A Basic overview of Foreign Investment and its impact on Business Environment. Mail me if any query on aim.amit1@gmail.com

1. FOREIGN
INVESTMENT
Overview Of Foreign Investment in Business
By:AmitInani

2. Topics to build on:
Types of
Foreign
Investment
Significance
of Foreign
Investment
Limitations
and
Danger of
Foreign
Investment
Factors
affecting
Foreign
Investment
Growth of
FDI
Cross Border
Merger &
Acquisitions
By:AmitInani

3. Types of Foreign Investment
Foreign
Investment
Direct
Investment
Wholly
owned
subsidiary
Joint Venture Acquisition
Portfolio
Investment
Investment
by FII
Investment in
GDRs, FDRs,
FCCBs, etc.
By:AmitInani

4. McDonald’sIndiaPvt.Ltd.
A wholly owned subsidiary of
McDonald’s Corp
Wholly
owned
Joint
Venture
Acquisition
F I I
ADR, GDR

5. SBI,BrookfieldtosetupaJointVenture
For the purpose of
BAD LOANS RESOLUTION PROCESS
Wholly
owned
Joint
Venture
Acquisition
F I I
ADR, GDR

6. NirmaacquiredLafargeIndiafromLafargeHolcim
Acquisition process amounted to about $1.4 Billion
Wholly
owned
Joint
Venture
Acqu.
F I I
ADR,
GDR

7. FederalBankhasabout29%ForeignInstitutionalInvestors*
FIIs are a kind of Foreign Investment Companies or Investment Funds
Wholly
owned
Joint
Venture
Acquisition
F I I
ADR, GDR

8. HDFCBANK asHDBonNYSEisanADRandGDR(LSE)
Wholly
owned
Joint
Venture
Acquisition
F I I
ADR,
GDR

9. Significance of Foreign Investment
EconomicGrowth
Investments from
Multinational
Companies
improves Growth
Rate, Employment,
Infrastructure, etc.
ImprovementinSupplyChain
Distribution and
Introduction of
modern
Technology
ShiftingofRisk
Risks shared
from Domestic
to Foreign
investors
AgriculturalBenefits
Technical and
Operational
Expertise
Stability for
Economies to scale
By:AmitInani

10. Other Significant issues of
Foreign Investment
•Depreciation of
currency in the
host country will
increase
investments
Exchange Rate
Improvement
•Expands the
scope of market
in different
countries
Market Size • Worker’s get higher
salaries and wages
in MNCs which
increases the
standard
Efficiency in
Labour Market
•Policy
fluctuations will
see stability due
to external
investments
Political
Stability
By:AmitInani

11. Limitations and Dangers of
Foreign Investment
Focus Area of FDI
•Tends to Flow towards
High Profit Areas
Technology
•May or may not be adapted to
•Consumption needs
•Market Size
•Stage of Development
Drain of Foreign Exchange
•Loyalties
•Dividends
Interference in National
Policies
By:AmitInani

12. Foreign Investors
sometimes engage in
unfair & unethical
trade practices
MONOPOLIES
Elimination and
Minimization of
Domestic Competition
Special concessions to
Foreign investors may
demotivate Domestic
Investors
Distortion of Culture, as
youth easily imbibe
certain negative aspects
of foreign culture
DEPENDENCE
Limitations and Dangers of
Foreign Investment
By:AmitInani

13. Factors affecting Foreign
Investment
•Capital movements for
difference in interest
rates
•FED Rate Hike Scenario
Rate of
Interest
•Anticipated Growth of
Countries sometimes
influence the Capital
Investments
Speculation
•Private Foreign Capital
movement influenced
by profit motive, where
return on equity may
be higher
Profitability
•Cost of Raw Materials
•Cost of Labour
available
•Cost of Resources
Costs of
Productions
•Political Factors
•Market Potential
•Infrastructural Benefits
Economic
Conditions
•Remittances
•FIPB Policies
•Tax Heaven Zones
•Automatic Routes
•Profits on Taxation
•Less Bureacracy
Government
Policies
By:AmitInani

14. Growth of FDI
• During October 2014 to May 2016
Increased by about 46%
61.58
42.31
October 2014 to May 2016 Feb 2013 to September 2014
FDI Inflow in USD Billion
By:AmitInani

15. • India received $5.34 Billion as FDI in April-May
Growth of FDI
4.76
0.582
Automatic Route Approval Route
FDI Inflow April-May in USD Billion
By:AmitInani

16. Growth of FDI
FIPB Data
By:AmitInani

17. • Major Factors affecting the trends in FDI Flows
• Business Cycles
• Economic and Government Policies
• Stock Market Sentiments
• Merger & Acquisition Deals
• Availability of Corporate Investible Funds
• 100% FDI in Key Industries
• Defence
• Agriculture
• E-commerce
• Aviation
• Pharma Sector: 74% FDI through Automatic route and 26%
after Approval
Growth of FDI
By:AmitInani

18. Cross-Border Merger &
Acquisition
• Involves FDI in Host Country by merging with or acquiring an
existing local firm
• Acquisition: Equity Stake of more than 10%
• Involves Fund Raising in both Local and International Market
• Major M&As
• Nokia acquired Alcatel-Lucent
• Microsoft acquisition of LinkedIn
• TATA Motors acquired JLR
• Jet and Etihad Airways
• Why?
• To increase company’s efficiency in production
• Increase the economies of scale
• Enlarging the markets
• Diversification
• Global Exposure
By:AmitInani

19. THANK YOU.
By:AmitInani