It is useful for the education purpose. This include the how well about india's investment environment, is it positive or negative?

1. Investment
Environment in
India
Firos Febin
Investment Analysis &
Management
4th Semester
MBA (BU)
07-05-2016

2. CONTENTS:
 Investment Definition
 Factors affecting investment
 Overview of India

3. Investment Definition
 The word investment can be defined in many ways according to different theories
and principles
 Generally, investment is the application of money for earning more money.
 Investment also means savings or savings made through delayed
consumption.
 According to economics, investment is the utilization of resources in order to
increase income or production output in the future.
 finance professionals define an investment as money utilized for buying financial
assets, for example stocks, bonds, bullion, real properties, and precious items.
 According to business theories, investment is that activity in which a manufacturer
buys a physical asset, for example, stock or production equipment, in expectation that
this will help the business to prosper in the long run.

4. Factors affecting investment
I. Economic Growth.
II. Labour Force and Educated Workforce.
III.Capital and Institutional Support.
IV. Infrastructure.
V. Bureaucracy and Corruption.
VI. Legal Delays.
VII.Taxes.

5. India Overview
 GDP crossed 2 trillion US $ (2.40 nominal, 8.8 PPP)(7th & 3rd)
 2nd largest population
 GDP growth rate is 7.5 (2015-16)
 No.1 in FDI inflow
 FDI inflow 31$ 2015
 Diversity-The Indian economy offers investors exposure to a wide range of opportunities from consumer goods
and pharmaceuticals to infrastructure, energy and agriculture.
 Demographics-India is one of the youngest countries in the world, with an average age of 25 and likely to get
younger. India's working-age population will increase by 240 million over the next 20 years
 High Savings-With a savings rate of 37% of GDP, India's domestic savings fuels most of its investment
requirements, and only 20% of India's total public debt is sourced from foreign borrowing.
 Domestic economy
 Quality of Investment Markets-The Bombay Stock Exchange is the second oldest in the world (165 years) and
offers investors a low cost, highly efficient, modern and well governed environment in which to prosper from
India's extraordinary economic growth

6. Investment Environment of India
1) FDI
Generally speaking FDI refers to capital inflows from abroad.
WHY FDI ?
Gain a foothold in a new geographic market.
Increase a firm’s global competitiveness and positioning.
Fill gaps in a company’s product lines in a global industry.
Reduce costs in areas such as R&D, production, and distribution.
FACTORS REQUIRED TO ATTRACT FDI
Low cost but Qualified, Educated/Skilled Labor Pool.
Long-term Market Potential OR Yields greater than can be achieved Domestically.
Access to Natural Resources.
Geography
Stability of the economic and Political Environment.
FORBIDDEN TERRITORIES
Arms and ammunition.
Atomic Energy.
Railway Transport.
Coal and lignite.

7. ADVANTAGES OF FDI
Increase in Domestic Employment/Drop in unemployment
Investment in Needed Infrastructure.
Positive Influence on the Balance of Payments.
New Technology and “Know How” Transfer.
Increased Capital Investment.
Targeted Regional and Sectoral Development
According to the Financial Times, in 2015 India overtook China and the US as the top destination for the
Foreign Direct Investment.
40% increase in FDI
Most attractive FDI destination because of “Make in India” concept of Narendra Modi.
Government initiatives
 The Government of India has amended FDI policy to increase FDI inflow. In 2014
 the government increased foreign investment upper limit from 26% to 49% in insurance sector
 It also launched Make in India initiative in September 2014 under which FDI policy for 25 sectors was
liberalized
 India was ranking 15th in the world in 2013 in terms of FDI inflow, it rose up to 9th position in
2014[11][unreliable source?] while in 2015 India became top destination for foreign direct investment

8.  During 2014–15, India received most of its FDI from Mauritius, Singapore, Netherlands, Japan and
the US
2) Liberalization., Privatization and Globalization (1991)
3) GDP
India’s GDP growth rate is 7.5%
Nominal -2.40 trillion (7th Rank)
PPP- 8.8 trillion (3rd Rank)
4) Investment friendly government
Make in India
Red tapes- excessive bureaucracy or adherence to official rules and formalities
increase the limits of FDI, entrance to more sectors, easy procedures