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FOREIGN DIRECT INVESTMENT

Foreign
investment was
introduced
in
1991
under
Foreign Exchange
Management Act
(FEMA), driven by
then
finance
minister
Manmohan Singh.

Foreign direct investment (FDI) is a


direct investment into production or
business in a country by an individual
or company in another country, either
by buying a company in the target
country or by expanding operations of
an existing business in that country.

in regard to the GDP equation

Y=C+I+G+(X-M)
Where Y = income
C = household(or private) consumption demand
I = investment plus foreign investment
G = government demand for goods & services
X = exports
M= imports

Types of FDI Asset View


Asset Augmenting
Greenfield Investment

Asset Acquiring
Mergers & Acquisitions

Brownfield Investment
Horizontal FDI
Vertical FDI

Foreign Direct Investment (FDI) is permitted


as under the following forms of investments
Through financial collaborations.
Through
joint
ventures
and
technical collaborations.
Through capital markets via Euro
issues.
Through private placements or
preferential allotments.

FDI is not
permitted in the
following
industrial sector:

Atomic Energy
Agriculture

Gambling

But in certain sectors govt


recently raised :
Telecom 100% from 74%
Insurance 49% from 26%
Single brand retail 100% from
49%

ENTRY ROUTES FOR FDI


Investments can be made by non-residents in the equity shares/fully,
compulsorily and Mandatorily convertible debentures/ fully, compulsorily and
mandatorily convertible preference shares of an Indian company, through two
routes:
(i) The Automatic Route: under the Automatic Route, the non-resident investor
or the Indian company does not require any approval from the RBI or
Government of India for the investment.
(ii)The Government Route: under the Government Route, prior approval of the
Government of India through Foreign Investment Promotion Board (FIPB) is
required. Proposals for foreign investment under Government route as laid
down in the FDI policy from time to time, are considered by the Foreign
Investment Promotion Board (FIPB) in Department of Economic Affairs (DEA),
Ministry of Finance

STATUS OF FDI IN
INDIA

STATUS OF FDI IN INDIA

Advantages of FDI
Sufficient flow of capital towards development in various
sectors as well as revenue generation.

Improvement
in
technology
and skill
which
reduces the
cost and
increases the
efficiency of
working
process.

Increase in job opportunities in many sectors,


resulted as uplifting in their life style and acceptability.

Infrastructure and administrative reforms which create


effectiveness and accountability of nation.

Social and economic growth


due to awareness from various
sources like schools, colleges,
constitutional body and
information technology etc.
which is possible due to FDI.

Increase in Healthy
competition
will
benefit
the
end
consumer.

DISADVANTAGES
OF
FDI

Domestic
industries are
seeking due to
overflow of
cheap products
and monopoly
which makes
them
uncomfortable
to survive.

Political pressure always tries to control the flow


of FDI to get advantages which create the
obstacle in development.

Inflation is on high due


to lower value of
money, we have to pay
high due to lack of
money in the market
because it is shifting to
FDI companies.

Unethical
behaviours like
corruption,
redtapism and
selfishness is
increasing day
by day because
of money
matter for
example WalMart issue.

Foreign players
would displace
the unorganised
retailers because
of their superior
final strengths
and it would kill
local jobs and
millions of shops.

Presented By:Abhilasha Gupta (08303)


Astitva Tyagi (08314)
Krishna Sharma (08324)
Samiksha Arora (08340)
Swati Singh (08350)
Rahul Kumar (08361)

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