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¢ Introduction
¢ Classification of FDI
¢ Regulatory Authorities
¢ India·s Policy Framework
¢ India·s FDI outlook
¢ Global comparison
¢ Benefits of FDI
¢ Problems with FDI

 

Foreign direct investment (FDI) refers to

~ Cross-border investment made by a resident in one economy (the direct

investor)

~ With the objective of

~ Establishing a lasting interest in an enterprise (the direct investment

enterprise) that is

~ Resident in a country other than that of the direct investor.



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¢ Foreign Investment Promotion Board (FIPB)

Ú Expedite clearance process
Ú Periodically review implementation of cleared proposals
Ú Review general and sectoral policy guidelines
Ú Undertake investment promotion activities

¢ Secretariat for Industrial Assistance (SIA)

Ú Acts as gateway to industrial investment in India
Ú Assist entrepreneurs & investors in setting up projects
Ú Liaise with Govt. bodies to seek necessary clearance


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¢ Foreign Investment Implementation Authority (FIIA)

Ú Quick implementation of FDI approvals
Ú Resolution of operational difficulties faced by foreign investors
Ú Gather feedback from foreign investors

¢ Other authorities involved :

Ú Investment Commission
Ú Project Approval Board
Ú Reserve Bank of India



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Approval Routes
Automatic Route Approval by FIPB
~ Under delegated powers exercised by ~ Under Foreign Investment Promotion
RBI Board.

~ FDI upto 100% for new and existing ~ Required for the projects that do not qualify
companies , JVs,firms is permitted for automatic approval route.
under automatic route for all items
except for those where approval from ~ A proposal to be made to FIPB which studies
SEBI or FIPB is required. the project and conveys it·s decision within
30 days of submitting application.

~ Preference is given to projects in high priority

industries.
 
  

Foreign investment is allowed in all areas except following sectors where foreign
investment is prohibited :

Ú Atomic energy

Ú Agriculture (except floriculture , horticulture , seed development etc.)

Ú Lottery business / Gambling and betting

Ú Plantations (except tea plantations)

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Ú Investments through GDRs and ADRs

Ú Mobilization of funds through preference shares

Ú Mobilization of funds through external commercial borrowings

Ú Foreign currency exchangeable bonds

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~ Play a complementary role in overall capital formation

~ Employment generation and productivity enhancement

~ Encourages the transfer of management skills, intellectual property, and

technology

~ Improves Forex position of the country

~ Promotion of the competition within the local input market

~ Development of the human capital resources

~ Increase in exports

~ Increases tax revenues



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~ A company may lose out on its ownership to an overseas company

~ Government has less control over the functioning of the company that is
functioning as the wholly owned subsidiary of an overseas company

~ FDI entering and taking the control of already established market, where
local companies are meeting the requirements of the market

~ Invest in machinery and intellectual property, not in wages

~ Large giants can set up monopolies in highly

profitable sector
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