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CONTENT :
CONTENT Introduction Classification of FDI Regulatory Authorities Indias Policy Framework Indias FDI outlook Global comparison Benefits of FDI Problems with FDI 2
INTRODUCTION :
INTRODUCTION Foreign direct investment (FDI) refers to Cross-border investment made by a resident in one economy (the direct investor) With the objective of establishing a lasting interest in an enterprise (the direct investment enterprise) that is Resident in a country other than that of the direct investor. 3
CLASSIFICATION OF FDI :
CLASSIFICATION OF FDI 4
Foreign Investment Implementation Authority (FIIA) Quick implementation of FDI approvals Resolution of operational difficulties faced by foreign investors Gather feedback from foreign investors Other authorities involved : Investment Commission Project Approval Board Reserve Bank of India AUTHORITIES DEALING WITH FOREIGN INVESTMENT 7
GOVERNMENT POLICY :
GOVERNMENT POLICY Foreign investment is allowed in all areas except following sectors where foreign investment is prohibited : Atomic energy Agriculture (except floriculture , horticulture , seed development etc.) Lottery business / Gambling and betting Plantations (except tea plantations) 9
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14 FDI INFLOW FINANCIAL YEAR- WISE
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PRIMARY REASONS FOR FDI INVESTMENTS IN INDIA Local Market Demand -86% Low cost operations -29% Ease of making FDI -29% Labour Availability -29% Entry of other players -24% Political stability -24% Time zone advantage -14% 16
GLOBAL COMPARISONS :
GLOBAL COMPARISONS 18
GLOBAL COMPARISONS :
GLOBAL COMPARISONS 19
BENEFITS OF FDI :
BENEFITS OF FDI Play a complementary role in overall capital formation Employment generation and productivity enhancement Encourages the transfer of management skills, intellectual property, and technology Improves Forex position of the country Promotion of the competition within the local input market Development of the human capital resources Increase in exports Increases tax revenues 20
PROBLEMS WITH FDI A company may lose out on its ownership to an overseas company Government has less control over the functioning of the company that is functioning as the wholly owned subsidiary of an overseas company FDI entering and taking the control of already established market, where local companies are meeting the requirements of the market Invest in machinery and intellectual property, not in wages Large giants can set up monopolies in highly profitable sector 21
THANK YOU :
THANK YOU 22