FOREIGN DIRECT INVESTMENT - METHODS, TYPES

1. FOREIGN DIRECT
INVESTMENT

2. What is FDI
 Investment by a company or individual in another
country.
 Ownership or controlling interest in foreign company.
 Commonly made in open economies which offer skilled
workforce and above average growth prospect.
 Provision of management or technology as well.

3. Methods of FDI
 Mergers and Acquisitions
 Joint Ventures – Ratio of 51:49
 Green Fields Investment

4. Types of FDI
HORIZONTAL FOREIGN DIRECT
INVESTMENT
VERTICAL FOREIGN DIRECT INVESTMENT
CONGLOMERATE FOREIGN DIRECT
INVESTMENT

5. Routes of FDI in India
 Automatic Route
 Government Route

6. Sectors for Foreign Direct Investment in India
Sector FDI Cap Aproval route
Agriculture and Animal Husbandry 100% Automatic
Plantation Sector (tea, coffee,rubber,palm oil,cardamom
oil,olive oil)
100% Automatic
Petroleum and Natural Gas (PSU's) 49% Automatic
Defence 100% Automatic upto 49% and
beyond 49% under
government route
Single brand product retail trading 100% Automatic upto 49% and
beyond 49% under
government route
Telecom 100% Automatic upto 49% and
beyond 49% under
government route
Banking- public sector 20% Government
Banking- private sector 74% Automatic upto 49% and
beyond 49% upto 74%
under government route

7. FDI in India
• Foreign direct investment (FDI) in India is the major
monetary source for economic development in India.
• India ranked no. 9th on FDI inflows in 2016.
• The sectors attracting highest FDI inflows in India are
service sector, construction, telecommunication,
automobile, pharma etc.

8. • The sectors attracting highest FDI inflows in India are service sector,
construction, telecommunication, automobile, pharma etc.

9. Sectors prohibited for FDI
1. Lottery Business
2. Gambling and betting
3. Business in Chit fund
4. Trading and transferable development rights
5. Manufacturing of cigarettes, tobacco and its substitutes.
6. Atomic Energy

10. FDI Policies in India
• Automatic Route
• 4 parameters while framing FDI policies
• 100% investment allowed
• Below 50% investment allowed

11. Benefits for Host Country
 Technology
 Capital
 Management
 Employment effects
 Effects on competition and economic growth

12. Benefits to Home Company
 Low cost production
 Cheap employment
 New technology
 Improves export
 Increases income

13. Disadvantages of FDI to Host Country
 Hindrance to Domestic Investment
 Risk from political changes
 Higher Costs
 Expropriation
 Pollution
 Convertibility of Currency

14. Thank you