Existing International

Arrangements,
Globalization
And Foreign Investment,
I n t r o d u c t i o n To F D I
GROUP MEMBERS:

• NISHA
• SHRISHTI GUPTA
• SHALU GOYAL
• ANU JAIN
• PRIYA MADAN
• PRANATI SHARMA
INTERNATIONAL AGREEMENTS

• International Agreements or International Commodity Agreements

which are inter-governmental agreements concerning the production
of & trade in , certain primary products with a view to stabilizing
their prices.

• Commodity Agreements are arrangements between producing and

consuming countries to stabilize market and rise average prices.
Such agreements are common in many market, including the market
of coffee, tea and sugar.
 Quota

Forms of
International Buffer
Commodity stock
Agreements

Bilateral or
Multilateral
QUOTA AGREEMENTS
In international trade, a government imposed limit on the quantity of goods and
services that may be exported or imported over a specific period of time. Limits
on the amount of a goods produced, imported, exported or offered for sale.
• International quota agreements seek to prevent a fall in commodity prices by
regulating prices.
• This agreement undertake to restrict the export or production by a certain
percentage of the basic quota decided by the Central Committee or Council.
• This type of agreement mostly in the case of the commodities like coffee, tea &
sugar.
• This agreement avoids accumulation of stock require no financing & do not call
continuous operating decisions.
BUFFER STOCK AGREEMENTS
A practice in which a large investor, especially a government, buys
large quantities of commodities during period of high supply and
stores them so they do not trade or circulate. The investor then sells
them when supply is low. This is done to stabilize the price.
• It is to stabilizing the prices by maintaining the demand & supply
balance.
• It is more useful for the commodities like tea, sugar, rubber, copper.
• This arrangements only for those products which can be stored at
relatively low cost without the danger of deterioration & this is one
of the limitation of this agreement.
 BILATERAL OR MULTILATERAL
AGREEMENTS
Bilateral agreements may be formed as business or personal agreements between
individuals or companies. They may also be formed between sovereign countries
in the form of trade agreements or agreements in other areas. In either case, a
bilateral agreement is a binding contract between the two parties that have agreed
to mutually acceptable terms.
• International sale & purchase contracts may also be entered into two or more
major exporters & importers.
• Bilateral contract to purchase & sell certain quantities of a commodity at agreed
prices.
• In this agreement, an upper price & a lower price are specified.
• If the market price, throughout the period of the agreement, remains
within these specified limits the agreement becomes inoperative.
• If the market price rises above the upper limit specified, the exporter
country is obliged to sell to the importing country a certain specified
quantity of the upper price fixed by the agreement.
• On the other hand, if the market price falls below the lower limit
specified, the importer is obliged to purchase the contracted quantity
at the specified lower price.
AGREEMENTS
• International Grain Agreement
• Association of National Rubber Producing Countries
• International Coffee Agreement
• International Cotton Advisory Committee
• International Cocoa Agreement
• International Jute Council
• International Sugar Agreement
MISSION
• The International Coffee Organization (ICO) is the
main intergovernmental organization for coffee,
bringing together producing and consuming
countries to tackle the challenges facing the world
coffee sector through international cooperation. It
makes a practical contribution to the world coffee
economy and to improving standards of living in
developing countries by:
• Enabling government representatives to exchange views
and coordinate coffee policies and priorities at regular high-
level meetings
• Improving coffee quality through the Coffee Quality-
Improvement Programme and specific projects increasing
world coffee consumption through innovative market
development activities
• Initiating coffee development projects to improve quality
and marketing
• encouraging a sustainable world coffee economy
• working closely with the private sector through a 16
strong Private Sector Consultative Board which
tackles issues such as food safety
• providing objective and comprehensive information
on the world coffee market; and
• ensuring transparency in the coffee market through
statistics.
• The International Coffee Organization was
established in 1963 when the first International
Coffee Agreement (ICA) entered into force in
1962 for a period of five years, and it has
continued to operate under successive
Agreements negotiated since then.
Globalization refers to increasing global
connectivity and integration in the economic,
social, technological, cultural, political and
ecological sphere.
INTRODUCTION

• The modern world is seen as the world without

geographical boundaries and any kind of barriers.
Globalisation has been the major force behind this.
• Globalisation is the integration of the world economy and
exchanging the ideas, products, technologies etc.
• The globalisation hit India late but had huge impact on the
nations economic policies and various other aspects.
GLOBALISATION
• Globalisation is the process of
international integration arising
from the interchange of world
views, products, ideas, and other
aspects of culture.
• Globalisation means rapid increase
in the share of economic activities
taking place across national
borders.
ASPECTS OF GLOBALISATION
• Trade and transactions
• Capital and investment
movement
• Migration
• Dissemination of
knowledge
REASONS FOR GLOBALISATION

• Better resources
• Low cost of production
• Dilution of the local market
• Operating internationally
• Market expansion
• Increased profit
IMPACT OF GLOBALISATION
• Rapid growth of business.
• Opportunity to go global.
• Introduction of various new
technology.
• Rise in access of technology in rural
area.
• New technology in the agriculture
• Literate farmers
• Rise in the literacy rate and quality of
education
IMPACT OF GLOBALISATION
• Disparity in the society
• Ethical responsibility of business has
been diminished.
• Price hike of every daily usable
commodities.
• The local business has perished
• High growth but problem of
unemployment.
• Affected the agriculture sector
Foreign investment is when a company or individual from
one nation invests in assets or ownership stakes of a
company based in another nation. As increased
globalization in business has occurred, it's become very
common for big companies to branch out and invest money
in companies located in other countries.
 FOREIGN INVESTMENTS CAN
BE SPLIT INTO:
• Direct investments are when companies make physical investments and
purchases in buildings, factories, machines, and other equipment outside
of their home country.
• Indirect investments are when companies or financial institutions
purchase positions or stakes in companies on a foreign stock exchange.

Indirect investment isn't as favourable as direct investment because the home country
can sell their investment very easily. On the next day if they choose. direct investments
are usually a longer-term investment in the economy of a foreign country. it’s not nearly
as easy to sell factories, machines, and buildings as it is to sell shares of stock.
Foreign Direct
Investment (FDI)
• Foreign direct investment
(FDI) is when a foreign
company or individual makes
an investment in India that
involves either
• (i) establishing new business
operations (known as green-
field FDI) or
• (ii) acquiring business assets,
including controlling interests,
in an already existing Indian
company. (known as brown-
field FDI)
Foreign Portfolio
 Foreign
Investment (FPI)
• Foreign Portfolio Investment
(FPI) is investment by non-
residents in Indian securities
including shares, government
bonds, corporate bonds,
convertible securities,
infrastructure securities etc.
The class of investors who
make investment in these
securities are known as Foreign
Portfolio Investors.
Institutional
Investment (FII)
• FII is when foreign
institutional investors
invest in the shares of
an Indian company, or
in bonds offered by an
Indian company. So, if
a foreign investor buys
shares in Reliance, it is
an FII.