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Published by: Vipin Kumar on Apr 19, 2011
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Foreign Investment In INDIA


An Overview



Foreign Direct Investment (FDI)        4/19/2011  What is FDI Why we need FDI Process of the Inflow of FDI Benefits Types Advantages and disadvantages FII Diff between FII and FDI 2 .

Modes of FDI 1) By Direction Target * Inward *Outward 2) By * Mergers and Acquisitions * Horizontal FDI * Vertical FDI (a) Backward Vertical FDI (b) Forward Vertical FDI 3 )By Motive 4/19/2011 * Resource-Seeking * Market-Seeking * Efficiency-Seeking 3 .

Factors Affecting FDI        Financial incentives (Funds from local Government) Fiscal incentives (Exemption from import duties) Indirect incentives (Provides land and Political stability Market potential & accessibility Large economy Market size 4 4/19/2011 .

4 trillion)  Skilled and competitive labors force  highest rates of return on investment  one hundred of the Fortune 500 have R & D facilities in India  Second largest group of software developers after the U. Political Stability  Second largest emerging market (US$ 2. largest democracy.500 companies on the Bombay Stock Exchange (only the NYSE has more) 4/19/2011  5 .S.Why India? Liberal.  lists 6.

)        World's fourth largest economy & second largest pharmaceutical industry growth over the past few years averaging 8% has a middle class estimated at 300 million out of a total population of 1 billion Destination for business process outsourcing.Why India (cont. Knowledge processing etc. business process outsourcing and KPO companies 6 4/19/2011 . Second largest English-speaking. technical and executive manpower Low costs & Tax exemptions in SEZ Tax incentives for IT . scientific.

Government policies   Automatic Route Prior Permission (FIPB) 4/19/2011 7 .

Investing in India ± Entry Routes Investing in India Automatic Route General rule No prior permission required Only information to the Reserve Bank of India within 30 days of inflow/ Issue of shares Prior Permission (FIPB) By exception Prior Government Approval needed Decision generally Within 4-6 weeks 4/19/2011 8 .

hospitals 4/19/2011 9 . Minerals  Atomic minerals  Electricity  Hotel.FDI Investment Sectors        Prohibited activities Atomic energy Arms and ammunition Lottery business Betting and Gambling Aircraft and warships Coal lignite Fully permitted Activities  Cigar and cigarettes of tobacco  Coal. Gold. Roads & Highways  Diamond. Silver .

FDI inflows in Telecommunication US$ 24 Billion 4/19/2011 10 .5 Billion per N.T Oil & Energy Power sector Pharmaceuticals & Chemicals      Real state Mining Mobile Sector Automobile Telecommunication     FDI inflows In real estate US$ 5 Billion FDI inflows Retail US$ 20 Billion by 2010 FDI inflows in Mining US$ 2.     Retail I.M.

51 Billion Telecommunicatio US$ 200 million n 11 4/19/2011 Source: . British & cairn Essar power Toyota Panasonic Sector Retail I.Major Investments Companies Wal mart.T Oil & Energy Power sector Automobile Investment US$ 10 Billion US$ 40 Billion US$ 2 Billion US$ 2 Billion US$ 10.Marks Intel Corp.

FDI is Foreign Direct Investment: It is the investment made by Foreign Multinational comapnies in India.FII Vs FDI  FII is Foreign Institutional Investment: It is investment made by foreign Mutual Funds in the Indian Market. 4/19/2011 12 .

referred to as ³sub-accounts´ 4/19/2011 13 .   Foreign Institutional Investors (FII) Foreign investment banks are not permitted to directly invest in shares on the Indian stock exchange Makes investments on behalf of foreign investors.

Thank You«« 4/19/2011 14 .

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