1FDI in INDIA

1PRESENTED BY:-TUSHAR YADAV

(16101013)HEMANT

(16101036)

2 What is FDI..?

Foreign direct investment (FDI)-

It is a direct investment into production or business in a country by an individual or company in another country.

It can be either by buying a company in the target country or by expanding operations of an existing business in that country.

3 WHY FDI ?

1. Gain a foothold in a new geographic market.

2. Increase a firm’s global competitiveness and positioning.

3. Reduce costs in areas such as R&D, production, and distribution.

4 FDI inflow routes:

1 Automatic Route

2 Government Route:

5Automatic And Government Routes

1. Automatic Route: FDI in sectors /activities to the extent permitted under the automatic route does not require any prior approval either of the Government or the Reserve Bank of India.

2. Government Route: FDI in activities not covered under the automatic route requires prior approval of the Government which are considered by the Foreign Investment Promotion Board (FIPB), Department of Economic Affairs, and Ministry of Finance.

6CURRENT STATUS OF FDI IN INDIA RETAIL SECTOR:-

As of June 2015, the Government of India allowed FDI in single and multi brand retailing along with the following conditions:-

1) Up to 100% FDI in single brand retail trading. Products to be sold should be of a “single brand”. Product should be

sold under the same brand internationally. Eg- ikea, puma, Adidas, fasttrack

2) Up to 51% FDI in multi brand retail trading. At least 100 million US$ must be invested into Indian company. At least 50% of the total FDI is to be invested in back end

infrastructure within 3 years. Eg-Walmart, tesko

7CURRENT STATUS OF FDI IN INDIA SERVICE SECTOR:-

The Computer Software and Hardware enjoy the permission of 100% FDI under automatic route.

The limit of FDI in Telecom sector was increased from 49% to 74%. FDI up to 49% is permissible under automatic route .

Service sector also includes banking, insurance, outsourcing R&D, courier etc.

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9DETERMINANTS OF FDI:-

1) Stable policies-(economic and socio) 2) Economic factors-(tax exemption,

subsidies,loans) 3) Cheap labour 4) Basic infrastructure(effective transportation,

roads, power, communication n/w, legal system) 5) Availability of natural resources

10FINANCIAL YEAR AMOUNT OF FDI INFLOW

(CR.)% GROWTH OVER PREV. YEAR

2000-01 10,7332001-02 18,654 (+65%)2002-03 12,871 (-33%)2003-04 10,064 (-19%)2004-05 14,653 (+47%)2005-06 24,584 (+72%)2006-07 56,390 (+125%)2007-08 98,642 (+97%)2008-09 142,829 (+28%)2009-10 123,120 (-18%)2010-11 97,320 (-17%)2011-12 165,146 (+64%)2012-13 121,907 (-36%)2013-14 147,518 (+8%)2014-15 189,107 (+27%)2015-16 (Upto June 15) 60,298TOTAL(2000-2016) 1,293,836

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12 AIRPORTS

Foreign Investment up to 100% is allowed in green field projects under automatic route

Foreign Direct Investment is allowed in existing projects

- up to 74% under automatic route

- beyond 74% and up to 100% subject to Government approval

13 TELECOM

• FDI in basic and cellular, unified access services, national/ international long distance , V-Sat, public mobile radio trunk services , global mobile personal communications services

- Automatic up to 49% - FIPB beyond 49% but up to 74%

Manufacture of telecom equipments - Automatic up to 100%.

14 DRUGS & PHARMA

FDI up to 100% is permitted under the automatic route for manufacture of drugs and pharmaceuticals (The following is the current position)

FDI up to 74% in the case of bulk drugs, their intermediates Pharmaceuticals and formulations would be covered under automatic route.

FDI above 74% for manufacture of bulk drugs will be considered by the Government on case to case basis

15 INSURANCE

• FDI up to 26% allowed on the automatic route

• However, license from the Insurance Regulatory & Development Authority (IRDA) has to be obtained

• There is a proposal to increase this limit to 49%

16 PETROLEUM

• Petroleum and natural gas sector, other than refining and including market study and formulation; setting up infrastructure for marketing - Automatic up to 100%

• For petroleum refining activity 100% FDI is permitted in Indian Private Companies under automatic route and up to 26% FDI is permitted in Public Sector Undertakings with Government approval

17 BROADCASTING

• FDI permitted for setting up hardware facilities such as up-linking, HUB, etc. up to 49% under Government approval route

• FDI permitted in Cable Network up to 49% under Government approval route

• Foreign Investment (FDI/FII) up to 49% allowed under Government approval route in Direct to Home Service Providers. FDI limited to 20%

• FDI permitted in FM radio up to 20% under Government approval route

18 INFRASTRUCTURE• 100% FDI is permitted for the following activities:

• Electricity Generation (except Atomic energy)• Electricity Transmission• Electricity Distribution• Mass Rapid Transport System• Roads & Highways• Toll Roads• Vehicular Bridges• Ports & Harbors• Hotel & Tourism

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20Percentage Growth in FDI From Previous Year

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22Top FDI Inflow Region in India

23PROBLEMS FOR LOW FDI FLOW TO INDIA:-

Lack of adequate infrastructure Stringent labor laws Corruption High corporate tax rates

24 FDI is not permitted in the following industrial sectors:

Arms and ammunition. Atomic Energy, Railway Transport. Coal and lignite. Mining of iron, manganese, chrome, gypsum, sulphur,

gold, diamonds, copper, zinc. Lottery Business Gambling and Betting Business of Chit Fund

25 Advantages of FDI

Inflow of equipment and technology Competitive advantages and innovation Finance resource for expansive Employment generation Contribution to export growth Improved consumer welfare through reduced cost, wider choice &

improved quality. Provide access to global markets for Indian producer.

26 Disadvantages of FDI

Crowing of local industry Conflict of laws Loss of control Effect on notional environment Effect on culture

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