FDI Foreign Direct Investment ppt
FDI refers to investment made by a company or individual in one country into business interests located in another country, in a way that allows for control of the foreign entity. It typically takes the form of establishing a new subsidiary, acquiring part of an existing foreign company, or starting a joint venture. Foreign direct investment brings investment capital into a country and can facilitate the transfer of technology, but it may also allow multinational corporations to undermine some aspects of economic autonomy and control. In 1991, India introduced foreign investment reforms under the Foreign Exchange Management Act to liberalize and encourage FDI. Over time, India has gradually increased caps and allowed higher levels of foreign ownership across various sectors to attract more international investment.
FDI Foreign Direct Investment ppt
- 2. What is FDI? FDI refers to investment in a foreign country where the investor retains control over the investment. 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. Direct investment and management of the firm concerned normally go together.
- 3. CONT… Foreign direct investment(FDI) is a direct investment into production or business in a country by an individual or company of another country, either by buying a company in the target country or by expanding operations of an existing business in that country.
- 4. FDI IN INDIA Foreign investment was introduced in 1991 under Foreign Exchange Management Act (FEMA), driven by then finance minister Manmohan Singh. As Singh subsequently became the prime minister, this has been one of his top political problems, even in the current times. India disallowed overseas corporate bodies (OCB) to invest in India. India imposes cap on equity holding by foreign investors in various sectors, current FDI limit in aviation sector is maximum 49% till 2012 BUT...
- 5. CONT.. Finally, after all that waiting & patience, the Indian government has rolled out the red carpet for international corporations to enter India. On 14 September 2012, the Government of India allowed FDI up to 100% in various sectors.
- 6. 100% FDI permitted Sectors in India Engineering & Manufacturing sectors Roads & Highways, Ports and Harbors Industrial model towns/industrial parks Hotels & Tourism Pollution Control and Management Advertising & Film industry Power generation (hydro-electric, coal/lignite, oil or gas based) Information Technology including E-Commerce
- 7. Main Sectors with FDI Equity/Route Limit in India Insurance- 26% Telecommunication- FDI is permitted up to 74% with FDI, beyond 49% requiring Government approval Domestic airlines- 49% Mining (Mining of Diamonds and precious stones)- 74% Airports- 74%
- 8. Advantages of FDI Increase investment level and thereby income & employment Increase tax revenue of government Facilitates transfer of technology Increase exports and reduce import requirements Increase competition and break domestic monopolies Improves quality and reduces cost of inputs
- 9. Limitations of FDI Flow to high profit areas rather than main concern areas Through their power and flexibility, MNC can undermine economic autonomy and control Sometimes interferes in the national politics Sometimes engage in unfair and unethical trade practices Sometimes result in minimizing / eliminating competition and create monopolies or oligopolistic structures
- 10. Country-wise FDI inflow in India
- 11. Sector-Wise FDI inflow in India
- 12. Factors affecting FDI Rate of Interest Speculation Profitability Costs of production Economic Conditions Government policies Political factors
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