Foreign direct investment (FDI) refers to direct investment into a country from another country. FDI can occur through buying a company in the target country or expanding existing operations. India allows FDI through both automatic and government routes. The key determinants of FDI include stable policies, economic factors like taxes and subsidies, infrastructure, natural resources, and cheap labor. While FDI into India has grown significantly in recent years, issues like inadequate infrastructure, stringent labor laws, and corruption have limited FDI flows. FDI provides benefits like new technology, jobs, and export growth, but can also crowd out local industries and affect the national environment and culture.

1. 1PRESENTED BY:-
TUSHAR YADAV
(16101013)
HEMANT
(16101036)
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2. What is FDI..?
 Foreign direct investment (FDI)-
 It is a direct investment into production or business in a
country by an individual or company in another country.
 It can be either by buying a company in the target country or
by expanding operations of an existing business in that
country.
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3. WHY FDI ?
1. Gain a foothold in a new geographic market.
2. Increase a firm’s global competitiveness and positioning.
3. Reduce costs in areas such as R&D, production, and
distribution.
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4. FDI inflow routes:
 1 Automatic Route
 2 Government Route:
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5. Automatic And Government Routes
 1. Automatic Route: FDI in sectors /activities to the extent
permitted under the automatic route does not require any
prior approval either of the Government or the Reserve Bank
of India.
 2. Government Route: FDI in activities not covered under the
automatic route requires prior approval of the Government
which are considered by the Foreign Investment Promotion
Board (FIPB), Department of Economic Affairs, and Ministry of
Finance.
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6. CURRENT STATUS OF FDI IN INDIA RETAIL
SECTOR:-
 As of June 2015, the Government of India allowed FDI in single and multi brand
retailing along with the following conditions:-
 1) Up to 100% FDI in single brand retail trading.
 Products to be sold should be of a “single brand”. Product should be sold
under the same brand internationally. Eg- ikea, puma, Adidas, fasttrack
 2) Up to 51% FDI in multi brand retail trading.
 At least 100 million US$ must be invested into Indian company.
 At least 50% of the total FDI is to be invested in back end infrastructure within
3 years. Eg-Walmart, tesko
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7. CURRENT STATUS OF FDI IN INDIA
SERVICE SECTOR:-
 The Computer Software and Hardware enjoy the permission of 100% FDI
under automatic route.
 The limit of FDI in Telecom sector was increased from 49% to 74%. FDI
up to 49% is permissible under automatic route .
 Service sector also includes banking, insurance, outsourcing R&D,
courier etc.
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9. DETERMINANTS OF FDI:-
 1) Stable policies-(economic and socio)
 2) Economic factors-(tax exemption, subsidies,loans)
 3) Cheap labour
 4) Basic infrastructure(effective transportation, roads, power,
communication n/w, legal system)
 5) Availability of natural resources
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10. FINANCIAL YEAR AMOUNT OF FDI INFLOW (CR.) % GROWTH OVER PREV. YEAR
2000-01 10,733
2001-02 18,654 (+65%)
2002-03 12,871 (-33%)
2003-04 10,064 (-19%)
2004-05 14,653 (+47%)
2005-06 24,584 (+72%)
2006-07 56,390 (+125%)
2007-08 98,642 (+97%)
2008-09 142,829 (+28%)
2009-10 123,120 (-18%)
2010-11 97,320 (-17%)
2011-12 165,146 (+64%)
2012-13 121,907 (-36%)
2013-14 147,518 (+8%)
2014-15 189,107 (+27%)
2015-16 (Upto June 15) 60,298
TOTAL(2000-2016) 1,293,836
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12. AIRPORTS
Foreign Investment up to 100% is allowed in green field
projects under automatic route
Foreign Direct Investment is allowed in existing projects
- up to 74% under automatic route
- beyond 74% and up to 100% subject to Government
approval
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13. TELECOM
• FDI in basic and cellular, unified access services, national/
international long distance , V-Sat, public mobile radio trunk
services , global mobile personal communications services
- Automatic up to 49%
- FIPB beyond 49% but up to 74%
Manufacture of telecom equipments - Automatic up to
100%.
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14. DRUGS & PHARMA
 FDI up to 100% is permitted under the automatic route for
manufacture of drugs and pharmaceuticals (The following is
the current position)
 FDI up to 74% in the case of bulk drugs, their intermediates
Pharmaceuticals and formulations would be covered under
automatic route.
 FDI above 74% for manufacture of bulk drugs will be
considered by the Government on case to case basis
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15. INSURANCE
• FDI up to 26% allowed on the automatic route
• However, license from the Insurance Regulatory &
Development Authority (IRDA) has to be obtained
• There is a proposal to increase this limit to 49%
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16. PETROLEUM
• Petroleum and natural gas sector, other than refining and
including market study and formulation; setting up
infrastructure for marketing - Automatic up to 100%
• For petroleum refining activity 100% FDI is permitted in
Indian Private Companies under automatic route and up to
26% FDI is permitted in Public Sector Undertakings with
Government approval
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17. BROADCASTING
• FDI permitted for setting up hardware facilities such as up-
linking, HUB, etc. up to 49% under Government approval
route
• FDI permitted in Cable Network up to 49% under
Government approval route
• Foreign Investment (FDI/FII) up to 49% allowed under
Government approval route in Direct to Home Service
Providers. FDI limited to 20%
• FDI permitted in FM radio up to 20% under Government
approval route
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18. INFRASTRUCTURE
• 100% FDI is permitted for the following activities:
• Electricity Generation (except Atomic energy)
• Electricity Transmission
• Electricity Distribution
• Mass Rapid Transport System
• Roads & Highways
• Toll Roads
• Vehicular Bridges
• Ports & Harbors
• Hotel & Tourism
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20. Percentage Growth in FDI From
Previous Year
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22. Top FDI Inflow Region in India 22

23. PROBLEMS FOR LOW FDI FLOW TO
INDIA:-
 Lack of adequate infrastructure
 Stringent labor laws
 Corruption
 High corporate tax rates
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24. FDI is not permitted in the following
industrial sectors:
 Arms and ammunition.
 Atomic Energy,
 Railway Transport.
 Coal and lignite.
 Mining of iron, manganese, chrome, gypsum, sulphur, gold,
diamonds, copper, zinc.
 Lottery Business
 Gambling and Betting
 Business of Chit Fund
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25. Advantages of FDI
 Inflow of equipment and technology
 Competitive advantages and innovation
 Finance resource for expansive
 Employment generation
 Contribution to export growth
 Improved consumer welfare through reduced cost, wider choice &
improved quality.
 Provide access to global markets for Indian producer.
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26. Disadvantages of FDI
 Crowing of local industry
 Conflict of laws
 Loss of control
 Effect on notional environment
 Effect on culture
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