 GROUP MEMBERS-

 Ameya Gandhi (13)

Gurpreet kaur(15)
 Pratik Jain(16)
Vikramjeet Singh Solar(48)
 Priy Chheda(46)
Hardik Gala(12)
 Pranali Bavkar(2)
Harshal Panchal(29)
 Rohit Maingi(19)
Arshad Ck(54)
 Rushil Gupta(65)
Jagjit Kaur Wasan(44)
 Sunmeet Matta(22)

1 22/9/2013
 What is FDI..?
 Foreign direct investment (FDI)-
 It is a direct investment into production or
business in a country by an individual or company
in another country.
 It can be either by buying a company in the target
country or by expanding operations of an existing
buisness in that country.

2 22/9/2013
 6000

5000

4000
US $ million

3000

2000

1000

3 22/9/2013
 Services Sector

4% 4% Computer Software &

6% 3% hardware
6% Telecommunications

Housing & real Estate

10%
Construction Activities
31%
Power
11%
Automobile Industry

Metallurgical Industries
12%
Petroleum & Natural Gas
13%
Chemicals
4 22/9/2013
 2% Mauritius
2%
4% 4% 3%
5% Singapore

7% USA

UK
9% Netherlands

Japan

Cyprus
11%
53% Germany

UAE

France
5 22/9/2013
 Economic
Growth

Linkages and
spillover to
Trade
domestic
firms

Technology
diffusion and Employment
knowledge and skill levels
6 transfer 22/9/2013
7 22/9/2013
MANUFACTURING
SECTOR

8 22/9/2013
 Ranked 2nd most favored destination for foreign

investments after China

 India ranks among the top 12 producers of manufacturing value

added (MVA).

 In textiles, the country is ranked 4th after China, USA and Italy.

 In electrical machinery and apparatus, it is ranked 5th.

9 22/9/2013
 6th position in the basic metals category

 7th in chemicals and chemical products

 10th in leather, leather products, refined petroleum products and

nuclear fuel

 12th in machinery and equipment and motor vehicles.

10 22/9/2013
Foreign Direct Investment (FDI) up to 100% is
permitted in all manufacturing activities
except:-

Where more
than 24%
Where the foreign
foreign equity is
Cigars & investor has proposed to
Defense Cigarette an existing be inducted
Industry manufacturi joint for
ng venture in manufactur
India in the e of
same field. items reserv
ed for Small
Scale sector
11 22/9/2013
12 22/9/2013
13 22/9/2013
14 22/9/2013
 Attracted only Acc to FICCI
67% of China’s
$3.4 billion of Action plan,
total FDI comes
FDI in India can attract
in the
manufacturing $12billion of FDI
manufacturing
on an average in the
sector compared
every year from manufacturing
to 37% in case of
2000 to 2008 sector per
India.
annum.

15 22/9/2013
 India’s share in outward FDI stock is negligible
(Chemicals, Automobiles, Food Processing, Electrical &
Electronic Equipment, Metals and Machinery Equipment)

 Sectors like Industrial Machinery, Agricultural

Machinery, Ship Building, Medical & Surgical Devices
and Computer Hardware

 Rather India imports these items.

16 22/9/2013
FDI Inflows for Selected Sectors in India (Jan
2000 to September 2008)
Sector FDI Inflows ($ million)

Ship Building 59.15

Industrial Machinery 283.77

Agricultural Machinery 148.37

Earth Moving Machinery 134.51

Medical and Surgical Appliances 140.77

Computer hardware 99.7

Defence 0.15

17 22/9/2013
 FDI Policy
A concrete and should aim at
comprehensive incentivizing
Action plan maximum value
addition .

Cut ting down

Encourage
the complex
technology
regulatory
transfer by
procedures and
adopting ‘Swap
reducing delays
Technology for
in the project
Market’ policy
approvals.

18 22/9/2013
 FDI IN SERVICE SECTOR

19 22/9/2013
 India's large service industry accounts for more
than 50% of the country's GDP.

 It makes up more than 25% Employment

 Service sectors like telecommunication, IT enabled

services, insurance, air transport are becoming
prominent

20 22/9/2013
 Introduction of ‘Manmohanomics’ in 1991

 Growing presence of transnational corporations and

the technological progress.

 Liberalization of many service sectors activities

(telecom, transport, finance etc.)

21 22/9/2013
 Attracted $3.12 billion FDI in the first seven
months of 2009-10

 22 per cent of the total FDI inflows of $17.64 billion

in the April-October for service sector

 In 2008-09, attracted the maximum FDI worth

USD 6.11 billion.

22 22/9/2013
 FDI Policy in Services Sector

 100% FDI is permitted for many service sectors

like-

(Real estate, Construction, Hotels, tourism, films,

IT - enabled services, Consultancy, Medical,
Education, Advertising, etc)

23 22/9/2013
 Restricted sectors in Services
 Atomic Energy, Lottery Business, Gambling and
Betting, Business of Chit Fund, and any
activity/sector that is not opened to private sector
investment.
 Besides the above, FDI is not allowed in
plantations.

24 22/9/2013
Current issues with FDI in Services Sector

 Very weak linkages of service sector with the

Indian economy (only few cities)
 Requires highly skilled workers
 Employee Welfare in time of crisis

25 22/9/2013
 Allowed up to
100%

Pilot
programme for
Contributes
delivering
19% to the GDP
subsidy directly
to farmer

26 22/9/2013
 To connect 66,800 habitations
 To construct 1,46,000Km of new rural roads
 To Upgrade and modernize 1,94,000Km of existing rural
roads
 To provide corpus of Rs. 8000 crore RIDF(rural
infrastructure development fund)

27 22/9/2013
 FDI in Retail….WHY INDIA?
 Low share of organized retailing
 Increase in disposable income and customer
aspiration or demand.
 Increase in expenditure for luxury items.

28 22/9/2013
 FDI in Retail….Benefits
 Generate huge employment

 Increased investment in technology

 The huge tax revenue generated.

 The consumer gains from the wide variety of choices and a

more diversified basket.

 The indirect benefits like better roads, online marketing,

expansion of telecom sector etc. Will give a ‘big push’ to

other sectors like agriculture, small and medium size
enterprises
29 . 22/9/2013
 FDI in Real Estate
 Second-most favoured destination for FDI in the
world
 Norms to allow 100% FDI in Mar 2005 .
 100 acre criterion to 25 acre criterion.

30 22/9/2013
 FDI in Real Estate….Why Invest??
 India produces an estimated 2 million new
graduates
 Presence in the list of top 500 sectors complied by
US taking into consideration of the growth rate.
 Real estate investments in India yield huge
dividends.

31 22/9/2013
 Tourism
 Raised to $120 million.
 Major source of employment.
 Third largest earner of foreign exchange.
 Private investments through public private
partnership.
 100% FDI permitted.

32 22/9/2013
 Need for FDI in Tourism
 Foreign tourist arrivals are expected to grow to 10
million by 2010-12
 Estimated that tourism in India could contribute
Rs.8,50,000 crores to the GDP by 2020

33 22/9/2013
 Reasons for low FDI
 High Taxes
 Highest import duty on imported liquor used in
hotels
 Service Tax on Tour Operators
 Inland Air Travel Tax

34 22/9/2013
 FDI Policies in India(overview)

 FDI Policy permits FDI up to 100 % from foreign/NRI

investor without prior approval in most of the sectors. Known as
the automatic route.
 The FDI policies in INDIA are formulated on 4 parameters:
-Increased capital flow.
-Improved technology.
-Management expertise.
-Access to international markets.
 Hence 100% inflow was allowed in sectors like Power, Renewable
energy , Agriculture, mining etc.
 Also sectors like insurance and defence have a cap of 26% and the
banking sector has cap of 49%.
35 22/9/2013
Some of the Major Investing Countries

36 22/9/2013
 Attract
‘Quality’ FDI

Attract
Increase ease
technology
of doing
and localize
business
production

Target Focus on
specific Export-
sectors oriented FDI
37 22/9/2013
FDI may provide better access to latest technologies for the
local economy.

FDI provides compitition to the local industries which intern

make them compitant. Hence product quality improvement.

The increased flow of FDI in a country has given a major boost

to the country's economy .

Hence measures must be taken in order to ensure that the flow

of FDI in the country to continue to progess in all perspectives.

38 22/9/2013
 THANK YOU

39 22/9/2013