POSCO and Arcenor mittal tale by Grp 5.pptx

7/27/2019 POSCO and Arcenor mittal tale by Grp 5.pptx

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POSCOS CAUTIONTALETHE FUTURE OF FDI IN INDIA

GROUP 5Rinky Sachdeva

Rohit Jain (147)

Atul Mathur (149

Munish Mittal (15

Aditya Goel (16

Satyam K. Saxen


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INTRODUCTION

Posco, the 5th largest steel producing companexited from Karnataka citing delay in procurimines

Foregone opportunity: $ 5.3 Billion

Estimated steel production lost: 6 mtpa

ArcelorMittal, the worlds largest steel manufafrom Orissa due to delay in land acquisition &iron ore mines

Foregone opportunity: $ 7 Billion

Estimated steel production lost : 12 mtpa


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Contd

Other Cases:

Walmart, worlds largest retail store, called year partnership with the Bharti Group

General Motors recalled 1.14 lakh units of T

to corrupt practices followed at their Indianmanufacturing unit


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WHAT DOES THIS ALL MFOR INDIA??

Where is Indias FDI heading?


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FDI IN INDIA

In 1991, India shifted to New Economic Policy and alloweinternational trade and investment, deregulation, initiatiprivatization, etc

India in 1997 allowed foreign direct investment (FDI) in ccarry wholesale

In 2008-09, FDI stood at $27.3 billion.

FDI in 2009-10 was $24.2 billion

In 2010-11, FDI into India declined to $19.43 billion, decrease from both 2008 and 2009

In 2011-12, FDI stood at $28.4 billion.

In 2012-13, FDI dropped again by 38% to $22.4 billion


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FDI AND ECONOMIC

DEVELOPMENT

FDI helps in

Improving countrys trade balance,

Improving labour standards and skills,

Technological transfer and up gradation,

Access to global managerial skills and practices

Optimal utilization of human capabilities and natural resource

Making industry internationally competitive,

Opening up export markets, access to international quality go

Augmenting employment opportunities.


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BOOSTING FDI

Until 2011, Indian central govt. denied FDI in mIndian retail

On 24 November 2011, India allowed foreign g

own up to 51 % in multi-brand retailers

own 100 % for single brand retailers, from the previo

51%More recently, there have been relaxations in

norms so that a company can invest in cities hpopulation of less than 10 lakhs

The cap for 30 % sourcing regulation from locahas been increased from 1mn to 2mn USD


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SO, WHATS WRONG?

Corruption

Bureaucratic inefficiencies

Policy paralysis

Problems with land acquisition

Administrative loopholes

Environmental clearances


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ARCELOR MITTAL: A Case athand

ArcelorMittal faced stiff resistance to land acqfrom temple mutt.

The Orissa government, also could not offer Aany captive iron ore mines

It was hard for officials of the state or companexecutives to venture into Naxal hit areas to cpeople to part with land

After 7 years of considerable investment, the cfinally decided to shelf its plans


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CASE OF POSCO

In 2010, Posco entered into an agreement witgovernment of Karnataka to set up a steel pla

However, even after an year it could not acqrequired land due to agitation by farmers andleaders

Also, there were delays in acquiring iron ore m

Supreme Courts 2010 order to stop iron-ore madded to project delays

Finally, Posco exited from Karnataka in July 20


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SINGUR

Singurvillage land to be acquired by Tata to splant for Nano production.

The land was given to Tata on a rule which sppublic welfare.

The state govt. fenced off the land in 2006 anconstruction of plant started in 2007.

However, due to attacks on fences by villagepeople activists, Tata shifted its plant to Gujra


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NANDIGRAM

Nandigram village was to be developed as SEIndonesia based Salim group.

Villagers were not ready for the establishmentchemical plants on their fertile lands.

Violent protests by villagers lead to the death

officer and 12 civilian in retaliation.

Finally the project was scrapped in its nascent


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THE WAY OUT

Additional incentives should be given to foreigto boost FDI

Government should ensure the equitable distrinflows among states

More freedom must be given to states to attra

inflows

Focus should also be on investing in human caactivities, environmental issues, productive casectors with high income elasticity of demand


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Contd

Laws and rules should facilitate easy and timeacquisition of land

Delays in getting environmental clearances sheliminated

Government must exercise strict control over

bureaucracy, red - tapism, and the rampant cto improve investors confidence


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THANK YOU!!

QUESTIONS?

Documents

POSCO and Arcenor mittal tale by Grp 5.pptx