FOREIGN DIRECT INVESTMENT

Foreign direct investment refers to the net inflow of

investment to acquire a lasting management interests in an
enterprise operating in an economy other than that of investor

 FDI is an investment to acquire long term interest operating

outside of the economy of the investor
 FDI is a source of external finance which mean that countries
with limited amount of capital can receive finance beyond the
national border from wealthier countries
 FDI is consider as an ingredient in economic growth
 WHY FDI????
• No debt creation on the part of the government.
• Triggers technology transfer.
• Assists capital formation.
• Contributes to international integration by
promoting exports.
• Increases productivity and competitiveness.
Improves efficiency of resources.
• Promotes innovation.
 FDI IN INDIA
Currently FDI is permitted in India;
• Through financial collaborations.
• Through joint ventures and technical collaborations. Through capital
markets via Euro issues.
• Through private placements or preferential allotments
Major Sector for FDI in India are:
• Infrastructure
• Automotive
• Pharmaceuticals
• Defense
• Retails
• Railways Infrastructure
• Chemicals
• Textiles
• Airlines
FDI RELATED INSTITUTION IN INDIA
• Foreign Investment Promotion Board (FIPB)
• Foreign Investment Promotion Council (FIPC)
• Foreign Investment Implementation Authority
(FIIA)
• Secretariat for Industrial Assistance (SIA)
 FDI IN MULTIBRAND RETAIL TRADING
• Marketing of similar and competing products
by the same firm under different and
unrelated brands. For example: walmart, big
bazar, tesco

• FDI in multi brand retail was not permitted in

India. however, the Government of India
proposed some policy changes in late 2011.
they are as follows..
• A decision has been taken by the Government to permit FDI in
all products, in a calibrated manner, subject to the following
conditions:
• FDI in Multi Brand Retail Trade (MBRT) may be permitted up
to 51%, with Government approval;
• Fresh agricultural produce, including fruits, vegetables,
flowers, grains, pulses, fresh poultry, fishery and meat
products, may be unbranded.
• Minimum amount to be brought in, as FDI, by the foreign
investor, would be US $ 100 million.
• At least 50% of total FDI brought in shall be invested in 'back-
end infrastructure‟. Back-end infrastructure will include
investment made towards processing, manufacturing,
distribution, design improvement, quality control, packaging,
logistics, storage, ware-house, agriculture market produce
infrastructure etc.
• At least 30% of the procurement of manufactured/ processed
products shall be sourced from Indian 'small industries' which have
a total investment in plant & machinery not exceeding US $ 1.00
million. Further, if at any point in time, this valuation is exceeded,
the industry shall not qualify as a 'small industry' for this purpose.

• Retail sales locations may be set up only in cities with a population

of more than 10 lakh as per 2011 Census and may also cover an
area of 10 kms around the municipal/urban limits of such cities;
retail locations will be restricted to conforming areas as per the
Master/Zonal Plans of the concerned cities and provision will be
made for requisite facilities such as transport connectivity and
parking;
• Government will have the first right to procurement of agricultural
products