Foreign direct investment in IndiaPRESENTED BY :- SUDHANSHU SHRIVASTAV
FOREIGN DIRECT INVESTMENT Introduction Global exposure FDI in India Advantage Disadvantage
INTRODUCTION Foreign Direct Investment 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. FDI is a measure of foreign ownership of domestic productive assets such as factories, land and organizations. Foreign direct investments have become the major economic driver of globalization, accounting for over had of all cross-border investments. Investors are granted management and voting rights if the level of ownership is greater than or equal to 10% of ordinary shares. Shares ownership amounting to less that the stated amount is termed portfolio investment and is not categorized as FDI.
CONT........Pre-1991 FDI was allowed selectively up to 40% under FERA This period was dominated by the Congress party1991 35 high priority industry groups were placed on the Automatic Route for FDI up to 51% Minority Congress government: Initiated economic reforms in a big way1997 Automatic Route expanded to 111 high priority industry groups up to 100%/ 74%/ 51%/50% United Front Government: Inclusive of ‘left parties’, was perceived as traditionally opposed to FDI, but continued with the reforms.2000 All sectors placed on the Automatic Route for FDI except for a small negative list BJP coalition government:(coalition of Left and Right wing parties) was traditionally seen as opposed to FDI, but continued with economic reforms.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; BJP coalition government: pursued reforms vigorously and initiated second
FOREIGN DIRECT INVESTMENT AND THE DEVELOPING WORLD FDI provides an inflow of foreign capital and funds, in addition to an increase in the transfer of skills, technology, and job opportunities. The United States is the world’s largest recipient of FDI. In the last 6 years, over 4000 new projects and 630,000 new jobs have been created by foreign companies, resulting in close to $314 billion in investment. Apporx $2.1 trillion stock of FDI in the United States at the end of 2008 is the equivalent of approximately 16 percent of U.S. gross domestic product (GDP). China is the second largest recipient of FDI globally. FDI into China fell by over one-third in 2009 due the Global Financial Crisis (global macroeconomic factors) but rebounded in 2010.
FOREIGN DIRECT INVESTMENT IN INDIA India is the second most important destination Telecommunication, construction activities and computer software and hardware is the sector which is affected mostly Foreign Direct Investment equity inflow into India in June this year rose by more than 310 percent from the same month last year, according to data released by the Indian Ministry of Industry Commerce on Monday.
FOREIGN DIRECT INVESTMENT IN INDIA IN LAST SIX YEARS Foreign Direct Investment in US$ Million4000 37493500 312130002500 2339 22142000 Foreign Direct Investment 15511500 in US$ Million1000 661 500 0 2006 2007 2008 2009 2010 2011
CURRENT ISSUE OF FDI IN RETAIL SECTOR IN INDIA Indian government is going to allow 51% FDI in multi brand retail sector Will affect the Indian retail industry in negative way because of the entrance of giant retail companies like Wal-Mart The governments decision to permit FDI in multi-brand retail has created political turmoil that has disrupted functioning of Parliament for 8 days.
ADVANTAGE & DISADVANTAGE OF FDI IN INDIA Economic growth Trade Employment and skill level Technology diffusion and knowledge transfer Linkages and spillover to domestic firm Infrastructure Development