Foreign Investment In INDIA :

An Overview

Presented By :-
Mayank Gupta (Roll No.- 25)
Sachin Wakankar(Roll No.- 68)
Batch – Xlll-B Kanupriya tiwari (Roll No.- 72)
Sanjay Singh (Roll No.- 95)
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 Foreign Direct Investment (FDI)

 What is FDI
 Why we need FDI
 Process of the Inflow of FDI
 Benefits
 Types
 Advantages and disadvantages
 FII
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 Diff between FII and FDI 2
 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
12/08/21 * Efficiency-Seeking 3
 Factors Affecting FDI
 Financial incentives (Funds from local
Government)
 Fiscal incentives (Exemption from import duties)
 Indirect incentives (Provides land and
 Political stability
 Market potential & accessibility
 Large economy
 Market size
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 Why India?
 Liberal, largest democracy, Political Stability
 Second largest emerging market (US$ 2.4

trillion)
 Skilled and competitive labors force

 highest rates of return on investment

 one hundred of the Fortune 500 have R & D

facilities in India
 Second largest group of software developers

after the U.S.

 lists 6,500 companies on the Bombay Stock

Exchange (only the NYSE has more)

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 Why India (cont.)
 World's fourth largest economy & second largest
pharmaceutical industry
 growth over the past few years averaging 8%
 has a middle class estimated at 300 million out of a total
population of 1 billion
 Destination for business process outsourcing,
Knowledge processing etc.
 Second largest English-speaking, scientific, technical
and executive manpower
 Low costs & Tax exemptions in SEZ
 Tax incentives for IT , business process outsourcing and
KPO companies

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 Government policies
 Automatic Route
 Prior Permission (FIPB)

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 Investing in India – Entry Routes
Investing in India

Prior Permission
Automatic Route
(FIPB)

General rule By exception

No prior permission
required
Only information to the
Reserve Bank of India
within 30 days of inflow/
Issue of shares
Prior Government
Approval needed
Decision generally
Within 4-6 weeks

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 FDI Investment Sectors
 Prohibited activities Fully permitted Activities
 Cigar and cigarettes of
 Atomic energy tobacco
 Arms and ammunition  Coal, Roads & Highways
 Lottery business
 Diamond, Gold, Silver ,
Minerals
 Betting and Gambling  Atomic minerals
 Aircraft and warships  Electricity
 Hotel, hospitals
 Coal lignite

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  Retail  Real state
 I.T  Mining
 Oil & Energy  Mobile Sector
 Power sector  Automobile
 Pharmaceuticals & Chemicals  Telecommunication

 FDI inflows In real estate US$ 5 Billion

 FDI inflows Retail US$ 20 Billion by 2010
 FDI inflows in Mining US$ 2,5 Billion per N.M.
 FDI inflows in Telecommunication US$ 24 Billion

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 Major Investments
Companies Sector Investment
Wal mart,Marks Retail US$ 10 Billion

Intel Corp. I.T US$ 40 Billion

British & cairn Oil & Energy US$ 2 Billion

Essar power Power sector US$ 2 Billion

Toyota Automobile US$ 10.51 Billion

Panasonic Telecommunicatio US$ 200 million

n

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Source:
 What is an FII??
 An institution established outside India, which invests
in securities traded on the markets in India e.g.

 Pension Funds
 Mutual Funds
 Investment Trust
 Insurance companies
 Endowment Funds
 University Funds
 Foundations or Charitable Trusts
 Asset Management Companies
 Power of Attorney Holders
 Bank

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 FII Vs FDI

 FII is Foreign Institutional Investment: It is

investment made by foreign Mutual Funds in the
Indian Market.
FDI is Foreign Direct Investment: It is the
investment made by Foreign Multinational
comapnies in India.

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  Foreign Institutional Investors (FII)
 Foreign investment banks are not permitted
to directly invest in shares on the Indian
stock exchange
 Makes investments on behalf of foreign
investors, referred to as “sub-accounts”

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  Foreign Institutional Investors (FII)
 FIIs may invest in:
 securities in the primary and secondary markets
(shares, debentures, warrants of listed and
unlisted companies)
 units issued by domestic mutual funds

 dated Government securities

 derivatives traded on a recognized stock

exchange
 commercial paper

 debt instruments – provided a 70/30 equity/debt

ratio is maintained
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 Foreign Institutional Investors (FII)
 Limits on the type and amount of investments
apply to FIIs
 no more than 10% of the equity in any one
company
 no more than 10% in the equity in any one

company on behalf of a fund sub-account

 no more than 5% in the equity in any one company

on behalf of a corporate/individual sub-account

 no more than 24% in the aggregate of the total

issued capital of a company to be held by FIIs

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 Thank You……

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