foreign direct investment in india. the beginning, how it started.current status of fdi in india. advantages & disadvantages of fdi.wallmart example. final conclusion

2. THE BEGINNING

3. THE HISTORY OF FDI CAN BE
TRACED BACK TO

4. FAST FORWARD

5. YEAR-1991

6. ECONOMIC CRISIS IN INDIA

7. THE GOVERNMENT INTRODUCES REFORMS
LIBERALISATION
PRIVATISATION
GLOBALISATION

8. AIMED AT liberalizing & GLOBALISING
THE ECONOMY

9. AS A RESULT OF THESE REFORMS
INDIA OPENED IT’S DOORS TO

10. FOREIGN DIRECT INVESTMENT

11. Foreign investment
was introduced in
1991 under Foreign
Exchange
Management Act
(FEMA), driven by
then finance minister
Manmohan Singh.

12. WHAT IS

13. Foreign direct investment (FDI) is a
direct investment into production or
business in a country by an
individual or company in another
country, either by buying a company
in the target country or by
expanding operations of an existing
business in that country.

14. in regard to the GDP equation
Y=C+I+G+(X-M)
Where Y = income
C = household(or private) consumption demand
I = investment plus foreign investment
G = government demand for goods & services
X = exports
M= imports

15. WHY INVEST IN INDIA ?
• India is the 7th largest and 2nd most populous country in the world
• 4th largest economy in the world in terms of PPP(Purchasing power
parity)
• Skilled managerial and technical manpower that matches the best
available in the world.
• transparent environment that guarantees the security of their long
term investments.
• Availability of highly competitive private sector that provides
considerable scope for foreign direct investment, joint ventures and
collaborations.

16. India has been ranked at the second place in
global foreign direct investments in 2010 and
will continue to remain among the top five
attractive destinations for international investors
during 2010-12 period, according to United
Nations Conference on Trade and Development
(UNCTAD) in a report on world investment
prospects titled, 'World Investment Prospects
Survey 2009-2012'

17. Foreign Direct Investment (FDI) is
permitted as under the following forms of
investments –
Through financial collaborations.
Through joint ventures and technical
collaborations.
Through capital markets via Euro issues.
Through private placements or preferential
allotments.

18. FDI is not permitted
in the following
industrial sectors:

19. arms and
ammunition

20. Atomic Energy

21. Coal and lign

22. Mining of iron, manganese, chrome,
gypsum, sulphur, gold, diamonds, copper,
zinc.

23. ENTRY ROUTES FOR FDI
• Investments can be made by non-residents in the equity shares/fully, compulsorily and
Mandatorily convertible debentures/ fully, compulsorily and mandatorily convertible
preference shares of an Indian company, through two routes:
• (i) The Automatic Route: under the Automatic Route, the non-resident investor or the Indian
company does not require any approval from the RBI or Government of India for the
investment.
• (ii)The Government Route: under the Government Route, prior approval of the Government
of India through Foreign Investment Promotion Board (FIPB) is required. Proposals for
foreign investment under Government route as laid down in the FDI policy from time to
time, are considered by the Foreign Investment Promotion Board (FIPB) in Department of
Economic Affairs (DEA), Ministry of Finance

24. STATUS OF FDI IN
INDIA

25. STATUS OF FDI IN INDIA

27. FACTS
We get 38% of FDI from Mauritius root due to tax relaxation treaty
with this. Shungalu committee analysed the issue and gives a solution
as GAAR which is yet to implement.
 Apart from Mauritius leading sources of FDI for India are Singapore,
United Kingdom and Japan.
Highest FDI was recorded in the services, telecommunication,
construction activities and computer hardware and software and
hospitality sectors.
 According to UNCTAD’s world investment report India is the second
lucrative place for FDI after china.

28. Advantages of FDI
Sufficient flow of capital towards development in various sectors as well as
revenue generation.

29. Improvement in
technology and
skill which
reduce the cost
and increase the
efficiency of
working
process.

30. Increase in job opportunities in many sectors,
resulted as uplifting in their life style and acceptability.

31. Infrastructure and administrative reforms which create
effectiveness and accountability of nation.

32. Social and economic growth due to
awareness from various sources like
schools, colleges, constitutional
body and information technology
etc. which is possible due to FDI.

33. The healthy competition
will increase, so at the
end customer will be in
profit

34. DISADVANTAGES
OF
FDI

35. Domestic
industries are
seeking due to
overflow of cheap
products and
monopoly which
makes them
uncomfortable to
survive.

36. Political pressure always tries to control the flow of FDI to
get advantages which create the obstacle in
development.

37. Inflation is on high due to
lower value of money, we
have to pay high due to lack
of money in the market
because it is shifting to FDI
companies.

38. Unethical
behaviours like
corruption, redtap
ism and
selfishness is
increasing day by
day because of
money matter for
example Wal-
Mart issue.

39. Foreign direct investment incentives may
take the following forms
• low corporate tax and individual income tax rates
• tax holidays
• special economic zones
• EPZ – Export Processing Zones
• Bonded Warehouses
• free land or land subsidies
• relocation & expatriation
• infrastructure subsidies
• R&D support

40. What will happen if WALMART comes to
INDIA ?

41. 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 a turnover of
over Rs. 80,330 mn with only 10,195
employees. Extrapolating this
with the average trend in India, it
would mean displacing about

42. Anna Hazare makes a controversial
statement saying

43. “Liberalizing trade will repeat history of
British Rule in India. We cannot allow
East India Company happen again”. Big
companies in USA in organized retail
sector are controversial for penetrating
pricing or for misbehavior with
employees. If you invite FDIs in Retail,
you are going to kill small retailers.

44. CONCLUSION
As far as organized sector is concerned there
should be regulatory framework. On the one
hand because of penetrating pricing and
because of 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

45. Whereas on the other hand the
concept of global village forces the
theme of liberalization. By closing
door of your home world outside will
not stop from upgradation. Accepting
changes and challenges is the truth of
life.

46. Our foreign dependency will be increased so
it will affect our overall development in
technology, agriculture, production etc.
Backing efficiency of the system at a cost of
potentially social disruptive policy is the main
concern. As a countrymen I hope for the best
but at last its all about natures law:
“Survival of the Fittest!”

47. ANYWAY,
THAT’S PRETTY MUCH
ALL WE HAVE TO SAY
ABOUT FDI.
* For now

48. THANK
YOU !!

49. •PRESENTATION DESIGNED & DEVELOPED
BY --- PARAS CHOWHAN
• PRESENTED BY ------ CHETAN
• ------ SIDDARTH
• ------- UNNATI
• ------- KASHIF
• ------- PARAS