Академический Документы
Профессиональный Документы
Культура Документы
Presented by
: Vaishali Sharma
Lecturer MBA- IBE
Defination of FDI
Foreign direct investment (FDI) occurs when an investor
2
Types of FDI
FDI Types
3
Which factors encourages
FDI?
•
• Financial incentives (Funds from local
Government)
•
•
• Fiscal incentives (Exemption from import
duties)
•
•
• Indirect incentives (Provides land and
infrastructures at less commercial prices)
4
Which factors
• encourages FDI?
•
•
•Political stability
•
•Mar ket potential &
accessibility
•
•Lar ge economy
•
•Mar ket size
5
Don’t Be Confused
Between
FDI & FII
FII - is Foreign Institutional Investors, i.e, foreign
Investment Bankers like Goldman sachs, Merrill lynch,
Lehman bros etc...investing in indian markets in other
words buying indian stocks.FII's generally buy in large
volumes which has an impact on the stock markets...
6
The Direction of FDI
7
Modes of FDI
1) By Direction
* Inward
*Outward
2) By Target
* Mergers and Acquisitions
* Horizontal FDI
* Vertical FDI
(a) Backward Vertical FDI
(b) Forward Vertical FDI
3 )By Motive
* Resource-Seeking
* Market-Seeking
* Efficiency-Seeking
* Strategic-Asset-Seeking
8
BY TARGET
Mergers and Acquisitions
Transfers of existing assets from local firms to foreign firms
takes place;
Horizontal FDI
9
BY MOTIVE
Resource-Seeking
This typifies FDI into developing countries, for example seeking
natural resources in the Middle East and Africa, or cheap labor
in Southeast Asia and Eastern Europe.
Market-Seeking
Investments which aim at either penetrating new markets or
maintaining existing ones..
Efficiency-Seeking
It is suggest ed t hat t his t ype of FDI com es wit h t he expect at ion
t hat it furt her increases t he profit abilit y of t he firm . Typically,
t his t ype of FDI is m ost ly widely pract iced bet ween developed
econom ies; especially t hose wit hin closely int egrat ed m arket s
(e.g. t he EU)..
Strategic-Asset-Seeking
A tactical investment to prevent the loss of resource to a
competitor. Easily compared to that of the oil producers, whom
may not need the oil at present, but look to prevent their
competitors from having it.
10
INDIA AN IDEAL
INVESTMENT DESTINATION
RBI FIPB
9000
(Only
7722 7404 Equity)
8000
7000
6130
6000
5035 6051
US $ m
5000
4322
4000 4029
3000
2000
1000
0
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006 Apr - Nov
13
2500
500
0
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006 April Nov
14
FDI Policy …. Prohibited activities
15
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% - FIPB subject to export
obligation
•
–Defence products
•FDI upto 26% - FIPB subject to licensing of Arms
and Ammunitions
16
FDI Policy for Industry Sector…. Fully
permitted
Mining
•Coal – FDI upto 100% as per Coal Mines (Nationalization) Act
1977
•Diamond, Gold, Silver , 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,
Transmission, Distribution and Power Trading as per
Electricity Act 2003
17
FDI Policy for Service Sector…. Largely
permitted
18
FDI Policy for Service Sector…. Largely
permitted
Telecommunication - FIPB
Upto 74 % (Beyond 49%)
Private sector banks -
Automatic
19
Political Ideology & FDI
20
Advantages of FDI
Infrastructure and technology
transfer
Increased Productive efficiency
due to competition from
multinational subsidiaries
21
Advantages of FDI
Fastergrowth of output and
employment
Consumer Benefits
Price
Quality
Varieties
22
Advantages of FDI
Increase in Exports
23
Costs of FDI
Detriment of the growth of domestic producer
and the national economy
24
Costs of FDI
Enviroment and natural resource costs
25
Costs of FDI
Facilitate hegemony by the dominant US and the
western cultures.
Pr int TV Ent e r t a inm e nt
Political Influence (News)
26