This document summarizes foreign direct investment (FDI) in India's 2014-15 budget. It defines FDI and explains why countries seek it, including to supplement domestic capital and gain access to skills and technology. The main benefits of FDI are improving forex reserves, generating employment, increasing production and exports, aiding capital formation, and transferring technologies. The budget increases FDI limits in key sectors like defense, insurance, manufacturing, and e-commerce. While FDI brings benefits, local businesses fear being outcompeted and losing ownership control to foreign giants.

1. Budget 2014 – 15
With Special Reference to F.D.I
Coordinted By :
Dr. Pramod Goyal
Mr. M. L. Patidar
Presented By :
Pawel Gautam
Priti Tripathi
Gautam singh
Sachin Dhamodkar

2. FDI ?
The Foreign Direct Investment means
“cross border investment made by a
resident in one economy in an
enterprise in another economy, with
the objective of establishing a lasting
interest in the investee economy.

3. Why countries seek FDI
• Domestic capital is inadequate for purpose of
economic growth.
• Foreign capital is usually essential, at least as
a temporary measure, during the period when
the capital market is in the process of
development.
• Foreign capital usually brings it with other
scarce productive factors like technical know
how, business expertise and knowledge

4. What are the major benefits of FDI
• Improves forex position of the country
• Employment generation and increase in
production
• Help in capital formation by bringing fresh
capital;
• Helps in increasing exports;

5. Cont….
• Helps in transfer of new technologies,
management skills, intellectual
property
• Increases competition within the
local market and this brings higher
efficiencies
• Increases tax revenues

7. Latest Developments on FDI (budget 2014-15)
Defence Sector:
The Defence sector has been one of the biggest beneficiaries
of the increase in Foreign Direct Investment which will be
increasing from 26% to 49%. The increase in FDI in defence
sector would open the doors for a several foreign players to
have a local existence with full domestic management under
the FIPB route.

8. Insurance Sector :
The insurance sector at present is investment starved.
Increasing the composite FDI cap in the sector from 26
to 49 & offering full management control through FIPB
route will pave way for expansion of the sector as a
whole said the finance minister

9. Manufacturing and e-Commerce Segment
FDI in manufacturing sector the finance minister has
underlined the government’s role on focusing on offering
incentives for small manufacturers and MSMEs in order to
promote entrepreneurship FDI in the manufacturing sector
is today on the automatic route and the announcement of
FDI in the sector would make it possible for more small
manufacturers to enter the online market, banking on the
marketplace business model of e-commerce portals.

11. Sector
• Single Brand Retail
• Telecommunications
FDI limit
• 100% (upto 49%-
Automatic 49-100%-
FIPB)
• 100% (upto 49%-
Automatic 49-100%-
FIPB)

12. Why FDI is Opposed by Local People or Disadvantages of FDI
. Small enterprises fear that they may not be able to compete
with world class large companies and may ultimately be edged
out of business.
• Domestic companies fear that they may lose their ownership to
overseas company.
• Large giants of the world try to monopolise and take over the
highly profitable sectors.
• Such foreign companies invest more in machinery and
intellectual property than in wages of the local people.

13. SHARE OF TOP COUNTRIES - FDI EQUITY INFLOWS
(Cumulative, between April 2000 to February 2011)