Presentation on FDI through pictures and graphs.

2. Foreign Direct
Investment
Efforts by –
Suraj Sharma

3. The history of
FDI can be
traced back to…
EAST INDIA COMPANY

4. 1985 1991
SERIOUS
ECONOMIC
CRISIS
• Government was close to default.
•Central bank had refused new credit.
•Foreign exchange reserve reduced barely
for 3 weeks worth of import.
•Airlift of national gold reserve as a pledge
to IMF in exchange for a loan to cover
balance of payment debts.
• License permit quota policy.

5. The government introduced reforms…
INDIA IS RUNNIG
THROUGH TOUGH
TIMES
WE NEED TO DO
SOMETHING TO
REVIVE ITS
ECONOMIC
CONDITION
#MAIN HOON
NA!
LIBERALISATION
PRIVATISATION
GLOBALISATION

7. Foreign direct investment (FDI) takes place when a corporation in one
country establishes a business operation in another country, through setting
up a new wholly-owned affiliate, or acquiring a local company, or forming a
joint venture in the host economy.

9. Increase investment level and thereby income &
employment.
Increase tax revenue of government.
Facilitates transfer of technology.
Increase exports and reduce import requirements.
Increase competition and break domestic monopolies.
Improves quality and reduces cost of inputs.

10. Horizontal
Horizontal FDI is
a business
consolidation that
occur between
business firm
who operate in
the same space,
often as
competitors
offering the same
good or services.
Vertical
A vertical FDI is a
FDI between two
companies
producing
different goods or
services for one
specific finished
goods .
Conglomerate
A conglomerate
FDI is a FDI
between firms
that are involved
in totally
unrelated
business activities
Joint Venture
(JV)
A joint venture is
a business
agreement in
which the parties
agree to develop
for a infinite time
a new entity and
new asset by
contributing
equity

11. DISADVANTAGES ADVANTAGES

12. ADVANTAGES
• Increase in domestic
employment
• Investment in
infrastructure
• Positive influence on the
balance of payment
• New technology and “know
how” transfer.
• Increased capital
investment.
• Targeted regional and
sectoral development
• Economic Development
DISADVANTAGES
• Industrial sector
dominance in the domestic
market.
• Technological dependence
on foreign technology
sources
• Disturbance of domestic
economic plans in favor of
FDI-Directed Activities.
• “Cultural Change” created
by “Ethnocentric Staffing”
the infusion of foreign
culture, foreign business
practices.

13. INDIA
OTHERS

14. • India is the 7th largest and 2nd populous country in the world.
• 4th largest economy in the world in terms of PPP (Purchasing Power Parity).
• Transparent Environment that guarantees the security of their long term investments.
• Stable democratic environment.
• Large and growing market.
• World class scientific, technical and managerial manpower.
• Cost effective and highly skilled labor.
• Abundance of natural resources.
• Well established legal system with independent judiciary.
• Developed banking system and vibrant capital market.

16. •Courts lead to long procedural delays.
•Violent separatist movements existing in Kashmir .
•Corruption faced by firms in India after bureaucratic red tape and power shortages.
•Shortages of energy and handling capacities at the ports, and saturated rail and road networks
•Lack of a regulatory environment, clear investment policies.
•Problems with land acquisition

18. AUTOMATIC ROUTE
GOVERNMENT ROUTE
By this route FDI is allowed
without prior approval by
Government or Reserve
Bank of India
Prior approval by
government is needed
via this route. Foreign
Investment Promotion
Board is the responsible
agency to oversee this
route
RBI

20. 1991
– FIPB
1996 -
FIPC
1999
- FIIA
2004 -
SIA

21. The Foreign Investment Promotion Board (FIPB), housed in the
Department of Economic Affairs, Ministry of Finance, is an inter-
ministerial body, responsible for processing of FDI proposals and
making recommendations for Government approval.
In the process of making recommendations, the FIPB provides
significant inputs for FDI policy-making.

28. 39506
71195
3280 6988
23103
13925
2589 5040 2373 2600
0
10000
20000
30000
40000
50000
60000
70000
80000
FDI INVESTMENT (in US$ Billion)
FDI INVESTMENT (in US$
Billion)

29. SERVICE SECTOR,
19963
REAL ESTATE, 4582
COMPUTER
SOFTWARE,
13564
TELECOMMUNICAT
ION, 17372
AUTOMOBILE
INDUSTRY, 15794
DRUGS &
PHARMACEUTICAL
S, 9211
CHEMICAL, 4077
POWER, 3985
TRADING,
16962
METALLURGICAL
INDUSTRIES, 2897

30. India Foreign Direct Investment
Actual Previous Highest Lowest Dates Unit Frequenc
y
2473.0
0
4413.00 5670.00 60.00 2015 -
2016
USD
Million
Monthly

32. PM Narendra Modi’s ambitious “Make in India” initiative has
improved FDI inflows significantly between
September 2014 and November 2015 according to RBI.
FDI will grow by 40-45% in 2016 despite the global slowdown.
The government has taken vast number of
policy measures this year.

34. •E-commerce giant Amazon plans to set up its second largest global delivery centre outside the United
States, in Hyderabad.
•Global beverage company Pepsi plans to invest Rs 500 crore (US$ 72.84 million) to set up another unit in
Maharashtra.
•Apple will build its first technology development centre outside the US in Hyderabad with an investment
of $25 million.
•Japan has won the right to construct India’s first bullet train, while offering a loan of US$ 8.11 billion to
India for the same.
•Google plans to invest Rs 1,500 crore (US$ 220 million) for a new campus in Hyderabad which will be
focused on three key areas — Google Education, Google Fibre broadband services and Street view.

36. INDIA HAS 35 TOWNS EACH WITH A POPULATION OVER 1
MILLION. IF WAL MART WERE TO OPEN AN AVERAGE
WAL- MART STORE IN EACH OF THESE CITIES AND THEY
REACHED THE AVERAGE WAL-MART PERFORMANCE PER
STORE WE ARE LOOKING AT TUROVER OF OVER
RS.80,330 mn WITH ONLY 10,195 EMPLOYEES
EXTRAPOLATING WITH MARKET TREND IN INDIA, IT
WOULD MEAN DISPLACING ABOUT 432000 PERSON

37. Conclusion
As far as organized sector is concerned, there should be regulatory framework.
Because of penetrating pricing and the fact that it definitely creates monopolistic market and because
it has potential to create loss to crores of families which will occur to unorganized sector, FDIs
shall not be allowed in retail sector.
Whereas on the other hand, the concept of global village forces the theme of liberalization. By closing
doors to our home, the world outside will not stop from upgradation. Accepting changes and
challenges is the truth of life.
Thus the impact of the reforms in India on the policy environment for Foreign Direct Investment
presents a mixed picture. The industrial reforms have gone shady, they are supplemented by more
infrastructure reforms and increase in service sector rather than any significant industrial
growth which is a critical missing link.