 11% of our country’s GDP. Sophisticated techn & more investment is not required in retail trade.Small Retail shops provide more employment then large chain of Retailstores.There is no gestation period. Hence business starts from day one.
  • 5. FAILURE OF LOCAL GOVERNMENT Traders are being ignored by the government. lagged in infrastructure, irrigation power etc.- require huge investment- govt. feels -traders incompetent to serve. So, instead of development of such areas- the govt. handed over retail trade to foreigners. FOREIGNERS - more dearer than INDIANS. Anti – trader laws were designed.
  • 6. THE CRITERIA FOR FDI In 1991-92, the then Finance Minister and present Prime Minister Dr. Manmohan Singh referred to certain criteria for allowing FDI in India. They were :1. Establishment of basic industries requiring huge capital and advanced sophisticated technology.2. Infrastructure projects like electricity generation road building etc.3. Projects which would generate employment.
  • 7. ADVANTAGES OF FDI Increase investment level and thereby income & employment. Increase tax revenue of government. Facilitates transfer of technology. Encourage managerial revolution through professional management. Increase exports and reduce import requirements. Increase competition and break domestic monopolies. Improves quality and reduces cost of inputs.
  • 8. 100% FDI PERMITTED IN INDIA Engineering & Manufacturing sectors. Tourism & hotels. Advertising & Film industry. Roads & Highways, Ports and Harbors. Industrial model towns/industrial parks. Pollution Control and Management. Power generation (hydro-electric, coal/lignite, oil or gas based). Information Technology including E-Commerce.
  • 9. NOW ITS TURN FOR INDIA Kamal Nath, Union Urban Development and Poverty Alleviation Minister said, Advantages of having backend and cold-chains formation, sourcing, quality standardisation, etc are going to mainly help our agricultural sector. Montek Singh Ahluwalia, Deputy Chairman of the Planning Commission, FDI is not a threat to small retailers and it will create efficiency in supply chain infrastructure. So that , Wastage will fall, leading to lower prices of primary commodities. In India, 30% of fruits and vegetables, and 5-7% of grains are wasted between harvest and consumption. Restructuring to create entities to work in the current framework would need a lot of thought, but managing an efficient supply chain, considering that only nine States have given approval, will pose a big challenge, according to Rachna Nath.
  • 10. FDI- A BIG BENEFIT The FDI in multi-brand retail - benefit the farmers who will get a fair price by selling their products directly to the retail companies. This step will increase prices paid to farmers, reduce prices for customers, reduce agricultural wastage and create thousands of jobs. As many as 40 % of vegetables are rotting as there is no backend. Multi-brand retail is a model that will work and the advantages outweigh the risks.
  • 12. CONCLUSIONo If the FDI is in the limit and the in the control of our government, then it will surely benefit our country. And its also a great privilege that “India” is the second attractors of foreigners. Retail traders will also improve their standards and the channelization. This could be a big benefit, given that Indian retail chains have so far lacked the capital and incentive to invest in supply chains.
  • 13. R.M.K. E-CELLMail id:rmkecell@gmail.com ThankFacebook of rmk ecell:www.facebook.com/rmkecell you Presented by G.Sangeetha(ECE- final year).