FDI, Vinod

8/14/2019 FDI, Vinod

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FDI


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FDI

Attracting long-termforeign capital to

supplement domesticinvestment efforts,

particularly in infrastructurend export competitive sectors

Developing attractive

Configurations of

locational advantages

at global level

Promoting technology

and other linkages to

enhance domestic industry

competitiveness

Creating skilled employmentOpportunities and Importof world Class managerial

practices


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PROMISES

Investments

Quality of employment

Generation of employment

Better value to end customers

Franchising opportunities to localentrepreneurs

Cost benefit Implementation of IT

Growth of infrastructure


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Does Foreign Direct Investment Help

Emerging Economies? In developing nations

Equity investments as a percentage of gross

national income have been flat in recent years .

Debt flows, however, have picked up since 2002

after plunging to zero in the previous two years.

FDI as a share of GDP has grown rapidly,

becoming the largest source of capital moving fromdevelo ed nations to develo in ones


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Is FDI Always Good?Is FDI Always Good?

Offers attractive benefits

FDI may flow to riskier destinations.

During crises capital flight cant be ruled

out.

Too much FDI may not be beneficial.

Possibility that the most solid firms will

be financed through FDI.

Complements the host countrys

institutions and human capital


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DRAWBACKS

Small kirana merchants (CPM)

Cut throat competition

Increase in real estate prices Unfair trade practices may cause

Predatory Pricing.


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Investing in India Entry Routes

Automatic RoutePrior Permission

(FIPB)

Investing in India

General ruleNo prior permission

requiredInform Reserve Bankwithin 30 days ofinflow/issue of share

By exceptionPrior Government

Approval needed.Decision generallyWithin 4-6 weeks


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SECTORAL ANALYSIS


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Drugs &Pharma

Hotels &Tourism

Foreign Investment Policy

DefenceIndustry

TelecomServices

Townships

FDI up to 100 % permitted on automaticroute for non-licensable and non-recombinant DNA technology category

FDI up to 100% permitted on automaticroute

FDI up to 26% permitted subject tolicensing

FDI up to 74% in ISPs with gatewaysand limit raised from 49% to 74% inradio paging and end-to-end bandwidth

FDI up to 100% permitted in integrated

townships and settlements


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NBFCs

Banking

Foreign Investment Policy (contd.)

Insurance

Broadcasting

MRTS

FDI up to 100 % permitted onautomatic route

FDI up to 49 % permitted

FDI up to 26% permitted on theautomatic route subject to licensing

FDI up to 49% permitted in uplinkinghub and up to 20% in DTH

FDI up to 100% permitted, including

associated real estate development


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India The New Trillion DollarEconomy and Opportunities


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India: FDI Outlook

Third most attractive investment destination

Among the top 3 investment hot spots for

the next 4 years Most Preferred Off shoring destination


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FDI Outflow

India's FDI outflow to exceed inflow in2007-08

In 2007-08 overseas investment fromIndia will be around $15 billion

The number of outbound M & A deals hasincreased sharply over the past six yearsfrom about 37 in 2001 to more than 170 in2006.


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Sectors prohibited for FDI

Arms & Ammunition

Railways

NuclearPower


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Why is FDI attracted inIndias Retail Sector

The Indian retail market -- one of India's fastestgrowing industries -- is expected to grow fromUS$ 350 billion to US$ 600 billion by 2010.

According to Euromonitor International, theIndian Retail market will grow in value terms bya total of 39.6 per cent between 2006 and 2011,averaging growth of almost 7 per cent a year.

Modern retail formats have grown by 25-30 percent in India in the last year and could be worth

US$ 175-200 billion by 2016.


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RETAIL sector

The Government allows 100 per cent FDI in cash andcarry through the automatic route

51 per cent in single brand

Besides, the franchise route is available for big operators

Now, the Government also proposes further liberalisationin the retail sector allowing 51 per cent FDI in consumerelectronics, sports goods, stationery and buildingequipment


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More than 5 million outlets Per capita space (97% < 500 sq.ft.) Only 3 % organised

97% unorganisedwhy? No supply chain management No Third Party Logistics Restrictions to FDI funding

ORGANISED

UNORGANISED


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International retailers in India:

Strategies Franchise

International company gives name and technology tolocal partner. Gets royalty in return

In case master franchise is appointed for region or

country, he has right to appoint local franchisees Nike, Pizza Hut, Tommy Hilfiger, Marks and Spencer,

Mango

Manufacturing

Company sets up Indian arm for production Bata India. It also has right to retail in India

I t ti l t il i I di


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International retailers in India:

Strategies

Distribution International company sets up local distribution office

Supply products to Indian retailers to sell

Also set up franchised outlets for brand Swarovski, Hugo Boss

Wholesale trading

100% FDI permitted


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78 80 85 90 91 92 93 94 95 96 97 98 99 00 01 02

75

150

225

300

375

FDI in retailallowed

US$

bn

Total wholesale and retailtrade

Retail sales grew @ 19.6% CAGR for the next 4 yearsafter the introduction of FDI in 1992 .

Years

DOUBLE


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Thank you

Documents

FDI, Vinod