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Foreign Investment In INDIA :

An Overview

Presented By :- Mayank Gupta (Roll No.- 25) Sachin Wakankar(Roll No.- 68) Kanupriya tiwari (Roll No.- 72) Sanjay Singh (Roll No.- 95)

Batch – Xlll-B

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Foreign Direct Investment (FDI)

What is FDI Why we need FDI Process of the Inflow of FDI Benefits Types Advantages and disadvantages FII Diff between FII and FDI

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Modes of FDI1) By Direction

* Inward

*Outward

2) By Target * Mergers and Acquisitions

* Horizontal FDI

* Vertical FDI

(a) Backward Vertical FDI

(b) Forward Vertical FDI

3 )By Motive

* Resource-Seeking

* Market-Seeking

* Efficiency-Seeking

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Factors Affecting FDI

Financial incentives (Funds from local Government)

Fiscal incentives (Exemption from import duties) Indirect incentives (Provides land and Political stability Market potential & accessibility Large economy Market size

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Why India? Liberal, largest democracy, Political Stability Second largest emerging market (US$ 2.4

trillion) Skilled and competitive labors force highest rates of return on investment one hundred of the Fortune 500 have R & D

facilities in India Second largest group of software developers

after the U.S. lists 6,500 companies on the Bombay Stock

Exchange (only the NYSE has more)

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Why India (cont.) World's fourth largest economy & second largest

pharmaceutical industry growth over the past few years averaging 8% has a middle class estimated at 300 million out of a total

population of 1 billion Destination for business process outsourcing,

Knowledge processing etc. Second largest English-speaking, scientific, technical

and executive manpower Low costs & Tax exemptions in SEZ Tax incentives for IT , business process outsourcing and

KPO companies

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Government policies

Automatic Route Prior Permission (FIPB)

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Investing in India – Entry Routes

Investing in India

Automatic RoutePrior Permission

(FIPB)

General ruleNo prior permission requiredOnly information to the Reserve Bank of India within 30 days of inflow/Issue of shares

By exceptionPrior Government Approval needed

Decision generally Within 4-6 weeks

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FDI Investment Sectors

Prohibited activities Atomic energy Arms and ammunition Lottery business Betting and Gambling Aircraft and warships Coal lignite

Fully permitted Activities Cigar and cigarettes of

tobacco Coal, Roads & Highways Diamond, Gold, Silver ,

Minerals Atomic minerals Electricity Hotel, hospitals

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Retail I.T Oil & Energy Power sector Pharmaceuticals & Chemicals

Real state Mining Mobile Sector Automobile Telecommunication

FDI inflows In real estate US$ 5 Billion FDI inflows Retail US$ 20 Billion by 2010 FDI inflows in Mining US$ 2,5 Billion per N.M. FDI inflows in Telecommunication US$ 24 Billion

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Major Investments

Companies Sector Investment

Wal mart,Marks Retail US$ 10 Billion

Intel Corp. I.T US$ 40 Billion

British & cairn Oil & Energy US$ 2 Billion

Essar power Power sector US$ 2 Billion

Toyota Automobile US$ 10.51 Billion

Panasonic Telecommunication

US$ 200 million

Source:

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What is an FII??

An institution established outside India, which invests in securities traded on the markets in India e.g.

Pension Funds Mutual Funds Investment Trust Insurance companies Endowment Funds University Funds Foundations or Charitable Trusts Asset Management Companies Power of Attorney Holders Bank

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FII Vs FDI

FII is Foreign Institutional Investment: It is investment made by foreign Mutual Funds in the Indian Market.FDI is Foreign Direct Investment: It is the investment made by Foreign Multinational comapnies in India.

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Foreign Institutional Investors (FII) Foreign investment banks are not permitted

to directly invest in shares on the Indian stock exchange

Makes investments on behalf of foreign investors, referred to as “sub-accounts”

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Foreign Institutional Investors (FII) FIIs may invest in:

securities in the primary and secondary markets (shares, debentures, warrants of listed and unlisted companies)

units issued by domestic mutual funds dated Government securities derivatives traded on a recognized stock

exchange commercial paper debt instruments – provided a 70/30 equity/debt

ratio is maintained

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Foreign Institutional Investors (FII) Limits on the type and amount of investments

apply to FIIs no more than 10% of the equity in any one

company no more than 10% in the equity in any one

company on behalf of a fund sub-account no more than 5% in the equity in any one

company on behalf of a corporate/individual sub-account

no more than 24% in the aggregate of the total issued capital of a company to be held by FIIs

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Thank You……