Reason OF Increase F.D.I Merit and Demerit of F.D.I Steps taken by Govt. to increase F.D.I

1. F.D.I In India
Meaning of FDI
(FDI) is an investment made by a firm or govrnment or
individual in one country into business interests located
in another country. For exp. SAMSUNG establised
factory in India for manufacture of mobile and another
exp. acquire and merger of business like Walwart
acquires FLIPKART 77% shares in $20 BILLIONS
DOLLARS
ACCORDING TO: INDIAN GOVT. adopted simple
approach differenate between FII AND FDI if Foreign
Investment less or equal 10% in equity capital IN any
business is treated as FPI If Foreign Investment OF
more than 10% in the equity and foreign investment
more than 10% in equity capital of any business unit
treated as FDI
DIFFERENCE BETWEEN FDI AND FPI
Base F.D.I F.P.I
Limit Fixed according to
sector
No. limit
Time period Long Short depend upon on capitat market

2. Types of investment Direct investment Indirect investment
Stable/voliate stable voliate
Mode of entry Govt and auot
matic
Through financial market
Ownership /management Both Ownership
Barries of entry and exists Present No barries
Why India NEED FDI
1. Employment and Economic Growth: In india huge
population and their saving also low to start
business if fdi inflow in INDIA AND SETUP
FACTORY PROVIDE employment if employment
increase increase people income and also increase
consumption and saving motive setup more
industry in this manner increase G.D.P OF INDIA
with per capita and govt. more spends on
infrastructure and public and social goods
2. Human Resource Development: in F.D.I not only
flow of capital also flows of technoloy managerial
expertise our citizens know new technology and
managerial skills or provide training and also
increase living standard.
3. FULLER UTILISATION OF RESOURCES: IN India
abundance resources in form of human and

3. natural but lack of capital and advance technology
under utilisation for exp land our output per
hectare is very low than deveolp country if flow of
capital and technology increase output per hectare
4. Advance technology : fdi flow new and advance
technology which help use of resources in better
manner and more output same quantity of output
5. INCREASE GOVT. REVENUE when fdi est.
production starts need raw materials and other
factor companies pay taxes and counsumers also
pay taxes and other subsidy business also est. they
also paid and employed people pay taxes in this
way govt. revenue increase for. Exp automobiles
sector in suzuki setup business in Gurugram many
anciliary business setup like logistics service like
banking insurance and euipments factory pay
taxes
6. PROVIDE WORLD CLASS SERVICE and products to
our CITIZEN: f.d.i providses better service for exp in
telecommunciation industry few years ago people
wait takes telephone for many days but due to fdi
you takes sim immediately and starts
coummication and intrnets other exp. Bullets train
for Japan

4. 7. CORRECT OF BALANCE PAYMENT and Export
before the liberaisation india import of various
goods for foreign country like white goods cars
and mobile phones due to fdi many mobile and
electronices company setup in india like samsang
sony suzuki , ford , honda, hundai in automobiles
sector know they export their output rest of the
world.
Two routes inflow of FDI
1.Automatic Route : IN THIS route foreign fdi
investor not required any proir permission for
R.B.I and other govt. authouities but india
business unit which receive f.di provide
information to neaar by regional office of r.b.i
within 30days. Many sector allowed 100% f.di
like mining, Railway Infrastructure, Civil
Aviation etc and many area less than
100% LIKE INURANCE ONLY 49% IN
annual budgets announces 74% fdi in
insurance sector
2.GOVT.Route : In this route investor need govt
approval before invest in india in selective
sector. But due to pandemic and disuptes with
China Govt. of IndiaDepartment for Promotion

5. of Industry and Internal Trade Ministry of
Commerce and Industry Government of India
Amendments foreign direct investment
consolidation policy 2020. Neighours countries
which share boundaries with india requires take
approval of govt. before investment in india
IN many sectors some limits fixed with
automatic route and beyond the limits
investment through govt. route
According to: UNITED NATION CONFERENCE ON
TRADE AND DEVELPOMENT DURING pandemic
only INDIA and china positive inflow of F.D.I

6. • India recorded 13% growth in FDI, boosted by
investments in the digital sector, according to
the UNCTAD Investment Trends Monitor
• Overall, global FDI collapsed in 2020, falling
42% from $1.5 trillion in 2019 to an estimated
$859 billion IN 2020
Why India has emerged as one of the most
preferred destinations for FDI

7. 1. THIRD LARGEST G.D.P IN THE WORLD ACCORDING TO PPP
2. 6TH
LARGEST GDP IN THE WORLD ACCORDDING TO NOMINAL
VALUE
3. Rs. 1.97 lakh crore in next 5 years for PLI schemes in 13 Sectors to
create and nurture manufacturing global champions for an AatmaNirbhar
Bharat
4. The consumer market of India attracts foreign investors as they want
to tap the Indian markets due to its high volume and high spending
capacity. It is said, that the Indian consumer market with private
consumption will increase four times by 2025.
5. India is said to be the country that will be having the largest youth
population in the world in 2020 according to the United Nations
Population Fund
6. SECOND LARGEST COUNTY IN POPULATION PROVIDE WORK FORCE
AND CREATE OF DEMAND OF PRODUCTS
7. SECOND LARGEST INTERNET USER AND FAST GROWING INTERNET
MARKET IN WORLD
8.
TRENDS OF FDI IN INDIA ACCORDING TO COUNTRY WISE

8. IN this given data
Dark black figures colour shows F.D.I Inflows in
dollars term
Light black colour figures c shows F.D.I Inflows in
Indian rupees.
PERCENTAGE: Total Inflows of fdi between from
April 2000 TO SEP.2021
. ACCORDING TO DEPARTMENT OF PROMOTION
INDUSTRY AND INTERNAL TRADE
Singapur is on the first place inflow of fdi in India
during 2018-19 RS. 112362 crores in 2019-2020
In 2020- 2021 RS 103615

9. Gujarat Has Accounted For 53% Of The Total FDI
Investment In India IN 2020 APRIL TO SEP. ACCORDING
TO DEPARTMENT OF PROMOTION INDUSTRY AND
INTERNAL TRADE
STEPS TAKEN BY GOVERNMENT TO INCREASE IN FDI

10. 1.Foreign exchange Regulation ACT Repalcing into
FEMA
IN THE FEMA makes liberal approach toward foreign
investment For External trade and remittances,
there is no need for prior approval from the Reserve
Bank of India (RBI)
3.Govt. privatisation many sector and for
foreign direct investment.
4.In 2020, schemes like production-linked
incentive (PLI) scheme for electronics
manufacturing, have been notified to attract
foreign investments.
3 Further, the government permitted 26% FDI in
digital sectors. AND 74% IN DEFENSE SECTOR
Union Budget 2021: FDI limit in insurance sector
raised 49% to 74%
5.Foreign Investment Facilitation Portal
(FIFP) is the online single point interface of
the Government of India with investors to
facilitate FDI. It is administered by the
Department for Promotion of Industry and
Internal Trade, Ministry of Commerce and
Industry.

11. 6.Free trade and other foreign investment
related with different countries and group
of country
5. UNION BUDGETS 2021 MAINLY FOCUS ON
infrastructure development and connective of all
around the India and decrease the distance
Single window clearance system for investors by
April 2021 in which all the department and ministry
with state govt come on single platform all the
permission and legal formalities sevice provided for
foreign investor.
On 1ST
JULY 2021 GOI launched GST which is
revoluntionary reforms of indirect taxes. All around
the India same rate of taxes apply on goods and
service according their group.

12. Important Government Authorities in India concerning FDI
• Foreign Investment Promotion Board (FIPB)
• Department for Promotion of Industry and Internal Trade (DPIIT)
• Reserve Bank of India (RBI)
• Directorate General of Foreign Trade (DGFT)
• Ministry of Corporate Affairs, Government of India
• Securities and Exchange Board of India (SEBI)
• Income Tax Department
• Several Ministries of the GOI such as Power, Information & Communication, Energy, etc
Disadvantages of F.D.I
DAMAGE MICRO AND SMALL SCALE ENTERPRISES
FDI very big firm enter into the INDIA like samsung Oppo
which has huge expenditure on adversiting and use
dumping policy their stragey not face competition only
option to shut down or running into loss like Intex Or
LAVA IN TELVISION SECTOR VIDEOCON OR ONINDA
ETC
LARGE AMOUNT PROFIT TRANSFER TO HOST NATION
TO HOME COUNTRY: MANY company like HUL P&G
Samsung Suzuki etc earn huge amount of profit from India to
their home country. Create negative effect on foreign
exchange of India.
Decrease saving Habit : when foreign fund easily available
our citizens not focus on savings more dependence on f.d.i
and future investment also decrease bu domestic industry.
Corruption: increase corruption because to entry and makes
favourable policy for their business give huge amount of
donation to political parties and bribes to the officers.
Increase regional inequality: foreign direct investment in
developing and better infrastructure city or state not backward
state .

13. REFERENCE:
UNCATD
DEPARTMENT OF PROMOTION INDUSTRY AND INTERNAL TRADE
FOREIGN INVESTMENT FACILITOR
Times of India