PRESENTATION ON FDI

PREPARED BY: SHAGUN GUPTA SHALABH AGARWAL SHALINI SINGH SHASHI PRATAP SINGH SHISHIR PUROHIT

What is FDI?
 FDI or Foreign Direct Investment is any form of investment that earns interest in enterprise which function outside of the domestic territory of the investor. FDIs require a business relationship between a parent company and its foreign subsidiary. The parent firm needs to have at least 10% of the ordinary shares of its foreign affiliates. The investing firm may also qualify for an FDI if it owns voting power in a business enterprise operating in a foreign country.

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FDI movement in the world
• Increased by 5.1% and stood at US $ 947 bn in 2007. • Number of projects 11,574 (2007). • Top 10 destinations for FDI : China, US, India, UK, France, Germany, Russia, Spain , Poland and Romania.

Foreign Direct Investment (FDI) in India
• FDI has helped the Indian economy grow. • FDI investments are permitted through financial collaborations, through private equity or preferential allotments. • FDI is not permitted in the arms, nuclear, railway, coal & lignite or mining industries. • By 2004, India received $5.3 billion in FDI, big growth compared to previous years, but less than 10% of the $60.6 billion that flowed into China.

ADVANTAGES
• Economic development of the host • Transfer of technology • Development of human capital resources • Creation of jobs • Opening export window

DISADVANTAGES
• Difference in language and culture • Country secrets may be disclosed • Policies adapted may not be appreciated

FDI INFLOWS
Year (April-March) SINCE 2000. 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 Amount of FDI inflows (In US$ million) 2,908 4,222 3,134 2,634 3,755 5549 15,700 TGT 12,000 24,570 25,000

NEW NORMS
• Set to bring in additional foreign equity inflow into indian companies. • Dilutes the foreign investment ceiling in sensitive sectors. • The cornerstone of the new norms is the notion of control by the resident indians. • There is no concept of indirect holding.

WHY FDI PREFERED OVER FII
 FDI is more stable than FII  FDI is a long term investment while FII is generally not for such long time. FDI aims to increase the productivity/capacity Along with cash it brings better management, technology etc.

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