The document discusses foreign direct investment (FDI) in India, particularly in the multi-brand retail sector. It provides definitions of FDI and foreign institutional investment (FII), and compares the two. It outlines the key facts about FDI in India, including major investing countries and cities. The document also discusses the advantages and disadvantages of allowing 51% FDI in multi-brand retail in India. Overall, it analyzes the history, patterns, and impact of FDI in India as well as how India's FDI compares to China's.

1. FDI in Multi
Brand Retail
Sector
in
INDIA
• By
• Sambit Patnaik
• Biswajit Podder
• Anil Dora
• Aseet Choudhary
• Nitish Nadar
• Shashank Singh
• Vivek Kumar Singh
• Dilip Kumar Singh

2. FDI in Multi Brand
Retail Sector
in
INDIA
By
Sambit Patnaik
Biswajit Podder
Anil Dora
Aseet Choudhary
Nitish Nadar
Shashank Singh
Vivek Kumar Singh
Dilip Kumar Singh

3. Introduction
• What is FDI?
Foreign direct investment (FDI) is direct investment into production
in a country by a company located in another country, either by
buying a company in the target country or by expanding operations
of an existing business in that country. Foreign direct investment is
done for many reasons including to take advantage of cheaper
wages in the country, special investment privileges such as tax
exemptions offered by the country as an incentive to gain tariff-free
access to the markets of the country or the region.

4. What is FII?
• Institutional investors are organizations which pool large sums of
money and invest those sums in securities, real property and other
investment assets. They can also include operating companies which
decide to invest their profits to some degree in these types of assets.
• Types of typical investors include banks, insurance companies,
retirement, pension funds, hedge funds, investment advisors and
mutual funds. Their role in the economy is to act as highly specialized
investors on behalf of others. For instance, an ordinary person will have
a pension from his employer. The employer gives that person's pension
contributions to a fund. The fund will buy shares in a company, or some
other financial product. Funds are useful because they will hold a broad
portfolio of investments in many companies. This spreads risk, so if one
company fails, it will be only a small part of the whole fund's
investment.
• Institutional investors will have a lot of influence in the management of
corporations because they will be entitled to exercise the voting rights
in a company.

5. Difference b/w FDI and FII
FDI is an investment that a parent company makes in a foreign
country. On the contrary, FII is an investment made by an
investor in the markets of a foreign nation.
FII can enter the stock market easily and also withdraw from it
easily. But FDI cannot enter and exit that easily.
Foreign Direct Investment targets a specific enterprise. The FII
increasing capital availability in general.
Foreign Direct Investment is considered to be more stable than
Foreign Institutional Investor

6. Basic Facts
• Mauritius has been the largest direct investor in India
(US$20billion)
• The USA is the second largest investor in India (US$6billion)
and on the contrary US is the world’s largest recipient of FDI.
• Mumbai and New Delhi are the two major cities where FDI
inflows is heavily concentrated.
• FDI inflows in India for
Jan-Dec 2010 stood at $21.4 billion.
Jan-Dec 2011 stood at $28.0 billion.
Jan-June 2012 stood at $4.43 billions

7. What does 51% FDI in multi-
brand retail mean?
• Minimum investment of $100 million.
• 50% of the investment is to be in the backend infrastructure
development.
• 30% of all raw material has to be procured from India’s small
and medium industries
• Permission to set up malls only in cities with a minimum
population of 10lakhs
• Government has the first right to procure material from the
farmers.
• Products should be sold under the same brand internationally
• Foreign investor should be the owner of the brand.

8. Advantages of FDI
• Direct Benefits to Farmers
• Reduction in food Inflation
• Earning of FOREX
• Huge Employment Benefits
• Drop in Food Wastage
• Better Consumer Choice

9. Advantages to FDI cntd..
• Benefits to Small Grocery Stores
• Creation of Backend Infrastructure
• More purchase from SME
• Overall Growth

10. Disadvantages of FDI (Nitish)
pending

11. Impact of FDI on India
• To increase Job Opportunities.
• To Strengthen Infrastructure of Country.
• To Impact on Farmers and Consumers.
• To Impact Local Retailers.
• To Impact Country Growth

12. Inflow of FDI Patterns (DILIP)
pending

13. The Sectors Where FDI is
Allowed in India
• MULTI-BRAND : 51%
• SINGLE BRAND : 100%
• BANKING : 49%
• NON BANKING FINANCIAL
COMPANIES : 100%
• INSURANCA : 26%
• TELECOMMUNICATION : 49% &
74%
• PRIVATE PETROL REFINING :
100%
• CONSTRUCTION DEVELOPMENT :
100%
• TRADING : 51%
• ELECTRICITY : 100%
• PHARMACEUTICALS : 100%
• TRANSPORTATION
INFRASTRUCTURE : 100%
• TOURISM : 100%
• ADVERTISEMENT : 100%
• AIRPORT : 74%
• DOMESTIC AIRLINES : 49%
• MASS TRANSIT : 100%
• POLLUTION CONTROL : 100%
• PRINT MEDIA : 26% FOR
NEWSPAPER AND CURRENT
EVENTS, 100% FOR SCIENTIFIC
AND TECHNICAL PERIODICALS

14. The Sectors where FDI is Not
Allowed
• ARMS & AMMUNATIONS
• ATOMIC ENERGY
• RAIL TRANSPORT
• MINING OF METAL LIKE IRON, MANGANESE, CHROME, GYPSUM,
GOLD, DIAMONDS, COPPER ZINC, SULPHUR
• COAL & MINING
• LOTTERY BUSINESS INCLUDING GOVT./PRIVATE LOTTERY,
ONLINE LOTTERY, ETC
• GAMBLING & BETTING INCLUDING CASINO
• BUSINESS OF CHIT FUND
• MANUFACTURING OF CIGARS, CIGARATTES OF TOBACCO OR
TOBACCO SUBSTITUTE

15. History of FDI in China
Experiment Stage (1978 -1983)
• 1979 - Equity Joint Venture Law
• 1981 - four Special Economic Zones (SEZs): Shen Zhen, Shan Tou,
Zhu Hai and Xia Men established
Growth Stage (1984 – 1991)
•1984 - Fourteen coastal cities opened to the outside world
•1986 - Wholly Owned Subsidiaries (WOS) Law
•1987 - Hainan, China’s second largest island, became the biggest
SEZ

16. Peak Stage (1992 – 1993)
• 1992 - Adoption of Trade Union Law
• 1993 - Company Law and Provisions regulating value-added tax,
consumption tax, business tax and
enterprise income tax
Adjustment Stage (1994 – 2000)
• 1995 - Provisional Guidelines for Foreign Investment Projects
enacted
• 4 categories - encouraged, restricted, prohibited and permitted
History of FDI in China

17. • Encouraged - infrastructure or underdeveloped agriculture and with
advanced technology or manufacturing under-supplied new
equipment
• Restricted - Projects whose production exceeded domestic demand
and which required exploration of rare and valuable resources
• Prohibited - projects involving national security or public interest or
arable land
• Permitted – Any project not coming in above categories
History of FDI in China

18. Post-WTO Stage (2001 – present)
• 2001 - China became an official member of the World Trade
Organization (WTO)
• China has gradually reduced its industrial tariffs in a wide range of
sectors and areas
• Foreign firms were granted direct trading rights for the first time in
the history
History of FDI in China

19. History of FDI in India
• 1947 to 1948 - British owned private foreign capital, Swadeshi
movement & Industrial policy resolution
• 1949 to 1953 - Domestic business houses and the nationalist
sentiments in government policies kept foreign investment away
• 1957 - Second Economic Plan: “Industrialization though import
substitution” encouraged private investment
• 1960s - Selective industries got foreign collaboration and JV mostly
in manufacturing with Indian participation retained
• After 1960s -Devaluation of Rupee encouraged socialist idealism in
banks and foreign oil majors were nationalized

20. History of FDI in India
• 1968 - Establishment of Foreign Investment Board –encouraging
investments on own terms and conditions
• 1973 - Foreign Exchange Regulation Act (FERA) new clause
introduced, All foreign firms were made to dilute their stake to 40
%,Exit of IBM, Coca Cola
• 1980s - Restrictive licensing procedures softened, technology
transfer and royalty payments relaxed, wherever possible foreign
investment was encouraged

21. History of FDI in India
• 1990s - Rupee devalued, NRI money withdrew, India turned to
IMF, Trade regime and regulatory frame work was liberalized,
FDI invited in wide range of industry, limit was increased from
51% to 100% in some cases, service sector reopened for FDI,
FIIs also encouraged
• After 1995 - Political instability but perception towards FDI
changed, changing government kept focus on FDI

22. FDI: India v/s China
• In the year 2002 China received US$ 52.7 billion of FDI inflows
while India received US$ 4.67 billion of FDI inflows in the same
year
• In 2010, India attracted FDI worth US$ 25 billion
• In the same year China secured FDI inflows worth US$ 106
billion.

23. FDI: India v/s China
• FDI Inflows only contributes to 0.8 percent of India's GDP as
compared to 3.5 percent of the same in China
• India's high-tech industries claim for 2.3 percent of Gross
Domestic Product whereas the high-tech industries in China
contributes to around 7.9 percent in the GDP of the country

24. FDI: India v/s China
The majority of the foreign investors prefer
China over India for investment opportunities as
• China has a bigger market size than India
• Offers easy accessibility to export market
• Better government incentives
• Developed infrastructure
• Cost-effectiveness
• macro-economic climate

25. FDI: India v/s China
India on the other hand has
• Skilled and efficient manpower
• Talented management system
• Rule of law
• Transparent system of work
• Cultural affinity
• Regulatory environment

26. Conclusion(Anil) Pending