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Fdi &fii slideshareppt

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Fdi &fii slideshareppt

  1. 1. Foreign Investment In INDIA : 10/08/11 An Overview Presented By :- Mayank Gupta (Roll No.- 25) Sachin Wakankar(Roll No.- 68) Kanupriya tiwari (Roll No.- 72) Sanjay Singh ( Roll No.- 95) Batch – Xlll-B
  2. 2. Foreign Direct Investment (FDI) <ul><li>What is FDI </li></ul><ul><li>Why we need FDI </li></ul><ul><li>Process of the Inflow of FDI </li></ul><ul><li>Benefits </li></ul><ul><li>Types </li></ul><ul><li>Advantages and disadvantages </li></ul><ul><li>FII </li></ul><ul><li>Diff between FII and FDI </li></ul>10/08/11
  3. 3. Modes of FDI <ul><li>1) By Direction </li></ul><ul><li>* Inward </li></ul><ul><li>*Outward </li></ul><ul><li>2) By Target </li></ul><ul><li>* Mergers and Acquisitions </li></ul><ul><li>* Horizontal FDI </li></ul><ul><li>* Vertical FDI </li></ul><ul><li>(a) Backward Vertical FDI </li></ul><ul><li>(b) Forward Vertical FDI </li></ul><ul><li>3 ) By Motive </li></ul><ul><li>* Resource-Seeking </li></ul><ul><li>* Market-Seeking </li></ul><ul><li>* Efficiency-Seeking </li></ul>10/08/11
  4. 4. Factors Affecting FDI <ul><li>Financial incentives (Funds from local Government) </li></ul><ul><li>Fiscal incentives (Exemption from import duties) </li></ul><ul><li>Indirect incentives (Provides land and </li></ul><ul><li>Political stability </li></ul><ul><li>Market potential & accessibility </li></ul><ul><li>Large economy </li></ul><ul><li>Market size </li></ul>10/08/11
  5. 5. Why India? <ul><li>Liberal, largest democracy, Political Stability </li></ul><ul><li>Second largest emerging market (US$ 2.4 trillion) </li></ul><ul><li>Skilled and competitive labors force </li></ul><ul><li>highest rates of return on investment </li></ul><ul><li>one hundred of the Fortune 500 have R & D facilities in India </li></ul><ul><li>Second largest group of software developers after the U.S. </li></ul><ul><li>lists 6,500 companies on the Bombay Stock Exchange (only the NYSE has more) </li></ul>10/08/11
  6. 6. Why India (cont.) <ul><li>World's fourth largest economy & second largest pharmaceutical industry </li></ul><ul><li>growth over the past few years averaging 8% </li></ul><ul><li>has a middle class estimated at 300 million out of a total population of 1 billion </li></ul><ul><li>Destination for business process outsourcing, Knowledge processing etc. </li></ul><ul><li>Second largest English-speaking, scientific, technical and executive manpower </li></ul><ul><li>Low costs & Tax exemptions in SEZ </li></ul><ul><li>Tax incentives for IT , business process outsourcing and KPO companies </li></ul>10/08/11
  7. 7. Government policies <ul><li>Automatic Route </li></ul><ul><li>Prior Permission (FIPB) </li></ul>10/08/11
  8. 8. Investing in India – Entry Routes 10/08/11 Investing in India Automatic Route Prior Permission (FIPB) General rule No prior permission required Only information to the Reserve Bank of India within 30 days of inflow/ Issue of shares By exception Prior Government Approval needed Decision generally Within 4-6 weeks
  9. 9. FDI Investment Sectors <ul><li>Prohibited activities </li></ul><ul><li>Atomic energy </li></ul><ul><li>Arms and ammunition </li></ul><ul><li>Lottery business </li></ul><ul><li>Betting and Gambling </li></ul><ul><li>Aircraft and warships </li></ul><ul><li>Coal lignite </li></ul>10/08/11 <ul><li>Fully permitted Activities </li></ul><ul><li>Cigar and cigarettes of tobacco </li></ul><ul><li>Coal, Roads & Highways </li></ul><ul><li>Diamond, Gold, Silver , Minerals </li></ul><ul><li>Atomic minerals </li></ul><ul><li>Electricity </li></ul><ul><li>Hotel, hospitals </li></ul>
  10. 10. 10/08/11 <ul><li>Retail </li></ul><ul><li>I.T </li></ul><ul><li>Oil & Energy </li></ul><ul><li>Power sector </li></ul><ul><li>Pharmaceuticals & Chemicals </li></ul><ul><li>Real state </li></ul><ul><li>Mining </li></ul><ul><li>Mobile Sector </li></ul><ul><li>Automobile </li></ul><ul><li>Telecommunication </li></ul><ul><li>FDI inflows In real estate US$ 5 Billion </li></ul><ul><li>FDI inflows Retail US$ 20 Billion by 2010 </li></ul><ul><li>FDI inflows in Mining US$ 2,5 Billion per N.M. </li></ul><ul><li>FDI inflows in Telecommunication US$ 24 Billion </li></ul>
  11. 11. Major Investments 10/08/11 Source: Companies Sector Investment Wal mart,Marks Retail US$ 10 Billion Intel Corp. I.T US$ 40 Billion British & cairn Oil & Energy US$ 2 Billion Essar power Power sector US$ 2 Billion Toyota Automobile US$ 10.51 Billion Panasonic Telecommunication US$ 200 million
  12. 12. What is an FII?? <ul><ul><li>An institution established outside India, which invests in securities traded on the markets in India e.g. </li></ul></ul><ul><li>Pension Funds </li></ul><ul><li>Mutual Funds </li></ul><ul><li>Investment Trust </li></ul><ul><li>Insurance companies </li></ul><ul><li>Endowment Funds </li></ul><ul><li>University Funds </li></ul><ul><li>Foundations or Charitable Trusts </li></ul><ul><li>Asset Management Companies </li></ul><ul><li>Power of Attorney Holders </li></ul><ul><li>Bank </li></ul>10/08/11
  13. 13. FII Vs FDI <ul><li>FII is Foreign Institutional Investment: It is investment made by foreign Mutual Funds in the Indian Market. FDI is Foreign Direct Investment: It is the investment made by Foreign Multinational comapnies in India. </li></ul>10/08/11
  14. 14. <ul><li>Foreign Institutional Investors (FII) </li></ul><ul><li>Foreign investment banks are not permitted to directly invest in shares on the Indian stock exchange </li></ul><ul><li>Makes investments on behalf of foreign investors, referred to as “sub-accounts” </li></ul>10/08/11
  15. 15. <ul><li>Foreign Institutional Investors (FII) </li></ul><ul><li>FIIs may invest in: </li></ul><ul><ul><li>securities in the primary and secondary markets (shares, debentures, warrants of listed and unlisted companies) </li></ul></ul><ul><ul><li>units issued by domestic mutual funds </li></ul></ul><ul><ul><li>dated Government securities </li></ul></ul><ul><ul><li>derivatives traded on a recognized stock exchange </li></ul></ul><ul><ul><li>commercial paper </li></ul></ul><ul><ul><li>debt instruments – provided a 70/30 equity/debt ratio is maintained </li></ul></ul>10/08/11
  16. 16. <ul><li>Foreign Institutional Investors (FII) </li></ul><ul><li>Limits on the type and amount of investments apply to FIIs </li></ul><ul><ul><li>no more than 10% of the equity in any one company </li></ul></ul><ul><ul><li>no more than 10% in the equity in any one company on behalf of a fund sub-account </li></ul></ul><ul><ul><li>no more than 5% in the equity in any one company on behalf of a corporate/individual sub-account </li></ul></ul><ul><ul><li>no more than 24% in the aggregate of the total issued capital of a company to be held by FIIs </li></ul></ul>10/08/11
  17. 17. 10/08/11 Thank You……