FDI IN INDIA PPT

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Foreign direct investment (FDI) refers to direct investment into production in another country. FDI is generally preferred over other forms of external financing as it is non-debt creating and returns depend on project performance. India permits FDI through various routes like automatic approval, government approval, or Cabinet Committee approval depending on the sector and investment amount. The top sectors to receive FDI in India are services, construction, and telecommunications. Mauritius, Singapore, and the United States are the top countries investing in India, with Mauritius being the largest source of FDI.

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FDI IN INDIA PPT

1. TOPIC: FDI IN INDIA Submitted by VIJAY SINGH TEAM 6

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 2

3. Generally speaking FDI refers to capital inflows from abroad that invest in the production capacity of the economy and are  Usually preferred over other forms of external finance because they are  Non-debt creating, non-volatile and their returns depend on the performance of the projects financed by the investors.  FDI also facilitates international trade and transfer of knowledge, skills and technology 3

4. Why FDI 1. Gain a foothold in a new geographicmarket. 2. Increase a firm’s global competitiveness and positioning. 3. Fill gaps in a company’s product lines in aglobal industry. 4. Reduce costs in areas such as R&D, production, and distribution 4

5. Foreign Direct Investment (FDI) is permitted as under the following forms of investments- 1. Through financial collaborations. 2. Through joint ventures and technical collaborations. 3. Through capital markets via Euro issues. 4. Through private placements or preferential allotments. 5

6. FACTORS REQUIRED TO ATTRACT FDI 1. Low cost BUT Qualified, Educated/Skilled Labor Pool. 2. Long-term Market Potential OR Yields greater than can be achieved Domestically. 3. Access to Natural Resources. 4. Geography 5. Stability of the economic and Political Environment. 6

7. FORBIDDEN TERRITORIES FDI is not permitted in the following industrial sectors: 1. Arms and ammunition. 2. Atomic Energy. 3. Railway Transport. 4. Coal and lignite 7

8. 5 Mining of iron, manganese, chrome, gypsum, sulphur, gold, diamonds, copper, zinc. 6 Lottery Business 7 Agricultural or plantation activities 8 Housing and Real Estate Business (except development of townships, construction of residen-tial/commercial premises, roads or bridges to the extent specified in NotificationNo. FEMA 136/2005-RB dated July 19, 2005). 8

9. F D I - APPROVAL Foreign direct investments in India are approved through three routes: 1. Automatic approval by RBI. 2. The FIPB Route. 3. CCFI Route 9

10. AUTOMATIC ROUTE No need of Prior Approval From FIPB,RBI,GOI. BUT The investors are only required to notify the Regional Office concerned of the Reserve Bank of India within 30 days of receipt of inward remittances. AND File the required documents along with formFC- GPR with that Office within 30 days of issue of shares to the non-resident investors. 10

11. The Reserve Bank of India accords automatic approval within a period of two weeks (provided certain parameters are met) to all proposals involving: 1. foreign equity up to 50% in 3 categoriesrelating to mining activities . 2. foreign equity up to 51% in 48specified industries. 3. foreign equity up to 74% in 9 categories 11

12. THE FIPB ROUTE 1. FDI in activities not covered under the automatic route require prior government approval 2. Application for all FDI cases, except NRI investments and 100% EOUs, should be submitted to the FIPB Unit,DEA, Ministry of Finance. 3. Application for NRI and 100% EOU casesshould be presented to SIA in Department of Industrial Policy and Promotion (DIPP). 4. Application can be made in Form FC-IL. Plain paper applications carrying all relevant details are also accepted. 12

13. CCFI ROUTE 1. Investment proposals falling outside the automatic route. 2. Having a project cost of Rs. 6,000 million or more would require prior approval of Cabinet Committee of Foreign Investment (“CCFI”). 3. Decision of CCFI usually conveyed in 8-10 weeks. Thereafter, filings have to be madeby the Indian company with the RBI 13

14. ADVANTAGES OF FDI  Employment and Economic Boost-  Increased Productivity-  Increment in Income-  Quality of products and flow of technology-  Increase in government revenue-  Increased Capital Investment.  New Technology and “Know How” Transfer. 14

15. Disadvantages of F.D.I  Bad deal for the small entrepreneurs-  Inflation-  Limited employment generation-  Cultural erosion-  Corruption  Technological Dependence on Foreign Technology Sources 15

16. Top Ten Country-wise FDI Equity Inflows to India from April, 2000 to July, 2014 16 S.No Name of the Country Amount of FDI Inflows (Rs. in crore) %age with total FDI Inflows (+) 1 Mauritius 390691.18 35.88 2 Singapore 135784.52 11.88 3 United Kingdom 105795.83 9.46 4 Japan 85639.02 7.49 5 Netherlands 65256.29 5.57 6 U.S.A 57835.90 5.38 7 Cyprus 37349.33 3.38 8 Germany 33486.48 2.99 9 France 19398.74 1.75 10 Switzerland 13801.42 1.23

17. 17 S. No. State-wise Inflows of FDI Cumulative FDI ( 2000 to 2014) %age to total Inflows 1 MAHARASHTRA, DADRA & NAGAR HAVELI, DAMAN & DIU 328,166 30 2 DELHI, PART OF UP ANDHARYANA 216,274 19 3 TAMIL NADU, PONDICHERRY 71,017 6 4 KARNATAKA 63,294 6 5 GUJARAT 45,627 4 6 ANDHRA PRADESH 45,160 4 7 WEST BENGAL, SIKKIM, ANDAMAN & NICOBAR ISLANDS 13,584 1 8 CHANDIGARH, PUNJAB, HARYANA, HIMACHAL PRADESH 6,227 0.6 9 RAJASTHAN 6,623 0.5 10. MADHYA PRADESH, CHATTISGARH 6,095 0.5 11 KERALA, LAKSHADWEEP 4,893 0.4 12 GOA 3,710 0.4 13 UTTAR PRADESH, UTTRANCHAL 1,965 0.2 14 ORISSA 1,926 0.2 15 ASSAM, ARUNACHAL PRADESH,MANIPUR, MEGHALAYA, MIZORAM, NAGALAND, TRIPURA 352 0 16 BIHAR, JHARKHAND 247 0 17 JAMMU & KASHMIR 26 0 18 REGIONS NOT INDICATED# 292,906 26.06 19 TOTAL 1,108,091 100

18. Sector-wise FDI Equity Inflow from April, 2000 to July, 2014 18 Sl. No Sectors FDI Inflow (Rs. In Crores) Percentages of Total FDI Inflow 1 Service 191752.15 17.73 2 Construction 111127.49 10.40 3 Telecommunication 80608.47 7.23 4 Computer Software & Hardware 61707.07 5.76 5 Drugs &Pharmaceuticals 61340.03 5.47 6 Automobile Industry 49678.09 4.41 7 Chemicals (Other than Fertilizers) 47538.99 4.40 8 Power 44667.08 4.05 9 Metallurgical Industry 39225.17 3.60 10 Hotel & Tourism 38030.37 3.25

19. TEAM 7 GLBIMR PGDM(2017-19) 19

20. CONCLUSION • A large number of changes were introduced in the country after LPG era after 1991. • A structural breakthrough in the volume of the FDI inflows into the economy maintained a fluctuating and unsteady trend during reform period. • More than 50 per cent of the total FDI inflows received in India come from Mauritius, Singapore and the USA. • The main reason for higher investment from Mauritius was that the fact that India entered into a double taxation avoidance agreement (DTAA) with Mauritius were protected from taxation in India. • The service sector had received the larger proportion followed by computer software and hardware sector and then telecommunication sector 20

21. THANK YOU 21

FDI IN INDIA PPT

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