Foreign Direct Investment

FDRs. FCCBs etc. .Types Of Foreign Investment Foreign Investment Foreign Direct Investment Portfolio Investment Wholly owned subsidiary Joint Venture Acquisition Investment by FIIs Investment in GDRs.

It typically takes the form of starting a subsidiary. acquiring a stake in an existing firm or starting a joint venture in the foreign country. .Foreign Direct Investment FDI refers to investment in a foreign country where the investor retains control over the investment.

.Portfolio Investment If the investor has only a sort of property interest in investing the capital in buying equities. bonds. but has no much control over the use of the capital. In this case of portfolio investments. or other securities abroad. it is referred to as portfolio investment. the investor uses his capital in order to get a return on it.

American Depository Receipts (ADRs) and Foreign Currency Bonds (FCCBs). .Portfolio Investment Investments by FIIs: Foreign Institutional Investors (FIIs) like mutual funds. And through Global Depository Receipts (GDRs).

Factors affecting International Investment Rate of Interest Speculation Profitability Costs of production Economic conditions Government policies Political factors .

Foreign Investment in India .

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 .

Prohibited activities ‡ Retail except single brand retailing allowed upto 51% with FIPB approval Atomic energy Lottery business Betting and Gambling .FDI Policy «.

FIPB subject to export obligation ± Defence products ‡ FDI upto 26% .FIPB subject to licensing of Arms and Ammunitions .FDI Policy for Industry Sector«Fully permitted Manufacturing ‡ 100% FDI permitted in all activities under automatic route except: ± Cigar and cigarettes of tobacco .FIPB ± Products reserved for Small Scale Sector ‡ FDI less than 24% under automatic route ‡ FDI beyond 24% .

Minerals ± upto 100% under automatic route as MMRD Act ‡ Atomic minerals ± upto 74% in JV with PSUs ± FIPB Electricity ‡ FDI upto 100% under automatic route in Generation.FDI Policy for Industry Sector«. Silver . Transmission. Gold. Distribution and Power Trading as per Electricity Act 2003 . Fully permitted Mining ‡ Coal ± FDI upto 100% as per Coal Mines (Nationalization) Act 1977 ‡ Diamond.

FIPB ‡ Stock Exchanges . DTH. Largely permitted Upto 26% Upto 49% ‡ FM Broadcasting (20%) .FIPB ‡ Uplinking News and TV Channel .FIPB ‡ Air Transport Services Automatic .FIPB ‡ Print Media ± News Papers & Periodicals FIPB ‡ Insurance Automatic ‡ Broadcasting .Cable Network. Setting up hardware .FDI Policy for Service Sector«.

FDI Policy for Service Sector«.FIPB (Beyond .FIPB .Automatic ‡ Private sector banks Upto 100% ‡ Development of existing airports .FIPB .FIPB (Beyond 74%) ‡ Publishing scientific magazines ‡ Courier services . Largely permitted Upto 74% ‡ Telecommunication 49%) .

Horticulture. Animal husbandry.FDI Policy for Agriculture Sector«. . Cultivation of vegetables. Pisciculture. Mushrooms under controlled condition allowed 100% under automatic route ‡ Tea plantation ± 100% with FIPB and divestment of 26% in 5 years ‡ Other activities not allowed. Largely Restricted ‡ Floriculture. Development of seeds.

‡ Publications. UK. Chat room and Website Facilitation ‡ Country Focus Desks ‡ Foreign Investment Implementation Authority ‡ Policy review comprising of review of route. Equity caps and procedures. this year. . Events were held at France. USA.Investment Promotion and Facilitation Promotion ‡ Holding µDestination India¶ and µInvest India¶ events abroad. Taiwan. Italy. Japan. Finland.

18 billion (November2007) ± US$ 168 million in 2005 ± US$ 104 million in 2006 (Jan -Sept) Top sectors ± Transportation (55%). About 350 Japanese companies present in India.India Japan Investment Relations ‡ Japan 4th largest investor : US$ 2. ‡ ‡ ‡ ‡ . Japan Global Investments ± US$31 billion in 2004 ± US$46 billion in 2005 ± Around US$10 billion in East Asia Japan cell set up in to facilitate establishment and operation of Japanese investments. Electrical Equipment (7%).

Japanese Companies in India Japanese in India .

Japanese FDI Projects over 2005-2007 Japanese FDI Projects over 2005-2007 Company Name Maruti Udyog MCC PTA Toyota Motor Corporation Honda FDI (US$ million) 699 364 128 214 Description New factory for car production & diesel engine plant Increasing capacity of Haldia plant Increasing its capacity Increasing its capacity and building new factory Increasing its capacity Sakata Inx 54 .