FDI(Foreign Direct Investment)

Team Members Gaurav Prakash Divyadarshi Deepshikha Deepak Choudhary

INVESTMENT

Portfolio investmentInvestment that does not involve obtaining a degree of control in a company

Foreign Direct Investment Purchase of physical assets or a significant amount of the ownership (stock) of a company in another country to gain a measure of management control

Invesment in India

Automatic Route

General Rule

No prior permission requiredInform Reserve Bank within 30 days ofinflow/issue of shares

Prior Permission (FIPB)

By Exception

Prior Government Approval needed.Decision generally within 4-6 weeks

FDI

• Direct investment into production or business in a country by a company in another country.

• Either by buying a company in the target country or by expanding operations of an existing business in that country.

FDI inflows by Region and Economy

Sector-wise FDI inflows in India

Top country Investors in India

Forecast of FDI In India

Advantages of FDI

Increase investment level and thereby income & employment

Increase tax revenue of government

Facilitates transfer of technology

Encourage managerial revolution through professional management

Increase exports and reduce import requirements

Increase competition and break domestic monopolies

Improves quality and reduces cost of inputs

Limitations of FDI

Flow to high profit areas rather than main concern areas

Through their power and flexibility, MNC can undermine

economic autonomy and control

Sometimes interferes in the national politics

Sometimes engage in unfair and unethical trade practices

Sometimes result in minimizing / eliminating competition

and create monopolies or oligopolistic structures

100% FDI permitted in India

Engineering & Manufacturing sectors

Roads & Highways, Ports and Harbors

Industrial model towns/industrial parks

Hotels & Tourism

Pollution Control and Management

Advertising & Film industry

Power generation (hydro-electric, coal/lignite, oil or gas based)

Information Technology including E-Commerce

Factors affecting FDI

• Profitability: Attract where return on investment is higher

• Costs of production: Encouraged by lower costs of production like

raw materials, labor .• Economic Conditions: Market potential, infrastructure, size of

population, income level etc• Government policies: Policies like foreign investment, foreign

collaboration, remittances, profits, taxation, foreign exchange control, tariffs etc.

• Political factors: Political stability, nature of important political parties and relations with other countries.

OBJECTIVE OF THE STUDY

• The main objective of the study is to know about in which sector the

industries are invest our money .

• To identify factors which inhibit higher FDI and suggest remedial

steps.

• To examine policy reforms towards mergers and acquisition for

attracting FDI

• To suggest changes in institutional apparatus and organizations, both in

Centre and States, for attracting the FDI .

CONCLUSION The result of all these efforts are encouraging: the inflow of

foreign capital has been steadily rising year to year so that FDI is better then FII

Investors based in many countries have taken advantage of the India-Mauritius bilateral tax treaty to set up holding companies in Mauritius which subsequently invest in India, thus reducing their tax obligations.

By industry, the largest destinations for FDI are electrical equipment (including computer software and electronics), services, telecommunication & transportation.