2. Foreign direct investment (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.
6/19/2013 FDI GROUP NO.-1 2
OUTWARD
INWARD
BY
MOTIVE
GREENFEILD
INVESTMENT
HORIZONTAL
FDI
BY
TARGET
BY
DIRECTION
TYPES OF FDI
EFFICIENCY
SEEKING
MARKET
SEEKING
RESOURCE
SEEKING
VERTICAL
FDI
3. India is the 2nd most important FDI destination (after
China) for transnational corporations during 2010–2012
according to a survey conducted by UNCTAD
FDI in India in 2010 was $44.8 billion, and in 2011 there was
an increase of 25% to $50.8 billion.
The sectors which attracted higher inflows were
telecommunication, construction activities and
information technology.
Mauritius, Singapore, US and UK were among the leading
sources of FDI for India.
6/19/2013 FDI GROUP NO.-1 3
4. • India: Fourth largest economy in terms of Purchasing
Power Parity.
• Tenth most industrialized economy.
• FII inflows for the period 2003 –2008 was more than US
$35 billion, a good sign for the economy.
• India is still quite behind China with China majorly
accepting more of Green Field Investments.
FDI GROUP NO.-1 46/19/2013
5. 6/19/2013 FDI GROUP NO.-1 5
Atomic Energy
Housing and Real Estate
business
Trading in Transferable
Development Rights
Manufacture of cigars ,
cheroots, cigarillos and
cigarettes , of tobacco or of
tobacco substitutes.
Agricultural
Lottery Business
Gambling & Betting
Business of Chit Fund
Nidhi Company
7. 1. Economic growth- A remarkable inflow of FDI in various
industrial units boosts the economic life of country and has a
remarkable effect on the economic growth.
2. Trade- FDI opens a wide spectrum of opportunities in the
trading of goods and services both in terms of import and
export production with the manufacture of superior quality
products.
3. Employment and skill levels- FDI brings in a number of
employment opportunities by aiding the setting up of
industrial units.
4. Technology diffusion and knowledge transfer- FDI helps
in the outsourcing of knowledge especially in the Information
Technology sector in India. The foreign countries bring in
technological advancements in the foreign country.
5. Linkages and spillover to domestic firms- Firms enter into
joint ventures with various domestic firms with both the
companies getting the benefits.
6/19/2013 FDI GROUP NO.-1 7
8. Inflation increases
Positive pressure on prices
FDI has an adverse effect on competition.
FDI will be make the host country lose control
over domestic policy.
Certain foreign policies are adopted that are
not appreciated by the workers of the recipient
country.
6/19/2013 FDI GROUP NO.-1 8
9. FDI GROUP NO.-1 9
AUTOMATIC ROUTE PRIOR PERMISSION
INVESTING IN INDIA
•Inform RBI within 30 days of
inflow/issue of shares
• Pricing: FEMA Regulations
•Unlisted – CCI
•Listed – SEBI
• Cap of Rs.600Crore
By exception
•Approval of Foreign
Investment Promotion
Board needed.
•Decision generally
within 4-6 weeks
6/19/2013
11. 6/19/2013 FDI GROUP NO.-1 11
0.8
0.91
2.14 2.06
3.55
2.62
1.43
2.5
0
0.5
1
1.5
2
2.5
3
3.5
4
2004 2005 2006 2007 2008 2009 2010 2011
FDI as % of GDP
• It was highest in year 2008 i.e. 3.55 % .
• It decreased to 1.43 % in year 2010.
• In year 2011, it increased to 2.5 % .
Source: dipp.nic.in/English/Publications/
14. For Single Brand Retail Trading (SBRT) sector –
only 51% FDI permitted and no FDI in Multi
Brand – subject to approvals and conditions such
as:
FDI in (MBRT) is prohibited.
Products to be under the same brand in one or
more countries if are sold outside India.
”Single Brand‟ products should be branded
during manufacturing.
The foreign investor should be the owner of the
brand.
FDI in SBRT is permitted to 100% and up to 51%
in MBRT with Government approval.
Fresh agricultural produce, including fruits,
vegetables, flowers, grains, pulses, fresh poultry,
fishery and meat products, may be unbranded.
FDI in MBRT may be permitted up
to51% and 100% in SBRT.
Minimum amount to be brought in, as FDI, by
the foreign investor, would be$100 million.
At least 50% of total FDI brought in shall be
invested in “back-end infrastructure”.
In respect of proposals involving FDI beyond
51%, 30% sourcing would mandatorily have to be
done from SMEs.
In case of “Single Brand” The foreign investor
should be the owner of the brand
6/19/2013 FDI GROUP NO.-1 14
EXISTING POLICY PRESENT POLICY
16. Job opportunities in areas like marketing, agro-processing,
packaging, transportation, etc. will be created.
Farmers will get a good price for their crops and their
exploitation will stop.
Infrastructure facilities, refrigeration technology,
transportation, etc. will be renovated.
Foreign companies will create an improved and efficient
supply-chain in the Indian market.
6/19/2013 FDI GROUP NO.-1 16
17. • Contract farming-imposed on farmers with strict
adherence to quality & schedule.
• Will affect 50 million merchants in India
• Market places are situated too far which increases
traveling expenses.
• FDI may lead to rise of inflation.
• Multiple Indian companies are well entrenched into the
Indian market with their organized multi brand retail
offerings who may face tough challenges.
• FDI in retail nowhere claims that the consumer will spend
less from his/her pocket. The prices will largely remain the
same.
6/19/2013 FDI GROUP NO.-1 17
20. • The government should provide additional incentives to foreign
investors to invest in states where the level of FDI inflows is quite low.
• Ensure equitable distribution of inflows among states and give
freedom to states to attract inflows at their own level.
• Attract specific types of FDI that will be able to generate spillovers
effects in the overall economy like investing in human capital, R&D
activities, environmental issues, productive capacity, sectors with high
income elasticity of demand.
• The policy makers should focus more on attracting diverse types of
FDI and should design policies where foreign investment can be utilized
as means of enhancing domestic production, savings, and exports and
also as medium of technological learning and diffusion and also in
providing access to the external market.
6/19/2013 FDI GROUP NO.-1 20
21. • The increased flow of FDI in a country has given a major boost to the
country's economy.
• FDI has provided better access to technologies for the local economy.
• FDI has lead to indirect productivity gains through spillovers.
• MNC’s have increased the degree of competition in host-country markets
which will force existing inefficient firms to invest more in physical or
human capital.
• Service sector has been the most sought after sector in India for FDI.
• India, with its skilled labor and manpower has the potential to overtake
China as the most preferred destination for Foreign Investments.
6/19/2013 FDI GROUP NO.-1 21
22. • http://rbidocs.rbi.org.in/rdocs/Content/PDFs/FDIST_110412.pdf Accessed
on 24 Oct
• http://www.indiainbusiness.nic.in/investment/for_dir_investment.htm
Accessed on 26 Oct
• http://planningcommission.gov.in/ Accessed on 6 Nov
• http://finmin.nic.in/capital_market/capital_market.asp Accessed on 6 Nov
• http://www.randstad.com/the-world-of-work/employment-rises-in-indias-
service-sector?c=4374 Accessed on 11 Nov
• http://business.mapsofindia.com/india-gdp/sectorwise/services-sector
growth-rate.html Accessed on 8 Nov
6/19/2013 FDI GROUP NO.-1 22
23. PRESENTED BY:-
• UTKARSH GARG (121)
• SANGAM LALSIVARAJU (138)
• SUGANDHA ARORA (140)
• DHRUV MAHAJAN (141)
• MANASVI BANSAL (143)
PRESENTED TO:-
PROF. K. M. KUMAR
6/19/2013 FDI GROUP NO.-1 23
