FOREIGN DIRECT INVESTMENT IN INDIA

1. PRESENTED BY
DEBABRATA DEB BARMA
MBA (SOM,NIT AGARTALA)

2. Investment made in India

3. Foreign Direct Investment(FDI)
 FDI is defined as cross-border investment by
a resident entity in one economy with the
objective of obtaining a lasting interest in an
enterprise resident in another economy
Ownership of at least 10% of the voting
power, representing the influence by the
investor, is the basic criterion used.

4. FDI IN INDIA
 Foreign investment was introduced in 1991
under Foreign Exchange Management Act
(FEMA), driven by then finance
minister Manmohan Singh. As Singh
subsequently became the prime minister, this has
been one of his top political problems, even in the
current times. India disallowed overseas corporate
bodies (OCB) to invest in India. India imposes
cap on equity holding by foreign investors in
various sectors, current FDI limit in aviation
sector is maximum 49% till 2012 BUT...

5. CONT..
 Finally, after all that waiting & patience, the
Indian government has rolled out the red
carpet for international corporations to enter
India. On 14 September 2012, the
Government of India allowed FDI up to 100%
in various sectors

6. 100% FDI permitted Sectors
in India
 Engineering & Manufacturing sectors
 Roads & Highways, Ports and Harbors
 Industrial model towns/industrial parks
 Hotels & Tourism
 Pollution Control and Management
 Advertising & Film industry
 Power generation (hydro-electric, coal/lignite, oil or gas
based)
 Information Technology including E-Commerce

7. Main Sectors with FDI Equity/Route Limit in
India (Year 2011)
 Insurance- 26%
 Telecommunication- FDI is permitted up to
74% with FDI, beyond 49% requiring
Government approval
 Domestic airlines- 49%
 Mining (Mining of Diamonds and precious
stones)- 74%
 Airports- 74%

8. Advantages of FDI
 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

9. Limitations of FDI
 Flow to high profit areas rather than main concern areas
 Through their power and flexibility, MNC can undermine
economic autonomy and control
 Sometimes interferes in the national politics
 Sometimes engage in unfair and unethical trade practices
 Sometimes result in minimizing / eliminating competition
and create monopolies or oligopolistic structures

10. FDI inflow in
India(2005-12)
Year Amount(in billion $)
2005-06 6.05
2006-07 8.96
2007-08 17.59
2008-09 27.3
2009-10 24.2
2010-11 19.4
2011-12 35

11. Country-wise FDI inflow in
India

12. Sector-Wise FDI inflow in
India

13. Factors affecting FDI
 Profitability
 Costs of production
 Economic Conditions
 Government policies
 Political factors

14. Links
 1. http://www.onemint.com
 2. http://www.investopedia.com
 3. http://www.rbi.org.in
 4. http://www.sebi.gov.in

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