FOREIGN DIRECT INVESTMENT

(IMPACT OF FDI ON ECONOMY)

 Definition
 Advantage of FDI
 Factors Influencing FDI
 Origin of Statistical  Data
 Measures To Attract FDI
 Attracting Foreign Capital
 Results Encouraging
 Destination India
 Definition of FDI

Foreign direct investment (FDI) occurs when

investor based in one country (the home
country) acquired an asset in other country
(the host country) with the intent to manage
the asset
 Advantages of FDI

 Infrastructure& Technology transfer

 Increased productive efficiency due to
competition from multinational
subsidiaries
 Advantages of FDI

 Improvement in the quality of the

factors of production
 Inflow in investment fund (To fill the
gape..)
 Advantages of FDI

 Faster growth of output and

employment
 Consumer benefits
[1]Price [2] quality
[3] varieties
 Increase in exports
 Factors Influencing FDI

This factors Influencing FDI can be

divided into three sub factors.
1)Supply Factors
2)Demand Factors
3)Government Factors
Supply Factors Influencing FDI

 Production costs
 Logistics
 Resource availability
 Access to technology
Demand Factors Influencing FDI

 Customer Access
 Follow clients
 Follow rivals
 Exploitation of competitive
 Advantage
Govt Factors Influencing FDI

 Economic priorities
 Avoidance of trade barriers
 Economic
 Development incentives
 Origin of Statistical  Data

 From the ministries and agencies which

administer the country‘s law and
regulations on FDI
 Government and other surveys which
evaluate financial and operating data of
Companies
 Inflow of FDI in India

2007-08 ---$15.7 billion

2006-07 --- $5.5 billion
Major player –
Sectors
[1] Vodafone [1] services
[2] Nokia [2] Electrical Equipment
[3] General motors [3] Real state
[4] suzuki [4] Transportation
 Outflow of FDI from india

2007-08—$15 billion
2006-07--$2.8 billion
Players
[1] Tata Groups Sectors
[2] Bhart forge [1] Pharmaceuticals
[3] Wipro [2] Industrial goods,
[4] Infro Sys [3] Automotive components
[5] Ranbaxy [4] Software
[5] Metal
 Measures To Attract FDI

1992 --- Foreign firms obtained automatic rights over

international brand names.
1998-- FIIs-now allowed to invest in Govt
securities,listed & unlisted securities.
2000 --- 100% Foreign equity allowed in infrastructure
projects- ports road,highways.
2002 ---Limited FDI in print media permitted.
 How can FDI be better
 
applied to
sustainable developments?
 
 Recommendations 

 Compare the Pro and the Cons

 Develop strategies that targets the right
kind of FDI
 Consider the long term effects to the
entire economy and the social well
 Use of Environmental friendly
technology
 RESULT ENCOURAGING TO FDI

THE RESULT OF ALL THESE EFFEORTS

ARE ENCOURAGING . THE IN FLOW OF
FOREING CAPITAL HAS BEEN
STEADILY RISING FROM YEAR TO
YEAR