Foreign direct investment (FDI) involves investing foreign funds into a business operating in another country. There are three types of FDI: horizontal, platform, and vertical. India progressively liberalized FDI between 1991-2000 by expanding the number of sectors eligible for automatic approval of up to 100% foreign ownership and removing many from requiring government approval. FDI provides benefits like infrastructure, expertise, reducing the current account deficit and stabilizing the rupee, but can also have disadvantages like destroying small businesses and increasing income inequality.

2. WHAT IS FOREIGN DIRECT
INVESTMENT ???
 Foreign Direct Investment, or FDI, is a
 type of investment
 that involves the injection of foreign funds
 into an enterprise
 that operates in a different country of origin
from the investor.

3. TYPES OF FOREIGN DIRECT
INVESTMENT
 Horizontal FDI
 Platform FDI
 Vertical FDI

4. PROGRESSIVE
LIBERALIZATION
 Pre- 1991 - FDI was allowed selectively up to 40% under
FERA
 1991 --35 high priority industry groups were placed on the
Automatic Route for FDI up to 51%
 1997 Automatic Route expanded to 111 high priority
industry groups up to 100%/ 74%/ 51%/50%

5.  2000 -- All sectors placed on the Automatic
Route for FDI except for a small negative list
 Post 2000 -- Many new sectors opened to FDI;
viz., insurance (26%), integrated townships
(100%), mass rapid transit systems (100%),
defence industry (26%), tea plantations (100%),
print media (26%). Sectoral caps in many other
sectors relaxed;

6. Forms of investment under
FDI in India
 Through financial collaboration
 Through joint ventures and capital collaborations
 Through capital markets via euro issues
 Through private placements

7. Routes for FDI in India
Automatic Route
• FDI up to 100% is allowed
• Does not require any prior approval either by the
Government or RBI
• The investors are only required to notify the Regional
office concerned of RBI within 30 days of receipt of inward
remittances
Government Route
• FDI in activities not covered under the automatic route
requires prior Government approval
• The foreign investor or the Indian company should obtain
prior approval of the Government of India(Foreign
Investment Promotion Board (FIPB), Department of
Economic Affairs (DEA), Ministry of Finance or Department
of Industrial Policy & Promotion, as the case may be) for
the investment.

8. What is the need for the FDI
in India ?
 Infrastructure
 Expertise and know-how
 A dangerously high current account deficit
 Without FDI the rupee will continue to fall.
 Sustaining high level of investment
 Exploitation of natural resources

9. Disadvantages of FDI in India
 Destruction of small entrepreneurs
 Contribution of foreign firms to public
revenue through corporate taxes is
comparatively less
 Foreign firms increase income
inequalities
 Foreign firms may influence political
decisions in developing countries.

10. Eligibility for investing in
India
 A person resident outside India
 Or
 an entity incorporated outside India,
 can invest in India,
 subject to the FDI Policy of the Government of India.

11. FDI allowed in different
sectors in India
 Agriculture 100%
 Asset reconstruction companies 100%
 Civil aviation 100%
 Courier services 100%
 Defence 49%
 Insurance 49%
 Pension 26%

12.  Print Media 49%
 Petroleum 49%
 Private sector banks 100%
 Public sector banks 20%
 Special economic zones 100%
 Stock exchanges 49%
 Tea plantation 100%
 Tourism 100%
 Telecom 100%

13. Prohibited sectors for FDI
 Atomic energy
 Nidhi company
 Betting and gambling
 Chit fund business
 Plantation or agricultural activities
 Real estate business
 Business in Transferable Development Rights
 Lottery business
 Railway transport
 Mining of chrome, zinc, gold, diamonds, copper, iron,
gypsum, manganese, and sulfur
 Ammunition and arms

14. FDI inflows (US $
million)
COUNTRIES 2008-09 2009-10 2010-11 2011-12 2012-13
Mauritius 10,165 9,801 5,616 8,142 8,059
Singapore 3,360 2,218 1,540 3,306 1,605
U.S.A 1,236 2,212 1,071 994 478
Cyprus 1,211 1,623 571 1568 415
Japan 266 971 1,256 2,089 1,340

15. Why INDIA is favourite
destination for FDI ??
 Large middle class population has given a big boost
 Vast population provides a big market to the foreign
entrepreneurs
 India offers a large potential market with a pool of
talented, educated and skilled workforce
 Relatively low labour costs

16. CONCLUSION
 FDI creating regional disparities it should
be removed
 There is nothing wrong in getting foreign
money but depending on FDIs to help you
in crisis is not a good idea at all.
 Investment opportunity of USD 500 billion
expected to emerge in India in the next 5
years in major economic sectors of which
USD 250 billion is expected to come from
infrastructure sector alone.
 In power sector FDI is expected to
increase .

17.  In my view having FDI in India is very necessary. But in
retail industry its not good. Mostly there is unorganized
sector in retail market. Many people will become
unemployed comparing to creating of employment
opportunities. Why we should depend on foreign
country to help our farmers.