FDI refers to investment made by a company or individual in one country into business interests located in another country, in a way that allows for control of the foreign entity. It typically takes the form of establishing a new subsidiary, acquiring part of an existing foreign company, or starting a joint venture. Foreign direct investment brings investment capital into a country and can facilitate the transfer of technology, but it may also allow multinational corporations to undermine some aspects of economic autonomy and control. In 1991, India introduced foreign investment reforms under the Foreign Exchange Management Act to liberalize and encourage FDI. Over time, India has gradually increased caps and allowed higher levels of foreign ownership across various sectors to attract more international investment.

2. What is FDI?
FDI refers to investment in a foreign country
where the investor retains control over the
investment. It typically takes the form of
starting a subsidiary , acquiring a stake in an
existing firm or starting a joint venture in the
foreign country. Direct investment and
management of the firm concerned normally
go together.

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

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
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. Country-wise FDI inflow in
India

11. Sector-Wise FDI inflow in India

12. Factors affecting FDI
 Rate of Interest
 Speculation
 Profitability
 Costs of production
 Economic Conditions
 Government policies
 Political factors

13. .