WHAT IS FOREIGN DIRECT

INVESTMENT ???

Foreign Direct Investment, or FDI, 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.

TYPES OF FOREIGN DIRECT

INVESTMENT

Horizontal FDI

Platform FDI

Vertical FDI

PROGRESSIVE LIBERALIZATION

Pre- 1991 - FDI was allowed selectively up to 40% under

FERA

1991 --35 high priority industry groups were placed on the

Automatic Route for FDI up to 51%

1997 Automatic Route expanded to 111 high priority

industry groups up to 100%/ 74%/ 51%/50%

2000 -- All sectors placed on the Automatic

Route for FDI except for a small negative list

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;

Forms of investment under

FDI in India

Through financial collaboration

Through joint ventures and capital collaborations

Through capital markets via euro issues

Through private placements

Routes for FDI in India

Automatic Route

• FDI up to 100% is allowed

• Does not require any prior approval either by the Government or RBI

• The investors are only required to notify the Regional office concerned of RBI within 30 days of receipt of inward remittances

Government Route • FDI in activities not covered under the automatic route

requires prior Government approval

• The foreign investor or the Indian company should obtain prior approval of the Government of India(Foreign Investment Promotion Board (FIPB), Department of Economic Affairs (DEA), Ministry of Finance or Department of Industrial Policy & Promotion, as the case may be) for the investment.

What is the need for the FDI

in India ?

Infrastructure

Expertise and know-how

A dangerously high current account deficit

Without FDI the rupee will continue to fall.

Sustaining high level of investment

Exploitation of natural resources

Disadvantages of FDI in India

Destruction of small entrepreneurs

Contribution of foreign firms to public

revenue through corporate taxes is

comparatively less

Foreign firms increase income

inequalities

Foreign firms may influence political

decisions in developing countries.

Eligibility for investing in

India

A person resident outside India

Or

an entity incorporated outside India,

can invest in India,

subject to the FDI Policy of the Government of India.

FDI allowed in different

sectors in India

Agriculture 100%

Asset reconstruction companies 100%

Civil aviation 100%

Courier services 100%

Defence 49%

Insurance 49%

Pension 26%

Print Media 49%

Petroleum 49%

Private sector banks 100%

Public sector banks 20%

Special economic zones 100%

Stock exchanges 49%

Tea plantation 100%

Tourism 100%

Telecom 100%

Prohibited sectors for FDI

Atomic energy

Nidhi company

Betting and gambling

Chit fund business

Plantation or agricultural activities

Real estate business

Business in Transferable Development Rights

Lottery business

Railway transport

Mining of chrome, zinc, gold, diamonds, copper, iron, gypsum, manganese, and sulfur

Ammunition and arms

FDI inflows (US $

million)

COUNTRIES 2008-09 2009-10 2010-11 2011-12 2012-13

Mauritius 10,165 9,801 5,616 8,142 8,059

Singapore 3,360 2,218 1,540 3,306 1,605

U.S.A 1,236 2,212 1,071 994 478

Cyprus 1,211 1,623 571 1568 415

Japan 266 971 1,256 2,089 1,340

Why INDIA is favourite

destination for FDI ??

Large middle class population has given a big boost

Vast population provides a big market to the foreign

entrepreneurs

India offers a large potential market with a pool of

talented, educated and skilled workforce

Relatively low labour costs

CONCLUSION

FDI creating regional disparities it should be removed

There is nothing wrong in getting foreign money but depending on FDIs to help you in crisis is not a good idea at all.

Investment opportunity of USD 500 billion expected to emerge in India in the next 5 years in major economic sectors of which USD 250 billion is expected to come from infrastructure sector alone.

In power sector FDI is expected to increase .

In my view having FDI in India is very necessary. But in

retail industry its not good. Mostly there is unorganized

sector in retail market. Many people will become

unemployed comparing to creating of employment

opportunities. Why we should depend on foreign

country to help our farmers.