its presentation related to FDI to help the others who are in need of it.

1. FDI IN INDIAFDI IN INDIA
s

2. WHAT IS FDI ?WHAT IS FDI ?
 Foreign direct investmentForeign direct investment ((FDIFDI) in its classic form is defined as a) in its classic form is defined as a
company from one country making a physical investment intocompany from one country making a physical investment into
building a factory in another country.building a factory in another country.
 General speak FDI refers to capital inflows from abroad that investGeneral speak FDI refers to capital inflows from abroad that invest
in the production capacity of the economy .in the production capacity of the economy .
FDI refers to capital inflows from abroad that invest in
the production capacity of the economy.

3. FOREIGN
Derived from another country or nation; not native

4. DIRECT INVESTMENTDIRECT INVESTMENT
In order to qualify as FDI the investment must afford the
parent enterprise control over its foreign affiliate.

5. FDI is permitted as under theFDI is permitted as under the
following forms of investmentsfollowing forms of investments
 Through financial collaborations.Through financial collaborations.
 Through joint ventures and technical collaborations.Through joint ventures and technical collaborations.
 Through capital markets via Euro issues.Through capital markets via Euro issues.
 Through private placements or preferential allotments.Through private placements or preferential allotments.

6. FOREIGN INVESTMENTS THROUGHFOREIGN INVESTMENTS THROUGH
GDRs (Euro Issues)GDRs (Euro Issues)
Foreign Investment through GDRs is treated as ForeignForeign Investment through GDRs is treated as Foreign
Direct InvestmentDirect Investment

7. WHY FDI ?WHY FDI ?
1.Gain a foothold in a new geographic market.1.Gain a foothold in a new geographic market.
2. Increase a firm’s global competitiveness and positioning.2. Increase a firm’s global competitiveness and positioning.
3. Fill gaps in a company’s product lines in a global industry.3. Fill gaps in a company’s product lines in a global industry.
4. Reduce costs in areas such as R&D, production, and distribution.4. Reduce costs in areas such as R&D, production, and distribution.

8. FACTORS REQUIRED TOFACTORS REQUIRED TO
ATTRACT FDIATTRACT FDI
 Low cost BUT Qualified, Educated/Skilled Labor Pool.Low cost BUT Qualified, Educated/Skilled Labor Pool.
 Long-term Market Potential OR Yields greater than can be achievedLong-term Market Potential OR Yields greater than can be achieved
Domestically.Domestically.
 Access to Natural Resources.Access to Natural Resources.
 GeographyGeography
 Stability of the economic and Political Environment.Stability of the economic and Political Environment.

9. FORBIDDEN TERRITORIESFORBIDDEN TERRITORIES
FDI is not permitted in the following industrial sectors:FDI is not permitted in the following industrial sectors:
 Arms and ammunition.Arms and ammunition.
 Atomic Energy.Atomic Energy.
 Railway Transport.Railway Transport.
 Coal and lignite.Coal and lignite.

10.  Mining of iron, manganese, chrome, gypsum, sulphur, gold,Mining of iron, manganese, chrome, gypsum, sulphur, gold,
diamonds, copper, zinc.diamonds, copper, zinc.
 Lottery BusinessLottery Business
 Agricultural or plantation activitiesAgricultural or plantation activities
 Housing and Real Estate Business (except development ofHousing and Real Estate Business (except development of
townships, construction of residen­tial/commercial premises,townships, construction of residen­tial/commercial premises,
roads or bridges to the extent specified in Notification No.roads or bridges to the extent specified in Notification No.
FEMA 136/2005­RB dated July 19, 2005).FEMA 136/2005­RB dated July 19, 2005).

11. F D I - APPROVALF D I - APPROVAL
Foreign direct investments in India areForeign direct investments in India are
approved through three routes:approved through three routes:
 Automatic approval by RBI.Automatic approval by RBI.
 The FIPB Route.The FIPB Route.
 CCFI RouteCCFI Route

12. +VE’S OF FDI+VE’S OF FDI
 Increase in Domestic Employment/Drop in unemploymentIncrease in Domestic Employment/Drop in unemployment
 Investment in Needed Infrastructure.Investment in Needed Infrastructure.
 Positive Influence on the Balance of Payments.Positive Influence on the Balance of Payments.
 New Technology and “Know How” Transfer.New Technology and “Know How” Transfer.
 Increased Capital Investment.Increased Capital Investment.
 Targeted Regional and Sectoral Development.Targeted Regional and Sectoral Development.

13. -VE’S OF FDI-VE’S OF FDI
 Industrial Sector Dominance in the Domestic Market.Industrial Sector Dominance in the Domestic Market.
 Technological Dependence on Foreign Technology Sources.Technological Dependence on Foreign Technology Sources.
 Disturbance of Domestic Economic Plans in Favor of FDI­Disturbance of Domestic Economic Plans in Favor of FDI­
Directed Activities.Directed Activities.
 ““Cultural Change” Created by “Ethnocentric Staffing” TheCultural Change” Created by “Ethnocentric Staffing” The
Infusion of Foreign Culture , and Foreign Business PracticesInfusion of Foreign Culture , and Foreign Business Practices

14. FDIFDI
SECTORAL GUIDELINESSECTORAL GUIDELINES

15. AIRPORTSAIRPORTS
Foreign Investment up to 100% is allowed in green field projectsForeign Investment up to 100% is allowed in green field projects
under automatic routeunder automatic route
Foreign Direct Investment is allowed in existing projectsForeign Direct Investment is allowed in existing projects
- up to 74% under automatic route- up to 74% under automatic route
- beyond 74% and up to 100% subject to Government approval- beyond 74% and up to 100% subject to Government approval

16. TELECOMTELECOM
• FDI in basic and cellular, unified access services, national/ internationalFDI in basic and cellular, unified access services, national/ international
long distance , V­Sat, public mobile radio trunk services , global mobilelong distance , V­Sat, public mobile radio trunk services , global mobile
personal communications servicespersonal communications services

17. DOMESTIC AIRLINESDOMESTIC AIRLINES
 FDI up to 49% (40%) permitted under automatic route .FDI up to 49% (40%) permitted under automatic route .
 A R is not availableA R is not available
 However, a foreign airlines are not allowed to have any direct or indirectHowever, a foreign airlines are not allowed to have any direct or indirect
equity participationequity participation
 100% investment by NRIs/OCB’s100% investment by NRIs/OCB’s


18. DRUGS & PHARMADRUGS & PHARMA
 FDI up to 100% is permitted under the automatic route for manufacture ofFDI up to 100% is permitted under the automatic route for manufacture of
drugs and pharmaceuticals.drugs and pharmaceuticals.

19. INSURANCEINSURANCE
 FDI up to 26%.FDI up to 26%.
 However, license from the (IRDA) has to be obtainedHowever, license from the (IRDA) has to be obtained
 There is a proposal to increase this limit to 49%There is a proposal to increase this limit to 49%

20. MININGMINING
 Coal & Lignite mining for captive consumption by power projects, and forCoal & Lignite mining for captive consumption by power projects, and for
iron & steel and cement production - Automatic up to 100%iron & steel and cement production - Automatic up to 100%
 Mining covering exploration and mining of diamonds and precious stones,Mining covering exploration and mining of diamonds and precious stones,
gold, silver and minerals - Automatic up to 100%gold, silver and minerals - Automatic up to 100%

21. PETROLEUMPETROLEUM
• Petroleum and natural gas sector, other than refining and including market studyPetroleum and natural gas sector, other than refining and including market study
and formulation; setting up infrastructure for marketing - Automatic up to 100%and formulation; setting up infrastructure for marketing - Automatic up to 100%
• For petroleum refining activity 100% FDI is permitted in Indian PrivateFor petroleum refining activity 100% FDI is permitted in Indian Private
Companies under automatic route and up to 26% FDI is permitted in PublicCompanies under automatic route and up to 26% FDI is permitted in Public
Sector Undertakings with Government approval.Sector Undertakings with Government approval.

22. PRIVATE SECTOR BANKINGPRIVATE SECTOR BANKING
Foreign Investment up to 74% is permitted from all sources under theForeign Investment up to 74% is permitted from all sources under the
automatic route subject to guidelines for setting up of branches/subsidiariesautomatic route subject to guidelines for setting up of branches/subsidiaries
of foreign banks issued by RBI from time to time.of foreign banks issued by RBI from time to time.

23. TRADINGTRADING
 Wholesale / cash & carry trading - Automatic up to 100%Wholesale / cash & carry trading - Automatic up to 100%
 Trading for exports - Automatic up to 100%Trading for exports - Automatic up to 100%
 Trading of items sourced from small scale sector - 100% with GovernmentTrading of items sourced from small scale sector - 100% with Government
approvalapproval
 Single Brand product retailing - 51% with Government approvalSingle Brand product retailing - 51% with Government approval

24. PRINT MEDIAPRINT MEDIA
 FDI up to 100% in publishing/printing scientific & technical magazines,FDI up to 100% in publishing/printing scientific & technical magazines,
periodicals & journalsperiodicals & journals
 FDI up to 26% in publishing news papers and periodicals dealing in news andFDI up to 26% in publishing news papers and periodicals dealing in news and
current affairs.current affairs.
 All investments are subject to the guidelines issued by the Ministry ofAll investments are subject to the guidelines issued by the Ministry of
Information and Broadcasting.Information and Broadcasting.

25. INFRASTRUCTUREINFRASTRUCTURE
 100% FDI is permitted for the following activities:100% FDI is permitted for the following activities:
 Electricity Generation (except Atomic energy)Electricity Generation (except Atomic energy)
 Electricity TransmissionElectricity Transmission
 Electricity DistributionElectricity Distribution
 Mass Rapid Transport SystemMass Rapid Transport System
 Roads & HighwaysRoads & Highways
 Toll RoadsToll Roads
 Vehicular BridgesVehicular Bridges
 Ports & HarborsPorts & Harbors
 Hotel & TourismHotel & Tourism

26. BENIFITS TO INDIABENIFITS TO INDIA
 Stable democratic environment over 60 years of independenceStable democratic environment over 60 years of independence
 Large and growing marketLarge and growing market
 World class scientific, technical and managerial manpowerWorld class scientific, technical and managerial manpower
 Cost-effective and highly skilled laborCost-effective and highly skilled labor
 Abundance of natural resourcesAbundance of natural resources

27.  Well-established legal system with independent judiciary.Well-established legal system with independent judiciary.
 Developed banking system and vibrant capital market .Developed banking system and vibrant capital market .
 India among the top three investment hot spots and one of the fastestIndia among the top three investment hot spots and one of the fastest
growing economies in the world.growing economies in the world.
 Large English speaking population.Large English speaking population.

28. ..

29. RECENT TRENDS.RECENT TRENDS.
 Indian Railways, which is facing a severe cash crunch to the tune of RsIndian Railways, which is facing a severe cash crunch to the tune of Rs
30,000 crore every year, received a major financial boost as30,000 crore every year, received a major financial boost as 100%100%
Foreign Direct Investment (FDI) is now allowed for developingForeign Direct Investment (FDI) is now allowed for developing
infra.structure and improving safety features.infra.structure and improving safety features.
 It is expected that these new guidelines can attract upto Rs 90,000 croreIt is expected that these new guidelines can attract upto Rs 90,000 crore
FDI into Indian Railways.FDI into Indian Railways.

Among others suggestions, proposal to build Bio-toilets in passengerAmong others suggestions, proposal to build Bio-toilets in passenger
coachescoaches

30. THANK YOU

31. ??