Background:

Yesterday Slow rate of growth Bureaucratic Protected and slow Small consumer markets Weak infrastructure

India Transformed !!

Today Strong macro economic fundamentals Encouraging foreign investment Outsourcing destination Growing consumerism

Impetus on infrastructure development

India -- the largest Democracy - one of the fastest growing economies in the World!

What is FDI.???
Foreign Direct Investment (FDI):
1. FDI stands for Foreign Direct Investment, a component of a

country's national financial accounts.

2. Foreign direct investment is investment of foreign assets into

domestic structures, equipment, and organizations.

3. It does not include foreign investment into the stock markets.

Objective - to encourage FDI to promote industrial & socioeconomic development; supplement domestic capital/ technology

Foreign Direct Investment Policy

Foreign
Direct Investment (FDI) cross border investment with an objective to establish lasting interest
Indias FDI policy. The FDI guidelines administered by the Ministry of Commerce and Industry. of Industrial Policy & Promotion (DIPP), Foreign Investment Promotion Board (FIPB) and Secretariat of Industrial Assistance (SIA) regulate the FDI Policy by RBI

Foreign investment in India is regulated by Government of Department

Administrative and compliance aspects of FDI monitored

Investing in India Entry Routes

Automatic Route Government Route

No Prior Regulatory Approval but only Post Facto Filings to RBI, through AD Allowed for Most sectors Limits : Sectorial caps/ stipulated sector specific guidelines Inward remittances through proper banking channels Pricing valuations prescribed Post facto filing with 30 days of fund receipt Filings within 30 days of share allotment Includes Technical Collaboration/ Brand Name/ Royalty

Foreign Investment Promotion Board (FIPB) Only for cases other than Automatic Route and those mentioned in sectoral policy Applies to cases with existing venture/ tie up in same filed

Applies to investment over 24% in SSI reserved items

Sector wise FDI in india

FDI in Hotel & Tourism sector 100% FDI is permissible in the sector on the automatic route. FDI in Insurance sector in India FDI up to 26% in the Insurance sector is allowed on the automatic route subject to obtaining license from Insurance Regulatory & Development Authority (IRDA).

Cont.
FDI in Telecommunication sector 74% to 100% FDI is permitted for various telecom services. 100% FDI is permitted in the area of telecom equipment manufacturing and provision of IT enabled services. FDI In Power Sector Up to 100% FDI allowed.

Cont.
FDI in Retail sector FDI up to 100% for cash and carry wholesale trading and export trading allowed under the automatic route. FDI up to 51 % with prior Government approval (i.e. FIPB) for retail trade of Single Brand products. FDI up to 51% permitted in Multi Brand Retailing in India.

Advantages of FDI
Increase investment level and thereby income &

employment Increase tax revenue of government Facilitates transfer of technology Encourage managerial revolution through professional management Increase exports and reduce import requirements Increase competition and break domestic monopolies Improves quality and reduces cost of inputs.

Limitation 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.