Foreign Direct Investment
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PRESENTATION ON FDI PREPARED BY: SHAGUN GUPTA SHALABH AGARWAL SHALINI SINGH SHASHI PRATAP SINGH SHISHIR PUROHIT
What is FDI?
FDI or Foreign Direct Investment is any form of investment that earns interest in enterprise which function outside of the domestic territory of the investor.
FDIs require a business relationship between a parent company and its foreign subsidiary.
The parent firm needs to have at least 10% of the ordinary shares of its foreign affiliates.
The investing firm may also qualify for an FDI if it owns voting power in a business enterprise operating in a foreign country.
FDI movement in the world • Increased by 5.1% and stood at US $ 947 bn in 2007. • Number of projects 11,574 (2007). • Top 10 destinations for FDI : China, US, India, UK, France, Germany, Russia, Spain , Poland and Romania.
Foreign Direct Investment (FDI) in India • FDI has helped the Indian economy grow. • FDI investments are permitted through financial collaborations, through private equity or preferential allotments. • FDI is not permitted in the arms, nuclear, railway, coal & lignite or mining industries. • By 2004, India received $5.3 billion in FDI, big growth compared to previous years, but less than 10% of the $60.6 billion that flowed into China.
ADVANTAGES • Economic development of the host • Transfer of technology • Development of human capital resources • Creation of jobs • Opening export window
DISADVANTAGES • Difference in language and culture • Country secrets may be disclosed • Policies adapted may not be appreciated
FDI INFLOWS Year (April-March) SINCE 2000. 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008
Amount of FDI inflows (In US$ million) 2,908 4,222 3,134 2,634 3,755 5549 15,700 TGT 12,000 24,570 25,000
NEW NORMS • Set to bring in additional foreign equity inflow into indian companies. • Dilutes the foreign investment ceiling in sensitive sectors. • The cornerstone of the new norms is the notion of control by the resident indians. • There is no concept of indirect holding.
WHY FDI PREFERED OVER FII FDI is more stable than FII FDI is a long term investment while FII is generally not for such long time. FDI aims to increase the productivity/capacity Along with cash it brings better management, technology etc.
What is FDI?
FDI or Foreign Direct Investment is any form of investment that earns interest in enterprise which function outside of the domestic territory of the investor.
FDIs require a business relationship between a parent company and its foreign subsidiary.
The parent firm needs to have at least 10% of the ordinary shares of its foreign affiliates.
The investing firm may also qualify for an FDI if it owns voting power in a business enterprise operating in a foreign country.
FDI movement in the world • Increased by 5.1% and stood at US $ 947 bn in 2007. • Number of projects 11,574 (2007). • Top 10 destinations for FDI : China, US, India, UK, France, Germany, Russia, Spain , Poland and Romania.
Foreign Direct Investment (FDI) in India • FDI has helped the Indian economy grow. • FDI investments are permitted through financial collaborations, through private equity or preferential allotments. • FDI is not permitted in the arms, nuclear, railway, coal & lignite or mining industries. • By 2004, India received $5.3 billion in FDI, big growth compared to previous years, but less than 10% of the $60.6 billion that flowed into China.
ADVANTAGES • Economic development of the host • Transfer of technology • Development of human capital resources • Creation of jobs • Opening export window
DISADVANTAGES • Difference in language and culture • Country secrets may be disclosed • Policies adapted may not be appreciated
FDI INFLOWS Year (April-March) SINCE 2000. 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008
Amount of FDI inflows (In US$ million) 2,908 4,222 3,134 2,634 3,755 5549 15,700 TGT 12,000 24,570 25,000
NEW NORMS • Set to bring in additional foreign equity inflow into indian companies. • Dilutes the foreign investment ceiling in sensitive sectors. • The cornerstone of the new norms is the notion of control by the resident indians. • There is no concept of indirect holding.
WHY FDI PREFERED OVER FII FDI is more stable than FII FDI is a long term investment while FII is generally not for such long time. FDI aims to increase the productivity/capacity Along with cash it brings better management, technology etc.
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