FDI and its policies in India Impact of FDI on different Industries

2. Definition
 “Investment into the business of a country by a company
in another country”.
 Investment is into production by either buying a company
in the target country or by expanding operations of an
existing business in that country
 Reasons: to take advantage of cheaper wages, special
investment privileges (e.g. tax exemptions) offered by the
country

3. What are the major benefits of
FDI :
 Improves Forex position of the country
 Employment generation and increase in production
 Help in capital formation by bringing fresh capital
 Helps in transfer of new technologies, management skills,
intellectual property
 Increases competition within the local market and this brings
higher efficiencies
 Helps in increasing exports
 Increases tax revenues

4. Why FDI is Opposed by Local
People???
 Domestic companies fear that they may lose their ownership to
overseas company
 Small enterprises fear that they may not be able to compete with
world class large companies
 Large giants of the world try to monopolies and take over the
highly profitable sectors
 Such foreign companies invest more in machinery and
intellectual property than in wages of the local people;
 Government has less control over the functioning of such
companies as they usually work as wholly owned subsidiary of an
overseas company

5. What is the procedure for
receiving FDI??
 Automatic Route
FDI is allowed under the automatic route without prior approval
either of the Government or the Reserve Bank of India in all
activities/sectors as specified in the consolidated FDI Policy,
issued by the Government of India from time to time.
 Government Route
FDI in activities not covered under the automatic route requires
prior approval of the Government which are considered by the
Foreign Investment Promotion Board (FIPB), Department of
Economic Affairs, Ministry of Finance.

6. RETAILING

8. Organized Unorganized
Counter Stores,
Kirana Stores,
Street Markets
Owned or
Franchised
Chain Stores
Introduction
to
Indian
Retail

9. Online
TV
Catalogue
Stores
Direct Selling
Level 0
Speciality
stores of
various
product
category
Level 1
Supermarket
Hypermarket
Departmental
stores
Level 2
Malls
Level 3
Types of Retail
Specialty Retailers
Footwear – Bata, Liberty
Apparel – Cotton County,
Raymond
Home Décor – Bombay
Dyeing, Style Spa
Pharma – Apollo, Med plus
Consumer Durables –
Croma, Ezone
Large Retailers
Shoppers Stop
Trent
Reliance Retail
Aditya Birla
Spencers Retail
Landmark
Food & Grocery
Apparel
Jewellery
Consumer Durables & IT
Pharma
Furnishing
Footware
Others

10. Rising income levels to
drive consumption
Desire for better
standard of living to
drive non-food
consumption growth
Increasing role of
working women in
consumer spends
Favorable working age
population to
influence consumer
spending
Nuclearization of
families to drive
consumption
Growing urban
population holds the
key to future
spending
Better credit
availability,
increasing
penetration of plastic
money

11. 100% FDI in single brand
retailing
51% FDI in multi-brand
retailing
Minimum investment of
$100 million
50% of investment in
"Back-end Infrastructure"
At least 30% of the
merchandise from MSMEs
(Micro, Small & Medium
Enterprises

12.  Delhi
 Maharashtra
 Andhra Pradesh
 Karnataka
 Rajasthan
 Haryana
 Jammu & Kashmir
 Himachal Pradesh
 Assam
 Uttarakhand
 Manipur
 Daman & Diu
 Dadra & Nagar Haveli

13. Automobile Sector

14. Facts and Figures

15. Revenue in the past

16. More Figures

17. Indian Players

18. FDI
FDI inflows aggregated USD 9.6 billion (4.5 % of total FDI) over April 2000 -
Feb 2014

19. Increasing Investments
Nissan - Plans to double
current investment of
about $ 2.5 billion over
next 5 yrs
Ford - Investing in
Chennai and Sanand
Plants to raise capacity
BMW - In process to
expand dealer
network from 33 to 50
by end of 2014
GM - Plans to launch up
to 8 models over next 5
yrs
Honda - Aims to invest
$460 million in
Rajasthan Plant
Toyota - Expects to
invest $163 million at
Bidadi plant
Hyundai - Plans to
invest $600 million
over the next 3 yrs

20. Reasons for investing in India
India is a fast emerging as global R&D hub.
•Eg. Hyundai, Suzuki, GM
Opportunities for creating a sizeable market segments through
innovations
•Eg. Nano, Electric cars, Alternative Fuels
Small-car manufacturing hub
•Eg. GM, Nissan

21. AVIATION SECTOR

22. FDI in Aviation Industry
 Government allowed up to 49% FDI in the Indian aviation
industry in 2012
 The current size of the Indian aviation market and the growth
potential it offers is attractive for global carriers.
 Domestic passenger traffic has grown at about 5 per cent
CAGR over the last 5 years to 58 million passengers in 2012-13,
from 44 million passengers in 2007-08

23. Reasons
Need of funds for operations
To strengthen the sector
High taxes on aviation turbine fuel
Rising airport fees
Costly loans
Poor infrastructure
Competition

24. Expectations
Higher service standards
Induction of the state-of-the-art technology
Competitive fares
Better international connectivity
Better Products and services

25. CONCLUSION – (So, WHAT IS FDI ??)
 Foreign direct investment An investment made by a company
based in one country, into a company based in another country.
 Foreign direct investment includes "mergers and acquisitions,
building new facilities & reinvesting profits earned from overseas
operations .”
 FDI may be associated with improved economic growth.
 The local population may be able to benefit from the
employment opportunities created by new businesses.
 Lastly, Greater competition Numerous opportunities for
Growth & Development