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MANAGEMENT
FDI
INTRODUCTION
FDI is direct investment into
production in a country by a
company located in another country,
either by buying a company in the
target country or by expanding
operations of an existing business in
that country.
WHY
FDI plays a major role in developing
countries like India. They act as a
long term source of capital as well as
a source of advanced and developed
technologies. This helps in increasing
employment. FDI also helps in
promoting international trade.
SECTORS
Top 10 sectors by number of projects
Software & IT services 3,447
Business Services 2,477
Textiles 2,382
Financial Services 1,926
Industrial Machinery , Equipment & Tools 1,495
Communications 1,425
Consumer Products 1,234
Food & Tobacco 1,195
Transportation 1,046
Automotive Components 907
DECISION
Exchange Rate - The stronger the foreign currency is in
comparison to that of the host country, lesser will be the amount of
investment required. In other words, depreciation of currency in the
host country will lead to more investments.
Market Size - This refers to the GDP growth. Developing and
emerging countries are more likely to attract investments.
Infrastructure - Investors will invest in a country if they think that
the country has suitable infrastructure to support the business.
Tax regime - MNCs are subject to tax in both the parent as well as
host country. The host country which attempts to reduce this double
taxation of MNCs will attract more FDI.
Labor market conditions - The educational levels of the labor as
well as the wage rates also play a major role in determining the
flow of FDI.
Financial and economic stability
Political stability
RECENT TRENDS
RECENT POLICY
RECENT PROJECTS
POLICY
PROJECTS
Five industrial corridor projects have been identified, planned and
launched by the Government of India in the Union Budget of 20142015, to provide an impetus to industrialization and planned
urbanization. In each of these corridors, manufacturing will be a
key economic driver and these projects are seen as critical in
raising the share of manufacturing in Indias Gross Domestic
Product from the current levels of 15% to 16% to 25% by 2022.
Along these corridors, the development of 100 Smart Cities has
also been envisaged in the Union Budget of 2014-2015. These
cities are being developed to integrate the new workforce that will
power manufacturing along the industrial corridors and to
decongest Indias urban housing scenario.
A National Industrial Corridor Development Authority (NICDA) is
being established to converge and integrate the development of
all industrial corridors.
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Years
97,320
165,146
121,907
147,518
64,193
S.No
Name of the
Country
Amount of FDI
Inflows (Rs. in
crore)
Mauritius
390691.18
35.88
Singapore
135784.52
11.88
9.46
Japan
85639.02
7.49
Netherlands
65256.29
5.57
U.S.A
57835.90
5.38
Cyprus
37349.33
3.38
Germany
33486.48
2.99
France
19398.74
1.75
10
Switzerland
13801.42
1.23
FINDINGS
India is one of the most important countries in the world
to attract FDI.
The FDI inflow to India was not new one, because it was
prevailed way back during the colonial period.
Since introduction of New Economic Policy 1991, FDI
inflow got greater scope. This is because of open market
conditions.
Service sector, construction, telecommunication etc
tertiary sector attracting more FDI then agricultural and
small scale industries. Because we need more fund the
primary sector but they are deprived from the investment.
Sectors which are deprived from the FDI are those where
large market potential is present but these are ignored by
the policy makers & poor infrastructure as well as due to
high concentration on priority sectors also contributed to
the cause.
FINDINGS
State- wise FDI inflows show that Maharashtra,
New Delhi, Karnataka, Gujarat and Tamil Nadu
received major investment from investors because
of the infrastructural facilities and favorable
business environment provided by these states.
It is observed that major investment in the above
sectors came from Mauritius and investments in
these sectors in India are primarily concentrated
in Mumbai and New Delhi.
It is also observed that the realization of approved
FDI into actual disbursement is quite low.
Thank you