This document discusses foreign direct investment (FDI) in India. It defines FDI as an investment made by a company in one country into business interests located in another country, such as buying a stake in a company located in another nation. The document outlines the history and types of FDI in India, including horizontal, platform, and vertical FDI. It also discusses the objectives, routes, government initiatives, sectors, and prohibited sectors of FDI in India, as well as the top five countries by FDI inflows into India from 2000-2016.

1. FOREIGN DIRECT INVESTMENT (FDI)
By
Y.Madhu venkat sainath
171FC01085
madhusainath.y2017@gmail.com

2.  How it came into existence?
 What is FDI?
 Types of FDI.
 Objectives of FDI
 Routes of FDI come into country
 Government Initiative's
 Recent trends
 FDI flows in different sectors
 FDI prohibited in different sectors
 Top 5 countries FDI inflows into our country

3.  due to rapid growth of population since
1950’s occurred mostly in developing
countries.
 In India it came into existence in 1991 under
foreign exchange management act (FEMA)
by finance minister Manmohan Singh.
 First attempt in 1966 halt at 1967.
 Second attempt in 1985 halt at 1987 by
Rajiv Gandhi.
 Third attempt in 1991 by Manmohan Singh.

4.  Foreign direct investment or FDI is an
investment by an investor in another country
for which the foreign investor has control over
the company purchased.
 For example, if a company registered in USA
buys stake in an Indian company such an
investment is termed as FDI.

5.  Horizontal FDIs: it arises when a firm duplicates its home
country based activities at the same value chain stage in
a host country through FDI.
 Platform FDIs: foreign direct investment from a source
country into a destination country for the purpose of
exporting to a third country.
 Vertical FDIs: it takes place when a firm through FDI
moves upstream or downstream in different value chain
in a host country through FDI.

6. Toyota cars
 Assembling cars both in Japan and United Kingdom is an
example of horizontal FDI.
 Toyota acquiring a car distributor in America is an
example for forward Vertical FDI
 Toyota acquiring a tire manufacturer or a rubber
plantation is an example for backward vertical FDI.

7. • To sustain a high level of investment
• To fill the technological gaps.
• Provision for expert service.
• Training of Indian personnel
• Education research and training institutes on
the country
• Improvement in balance of payment (BOP)
positions.

8. Routes of FDI come into country
There are two routes by which India gets FDI.
a) Automatic route
b) Government route
a) Automatic route: By this route FDI is allowed without prior
approval by Government or Reserve Bank of India
a) Government route: Prior approval by government is
needed via this route. The application needs to be made
through Foreign Investment Facilitation Portal, which will
facilitate single window clearance of FDI application under
Approval Route.

9. Government Initiative's
In 2014, the government increased foreign
investment upper limit from 26% to 49%
in insurance sector. As of April 2015, FDI inflow in
India increased by 48% since the launch of "Make
in India" initiative.
India was ranking 15th in the world in
2013 in terms of FDI inflow. It rose to 8th position
in 2017

10. FDI flows in different sectors
• Agriculture & Animal Husbandry, Plantation Sector, Mining,
Petroleum & Natural Gas, Broadcasting, Civil Aviation,
Construction Development, Townships & etc.,
- 100%
• Banking- Private Sector, Credit rating -
74%
• Insurance, Pension, Power, Stock Exchange, Private Sector -
49%
• FM Radio, Print Media -
26%

11. FDI is prohibited in the following sectors
• Lottery Business including Government/private lottery, online
lotteries, etc.
• Gambling and Betting including casinos etc.
• Chit funds
• Nidhi company
• Trading in Transferable Development Rights (TDRs)
• Real Estate Business or Construction of Farm Houses
• Manufacturing of cigars, cheroots, cigarillos and cigarettes, of
tobacco or of tobacco substitutes
• Atomic Energy and Railway operations (other than permitted
activities)

12.  The department of industrial policy and promotion
(DIPP), ministry of commerce and industry, Government
of India (GOI) recently released the consolidated FDI
policy circular of 2017. ( New FDI Policy ).
 The New FDI Policy was effective immediately from its
publication, i.e., 28th August, 2017 ( Erstwhile FDI Policy)
and consolidates all the press notes issued by the DIPP
post 7th June, 2016 until 27th August, 2017.

13. Rank
Name of the
Country
Amount of FDI Inflows April 2000 -
December 2016 Percentage of
Total Inflows
April 2000 -
December 2016
(in Rs. Crore) (in U.S. Million)
1 Mauritius 566,396.06 108,729.21 33.52
2 Singapore 304,325.37 52,994.49 16.34
3 Japan 139,193.27 25,215.45 7.77
4 UK 124,071.47 24,374.33 7.51
5 U.S. 107,585.30 19,883.67 6.13