45671486 BE Foreign Direct Investment Shradha

8/3/2019 45671486 BE Foreign Direct Investment Shradha

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BUSINESS

ENVIRONMENT

FOREIGN DIRECT INVESTMENT

Presented By :Maya Udmale 66Shradha Mestry 22Reshma Puradkar 51Snehal Mhatre 21Rohan Ahire 01


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INTRODUCTION


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INVESTMENT

Investment is the flow of funds from one

destination to another for any activity.

Thus, an investment is carried on with somepurpose. The purpose can be varied.

For Example: Manufacturing, infrastructure, R &D (Research & Development)


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FOREIGN DIRECT INVESTMENT

Foreign Direct Investment (FDI) means a company or anyother entity in one country making a physical investment inother country.

FDI includes investments made to acquire a lasting interest inenterprises that are operating outside the economy &national borders of an investor.

FDI (for a country) represents foreign assets in domesticstructures, equipments & organizations.FDI does not include foreign investments in stock markets.


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For Example: British company investing directly in Indian

healthcare sector, is considered as FDI.

Companies engaged in FDI may be involved in the functional

areas such as: Production, Marketing and R & D.

In order to qualify as FDI, the investment must give aninvestor some control over its foreign affiliate.

The United Nations defines control as owning 10% or more of

ordinary shares or voting power in an incorporated firm or its

equivalent.


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ADVANTAGES


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Foreign Direct Investment plays a pivotal role in the development ofIndia's economy. It is an integral part of the global economic system.

Advantages of FDI can be enjoyed to full extent through various

national policies and international investment architecture. Both thefactors contribute enormously to the maximum FDI inflows in India,

which stimulates the economic development of the country.

Economic growth

Trade

Employment and skill levels

Technology diffusion and knowledge transfer

Linkages and spillover to domestic firms


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DISADVANTAGES


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FDI has and adverse effects on competition.

FDI will be make the host country lost the control over domesticpolicy.

One of the most indirect disadvantages of foreign direct investment is

that the economically backward section of the host country is always

inconvenienced when the stream of foreign direct investment is

negatively affected.

It has been observed that the defense of a country has faced risks as a

result of the foreign direct investment in the country.
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Another disadvantage of foreign direct investment is that there is a

chance that a company may lose out on its ownership to an overseas

company. This has often caused manycompanies to approach foreign

direct investment with a certain amount of caution.

Foreign direct investment disadvantageous for the ones who are making

The investment themselves.

Foreign direct investment may entail high travel and communications

expenses.

Inflation is increased

Local market is affected badly
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Why is FDI important for any consideration ofgoing global?

Avoiding foreign government pressure for local production.

Circumventing trade barriers, hidden and otherwise.

Making the move from domestic export sales to a locally

based national sales office.

Capability to increase total production capacity.

Opportunities for co-production, joint ventures with local

partners, joint marketing arrangements, licensing, etc;


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FDI POLICIES IN INDIA

The Foreign direct investment scheme and strategy depends on

the respective FDI norms and policies in India. The FDIpolicy of India has imposed certain foreign direct investment

regulations as per the FDI theory of the

Government of India (GoI). These include FDI limits in India for

example:

Foreign direct investment in India in infrastructure development projects

excluding arms and ammunitions, atomic energy sector, railways system ,

extraction of coal and lignite and mining industry is allowed upto 100%equity participation with the capping amount as Rs. 1500 crores.

FDI figures in equity contribution in the finance sector cannot exceed

more than 40% in banking services including


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credit card operations and in insurance sector only in joint ventures

with local insurance companies.

FDI limit of maximum 49% in telecom industry especially in the GSM

services


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FDI Trends in India

Steps have been taken by the government to impart technical

FDI education so as to improvise the FDI databaseof the country. FDI and trade go hand in hand as both works ina symbiotic situation. FDI has also create.more employment opportunities as FDI trends have increased

the basic infrastructure of any organization thusdemanding growth in terms of organizational structure as well.

The foreign direct investment news in Indiashows the FDI notations being adopted by India, the foreigndirect investment strategies, and the FDI guidelinesregulating the inflow of foreign funds in India.


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Sector Specific Foreign Direct Investment in

India

Hotel & Tourism: FDI in Hotel & Tourism sector in India

100% FDI is permissible in the sector on the automatic

route.

Private Sector Banking:

Non-Banking Financial Companies (NBFC)

49% FDI is allowed from all sources on the automatic route

subject to guidelines issued from RBI from time to time.


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Insurance Sector: FDI in Insurance sector in IndiaFDI up to 26% in the Insurance sector is allowed on the automaticRoute subject to obtaining license from Insurance Regulatory &Development Authority (IRDA)

Telecommunication:FDI up to 100% is allowed for the following activities in the telecomsector

Call Centers in India / Call Centers in India

FDI up to 100% is allowed subject to certain conditions.

Business Process Outsourcing BPO in IndiaFDI up to 100% is allowed subject to certain conditions.


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Trading: FDI in Trading Companies in IndiaTrading is permitted under automatic route with FDI up to 51%provided it is primarily export activities, and the undertaking is an

export house/trading house/super trading house/star trading house ..FDI up to 100% permitted for e-commerce activities

Power: FDI In Power Sector in IndiaUp to 100% FDI allowed in respect of projects relating to electricity

generation, transmission and distribution, other than atomic reactorpower plants. There is no limit on the project cost and quantum of

foreign direct investment.


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Drugs & Pharmaceuticals

FDI up to 100% is permitted on the automatic route formanufacture of drugs and pharmaceutical

Roads, Highways, Ports and Harbors

FDI up to 100% under automatic route is permitted in projectsfor construction and maintenance of roads, highways, vehicular

bridges, toll roads, vehicular tunnels, ports and harbors.

Foreign Direct Investment in Small Scale Industries (SSI's) in

India

Recently, India has allowed Foreign Direct Investment up to 100% in

many manufacturing industries which were designated as Small Scale

Industries.


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Thank You

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45671486 BE Foreign Direct Investment Shradha