Foreign Direct

Investment

Presenter
:
Pankaj
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 Contents
ü Introduction
ü Government policy of FDI
ü Benefits of FDI
ü Disadvantages of FDI
ü FDI inflow in India
ü FDI v/s FII
ü References

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 Introduction
Ø Foreign Direct Investment is any form of investment
that earns interest in enterprises which function
outside of the domestic territory of the investor.

Ø FDIs require a business relationship between a parent

company and its foreign subsidiary

Ø FDI stocks now constituting 28% of the global GDP

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 Types of FDI
Ø Inward FDI and Outward FDI

Ø Vertical FDI and Horizontal FDI

Ø Market seeking FDI and Resource seeking FDI

Ø Greenfield investments and mergers and acquisitions

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 FDI movement in the
World
Ø Increased by 5.1% and stood at US $
947 bn in 2007

Ø Number of projects 11,574 (2007)

Ø Top 10 destinations for FDI :

§ China, US, India, UK, France,
Germany, Russia, Spain , Poland and
Romania
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Ranking based on
FDI

Based on no. of projects

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 Government policy
for FDI
Ø Approval given by Foreign Investment Promotion Board

Ø Under automatic route

Ø Under government approval

Ø Prohibited sectors

Ø FDI policy notified by RBI under Foreign Exchange

Management Act (FEMA)
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 Benefits of FDI
Ø Economic development of the host

Ø Transfer of technology

Ø Development of human capital resources

Ø Creation of jobs

Ø Opening export window

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 Disadvantages of
FDI
Ø Company may lose ownership

Ø Difference in language and culture

Ø Country secrets may be disclosed

Ø Policies adapted may not be appreciated

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FDI inflow in India

FDI Inflow in US million dollars 10

Sector wise FDI

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 Country wise share
in FDI

SOURCE: DIPP, Federal Ministry of Commerce and Industry,

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Government of India
 FDI v/s FII
Ø Till 2006 more FII investment than FDI in India.

Ø Reverse in China

Ø FDI was more than ten times of ours earlier

Ø More FDI helpful than FII

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 References
Ø www.indianembassy.org
Ø www.economywatch.com
Ø www.indiaonestop.com
Ø Pratiyogita Darpan

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