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  • 1. Fdi in india PRESENTED BY K.Kiruthiga Nirosha R.Ramya M.Saravana kumar P.Sathya
  • 2. introduction The Foreign Direct Investment means “cross border investment made by a resident in one economy in an enterprise in another economy, with the objective of establishing a lasting in the investee economy.
  • 3. THE PURPOSE FOR WHICH THE COUNTRIES SEEK FDI •Domestic capital is inadequate for the purpose of economic growth. •Foreign capital is usually essential, at least as a temporary measure, during the period when the capital market is in the process of development. •Foreign capital usually brings it with other scarce productive factors like technical knowhow, business expertise and knowledge.
  • 4. FOREIGN DIRECT INVESTMENT IN INDIA •Foreign Direct investment was introduced in 1991 •It was introduced as Foreign Exchange Management Act (FEMA), driven by our former Finance minister Manmohan Singh. •Starting from a baseline of less than $1 billion in 1990
  • 5. FORMS OF FDI •Greenfield Investment •Mergers &Acquisition •Horizontal FDI •Vertical FDI
  • 6. ADVANTAGES OF FDI IN INDIA •Economic Growth •Increase trade •Superior quality products •Increase employment opportunity •Outsourcing of knowledge •Increase investment by joint-ventures •Reduce intermediaries involvement •Bringing down prices at retail level and calm inflation
  • 7. Cont… •Bigger market for small and medium enterprises and better branding. •Bring foreign investment and global practices •Induce better competition •Introduce cost effective manufacturing technology •Handling issues and challenges faced by two wheeler industry in India including fuel technology, development of nurturing practices for working manpower
  • 8. DISADVANTAGES OF FDI IN INDIA •Limited employment generation to semi-illiterate people •Fear of lowering of prices •drain out the country’s share of revenue to foreign countries •loss of market share by domestic organization
  • 9. Cont… •Small retailers and other ‘Kirana Stores’ may close down •Supermarkets will establish their monopoly in the Indian market •Domestic companies may lose their ownership •Loss of control by Government
  • 10. 7 MAJOR SECTORS ATTRACTING FDI IN INDIA •Infrastructure •Automotive •Retail and consumer products •Technology •Financial service •Life sciences •Cleantech
  • 11. SECTOR WHERE FDI IS NOT ALLOWED IN INDIA •Atomic energy •Lottery business •Gambling and betting •Business of chit fund •Nidhi company •Agriculture and Plantation activities •Housing and Real Estate business •Trading in Transferable Development Rights(TDRs) •Manufacture of cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco substitutes.
  • 12. THE KEY CHANGES PROPOSED UNDER THE FDI LIMITS ARE AS FOLLOWS Sector/Activity Before the proposal After the proposal % of FDI /Equity Entry Route % of FDI / Equity Entry Route Defense Sector 26% Government Route No Change Higher limits of foreign investment in "state of-the-art" manufacturing would be considered by the CCS Insurance Sector 26% Automatic Route 49% Automatic Route Telecom Services 74% Automatic up to 49% Government route beyond 49% and up to 74% 100% Automatic up to 49% Government route beyond 49% and up to 100% Tea Plantation 100% Government Route 100% Automatic up to 49% Government route beyond 49% and up to 100%
  • 13. Cont… Sector/Activity Before the proposal After the proposal Asset Reconstruction Company 74% of paid-up capital of ARC (FDI+FII) Government Route 100% Automatic up to 49% Government route beyond 49% and up to 100% Petroleum & Natural Gas 49% Government Route 49% Automatic Route Commodity Exchanges 49% (FDI & FII) + [Investment by Registered FII under Portfolio Investment Scheme (PIS) will be limited to 23% and Investment under FDI Scheme limited to 26% ] Government Route (For FDI) 49% Automatic Route Power Exchanges 49% (FDI &FII) FDI limit of 26 per cent and an FII limit of 23 per cent of the paidup capital Government Route (For FDI) 49% Automatic Route
  • 14. Cont… Sector/Activity Before the proposal After the proposal % of FDI /Equity Entry Route % of FDI / Equity Entry Route Credit Information Companies 49% (FDI & FII) Government Route 74% Automatic Route Courier Services 100% Government Route 100% Automatic Route Single Brand product retail trading 100% Government Route 100% Automatic up to 49% Government route beyond 49% and up to 100%
  • 15. PROCEDURES FOR RECEIVING FDI IN INDIAN COMPANY •Automatic Route •Government Route
  • 16. A two-stage reporting procedure of Automatic Route or Government approval 1. On receipt of money for investment The report to the Regional Office of RBI containing details such as: •Name and address of the foreign investors •Date of receipt of funds and their rupee equivalent •Name and address of the authorized dealer through whom the funds have been received, and •Details of the Government approval, if any;
  • 17. Cont… 2. On issue of shares to foreign investor A report in Form FC-GPR (Foreign Collaboration - General Permission Route should be filed with the Regional Office of RBI with required documents
  • 18. AUTHORITIES DEALING WITH FOREIGN INVESTMENT •Foreign Investment Promotion Board (FIPB •Secretariat for Industrial Assistance (SIA): •Foreign Investment Implementation Authority (FIIA). •Investment Commission •Project approval Board •Reserve Bank of India
  • 19. THE TOP 10 NATIONS INVESTING IN INDIA •Mauritius - Investment: Rs 247,092 crore ($55,203 million) •Singapore - Investment: Rs 58,090 crore ($13,070 million) •United States of America - Investment: Rs 42,898 crore ($9,529 million) •The United Kingdom - Investment: Rs 29,451 crore ($6,643 million) •The Netherlands - Investment: Rs 25,799 crore ($5,739 million)
  • 20. Cont… •Japan - Investment: Rs 25,001 crore ($5,511 million) •Cyprus - Investment: Rs 22,702 crore ($4,982 million) •Germany - Investment: Rs 13,607 crore ($3,051 million) •France - Investment: Rs 11,244 crore ($2,484 million) •United Arab Emirates - Investment: Rs 8,683 crore ($1,910 million)
  • 21. SUGGESTION We suggest that FDI is beneficial to our country since we are developing. Every activity has its own benefits and drawbacks. The important is which one is dominating. According to our point of view FDI is welcomed one due to the reasons such as •High employment opportunities •Growth of government revenue by bringing the foreign currencies into India. •Increasing exports. •International standard products
  • 22. Thank you