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A Study in last decade(2000-2010)


  

 

What is FDI?

‡ Investment that is made to acquire a lasting


interest in an enterprise operating in an economy
other than that of investors.
INVESTING  INDIA-ENTRY ROUTES
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‡  
 
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   
‡  
   
 
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‡    
FDI POLICY IN INDIA-AN OVERVIEW

FDI permitted in almost all activities


‡ Up-to 100% FDI allowed in manufacturing
‡ Most FDI allowed on the µautomatic route¶
‡ Liberal policy for foreign technology collaboration
‡ Policy supported by a legal framework
‡ National treatment to investment
‡ Investment being constantly reviewed and liberalized
‡ Policy is independently to be liberal and progressive.
FDI : MACRO  
OVERVIEW
ASustained Economic Growth
‡ Growth of over 8.0% during last 5 years
‡ Services account for around 55 % of GDP
‡ Manufacturing sector growing annually at over 9%
(17.4% in GDP)
‡ Foreign exchange reserve of over US $ billion 250
‡ FDI inflows grew by 48.1% in 2005-06.
‡ The growth in 2007-08 was 46.9%
‡ FDI inflows continue to be impressive this year
SECTORS WHERE FDI IS
PROHIBITED
ARetail Trade

(except Single Brand Retailing)

‡ Gambling

‡ Betting & Lottery

‡ Atomic Energy
LIBERALIZATION OF New Sector
opened
FDI POLICY FDI limits increased
FDI up to Procedures
100 % further simplified
Allowed in
FDI up to 100 most Sectors
% Allowed in Only a small
some Sectors negative list
FDI up to
74/51/50%
allowed in 111
Automatic
sectors
Route
Introduced
FDI up to 51 %
Allowed in 35
FDI Priority Sectors
Allowed
Selectively
up to 40%
     
FDI has an impact on

‡ Country's trade balance


‡ Increasing labour standards and skills
‡ Transfer of new technology and innovative ideas
‡ Improving infrastructure, skills and the general
business climate.
SECTOR WISE FDI INFLOW
(2000-2009)
S FDI I ( ) FDI I
S S 0 2 900 2
C S H 2 29 902
T 9 09
H R E 2 0
C 2 9 9
20099 2
I 9 2
I 29
N 2 2
ƒS ht t p :// p p . n ic . in / i_s t a t is t ic s
RANKING OF SECTOR-WISE
FDI INFLOW

S S
C S S
T
R E
C A

A I
I
N G
Ch
FDI Inflows«.Robust Growth

˜˜˜

7722 7404
˜˜˜
(Only
Equity)
˜˜˜
6130

˜˜˜
5035 6051




˜˜˜

4322
˜˜˜ 4029

˜˜˜

˜˜˜

˜˜˜

˜
˜˜˜ ˜ ˜˜ ˜ ˜˜ ˜ ˜˜ ˜ ˜˜ ˜ ˜˜ ˜ ˜˜



˜˜˜

4012
FDI ± Country wise
 ˜˜

Î 
continues to lead

ß retains its position as 2nd most important


source country
˜˜˜
Spurt in FDI from !"#
ß 

 ˜˜

˜˜˜

˜˜

˜
˜˜˜˜ ˜˜˜ ˜˜˜ ˜˜˜ ˜˜˜ ˜˜ ˜ ˜˜˜

˜
     
   

BREAK-UP
OF FDI INFLOWS
`   

ƒSource http://www.indiastat.com
FDI Policy 2010

‡ More liberal condition for the entry of new investors


‡ FDI in Single-Brand Retailing is permitted extent of
51%
‡ 2010, India attracted foreign direct investment
(FDI) worth $2.04 billion.

‡ FDI allowed in almost all sector except few sectors


FDI Policy for Industry Sector«. Fully
Permitted
Mining
‡ Coal ± FDI upto 100% as per Coal Mines (Nationalization)
Act 1977
‡ Diamond, Gold, Silver , Minerals ± upto 100% under
automatic route as MMRD Act
‡ Atomic minerals ± upto 74% in JV with PSUs ± FIPB
Electricity
‡ FDI up to 100% under automatic route in Generation,
Transmission, Distribution and Power Trading as per
Electricity Act 2003
FDI Policy for Service Sector«. Largely
permitted
‡ FM Broadcasting (20%) - FIPB
ß" #$ ‡ Up linking News and CATV Channel - FIPB
‡ Print Media ± News Papers & Periodicals -
FIPB
‡ Insurance - Automatic

‡ Broadcasting - Cable Network, DTH,


ß" #$ Setting up hardware - FIPB
‡ Stock Exchanges - FIPB
‡ Air Transport Services -
Automatic
FDI Policy for Service Sector«. Largely
permitted

‡ Telecommunication  FIPB
ß" #$
(Beyond 49%)
‡ Private sector banks 
Automatic
ß" #$
‡ Development of existing airports - FIPB
(Beyond 74%)
‡ Publishing scientific magazines - FIPB
‡ Courier services ë 
Agriculture Sector«. Largely Restricted

‡ Floriculture, Horticulture, Development of seeds, Animal


husbandry, Pisciculture, Cultivation of vegetables,
Mushrooms under controlled condition allowed 100% under
automatic route

‡ Tea plantation ± 100% with FIPB and divestment of 26% in


5 years

‡ Other activities not allowed.


Advantages

‡ Stimulates economic activity


‡ Employment will increase
‡ Long run aggregate supply will shift outwards
‡ Aggregate demand will also shift outward
‡ Domestic producers an incentive to become more
efficient
‡ Levels of FDI have a greater voice at international
summits
‡ Technology diffusion
‡ Knowledge transfer
Disadvantages

‡ Inflation may increase slightly


‡ Domestic firms may suffer
‡ country can become too dependent
‡ create irreversible social, economic and problems
‡ Company may lose ownership
‡ Country secrets may be disclosed
Findings

‡ Stimulus for the economic growth of India.


‡ FDI shown a tremendous growth in second decade
(2000 -2010)
‡ Banking & Insurance is first and
Telecommunication is second segment of
service sector which pick the growth in second
decade of reforms.
‡ FDI create high perks jobs for skilled employee in
Indian service sector
References

‡ Book:
Business Environment by Shaikh Saleem
‡ Pratiyogita Darpan
‡ Websites:
http://www.scribd.com/doc/11332841/FDI-ppt
http://ijeronline.com/documents/volumes/Vol2issue2/ijer20110202(2).pdf
http://www.scribd.com/doc/24447955/FDI-Final-Ppt
http://www.dipp.nic.in/fdi_statistics/india_FDI_December2010.pdf
http://www.ripublication.com/gjfm/gjfmv2n2_6.pdf
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