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Prepared by- Dr. Payal Chowdhary
  
r |oreign direct investment (|DI) is a measure
of foreign ownership of productive assets,
such as factories, mines and land. Increasing
foreign investment can be used as one
measure of growing economic globalization.
 
  

 
r Political stability
r Legal and regulatory framework
r Size of market
r Prices and exchange rate
 |

r aising level of investment

r Up gradation of technology
r Exploitation of natural resources
r Development of basic economic
infrastructure
r evenue to government
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r Œvoiding foreign government pressure for local
production.
r Circumventing trade barriers, hidden and otherwise.
r Making the move from domestic export sales to a
locally-based national sales office.
r Capability to increase total production capacity.
r Opportunities for co-production, joint ventures with
local partners, joint marketing arrangements,
licensing, etc
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r assessment of internal resources
r competitiveness
r market analysis
r market expectations.
r ÿ
   It is the |DI in the
new plant, location and facility
r 2
  
  It is the investment
through acquisition of shares.
r |

- It is done through portfolio acquisition

through financial markets.

|2
r -he new |-P aims to boost |- and double
India¶s share of foreign trade from 0.7 % in
2003 to 1.5% by 2009.
r It specially focuses on areas such as
agriculture, handlooms, handicrafts, gems,
footwear and leather.

|2
r ÿenerate employment opportunities in the
semi urban and rural areas.
r Set up free trade zones and warehousing
zones by allowing 100% |DI in them
r Set up SEZ that will help boost handicraft
exports.
r Provide a boost for the export industry by
exempting all the exported goods and
services from service tax.
r |DI is allowed up to 100 per cent in all these
industries except defence production where it
is capped at 26 per cent. |DI is not allowed in
a few services including retail trading (except
single brand), lottery business and gambling.
In the permitted services, foreign equity is
allowed below 50 per cent.
r |DI is currently allowed only up to 49 per
cent in scheduled air transport services or
domestic passenger airlines. Broadcasting
services also have similar rules
r |DI is allowed up to 74 per cent in financial
services such as private banks. Insurance,
however, can get |DI only up to 26 per cent.
r 100% |DI for business of e commerce
r 100% allowed in SEZ
ÿ 
   



 
 


r Small scale industry is one having investment
in plant and machinery (fixed capital) upto
s. 60 lakhs.
r |or ancillary units (the units which supply
parts and equipments to large scale
industries) the limit of capital investment is
s. 75lakhs.
r -iny industry- Investment in plant and
machinery is upto 2 lakh
r Cottage industry/ Household industry- It runs
as full time or part time occupation mainly
with the help of family members.


 !!

r †ast employment
r Helpful in exports
r Less dependence on imports
r Helpful in equitable distribution of income
r Complimentary to large scale industries
r Quick production
r Mobilization of capital and entrepreneurial
skills
r ÿrowth and role of SSI-the role emphasized
in II five year plan on following 5 grounds
r Employment generation- In 1991-92 the SSI
units employed 129.8 lakh people and in
2002-03 around 199 lakh.
r Equitable distribution of national income
r Mobilization of capital
r Mobilization of entrepreneurial skills
2
  !!

r Problem of raw material-Inferior quality, pay higher
prices as they do not buy in bulk
r Problem of technique
r Problem of finance
r Problem of marketing
r Competition from large scale industries
r Inadequacy of power
r Lack of efficient management
r Lack of research and standardization
!  "
 
   
 
!!

r Establishment of Boards and Corporation

- SSIDO
- National Small Industries corporation
- Œll India handloom and handicraft board
- Central silk board
- State khadi and village industry board
r |inancial assistance
- Credit on liberal terms through commercial banks
r -echnical assistance
- SIDO is running 26 service institute, 40 extension
centres, 7 training centres
r Marketing assistance
- Central cottage industries emporium was set up in
1949
- provides help marketing of products within and
outside the country
Ë Licensing concession- 873 commodities
reserved for this sector

Ë -ax and other concessions

Ë Organization of exhibitions
 

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# $%&&!!
 

Objectives of the new policy statement

Ë Impetus to the growth of small scale sector to
enable it to contribute fully to the economy,
particularly in terms of growth of output,
employment and exports
Ë Deregulation and debureaucratization of the
sector
Ë Encourage modernization and technological
up gradation to make them more competitive
o     

   
r Integrated Infrastructural facilities to facilitate
location of industries in rural areas
r Πtechnology development cell (-DC) would
be set up by SIDO which would provide
technology inputs to improve productivity and
competitiveness of products of SSI
r Marketing and exports- NSIC would
concentrate on marketing of mass
consumption items under common brand
name. SIDO will support in export promotion.
Modernization technological and quality up gradation
r -echnology information centres will be set up.
r Πreorientation program for improving productivity would be
pursued.
r II- s will serve as technological information design and
development centres

Promotion of entrepreneurship

r Women entrepreneurs will receive support through training

programs
r Large number of EDP programs to be organized
Development of village industries
r Promotion of handloom sector-Project
Package scheme
r NHDC will supply dyes and chemicals

r Setting up craft development centres

r Better flow of credit

|inancial support
r -he investment limit for small scale, and
ancillary industry has been fixed at s.
300lakh and s. 25 lakh respectively.
r Widen scope of national equity fund scheme
to cover projects up to s. 10 lakh for quality
support.
¦   
r Excise concessions- for both registered and
un registered units on a graded scale
depending upon turnover up to s. 300 lakh
r |inancial support to acquire ISO 9000
certificate
r Seven point action plan to improve flow of
credit
r Concessional fixed rate of interest for loans
up to s. 2 lakhs
r 822 products reserved for exclusive
manufacture in SSI
o '#(