PRESENTED BY RADHEY SHAYAM KUMAWAT

Foreign Direct Investment Purchase of physical assets or a significant amount of the ownership (stock) of a company in another country to gain a measure of management control

Portfolio investmentInvestment that does not involve obtaining a degree of control in a company

Automatic RoutePrior Permission

(FIPB)

Investing in India

General RuleNo prior permission requiredInform Reserve Bank within 30 days ofinflow/issue of shares

By ExceptionPrior Government Approval needed.Decision generally within 4-6 weeks

Automatic Route

General RuleNo prior permission requiredInform Reserve Bank within 30 days ofinflow/issue of shares

Prior Permission(FIPB)Automatic Route

General RuleNo prior permission requiredInform Reserve Bank within 30 days ofinflow/issue of shares

By ExceptionPrior Government Approval needed.Decision generally within 4-6 weeks

Prior Permission(FIPB)

Automatic Route

General RuleNo prior permission requiredInform Reserve Bank within 30 days ofinflow/issue of shares

Increase investment level and thereby income & employment

Increase tax revenue of government

Facilitates transfer of technology

Encourage managerial revolution through professional

management

Increase exports and reduce import requirements

Increase competition and break domestic monopolies

Improves quality and reduces cost of inputs

Flow to high profit areas rather than main concern areas

Through their power and flexibility, MNC can undermine

economic autonomy and control

Sometimes interferes in the national politics

Sometimes engage in unfair and unethical trade practices

Sometimes result in minimizing / eliminating competition and

create monopolies or oligopolistic structures

Year India(Amount US $ Billion)

2001 4.02

2002 6.13

2003 5.03

2004 4.32

2005 6.05

2006 8.961

2007* 17.59

*Jan.- Nov.*Jan.- Nov.Source- 1. Source- 1. http://siteresources.worldbank.org/CHINAEXTN/Resources/chinaei.pdfhttp://siteresources.worldbank.org/CHINAEXTN/Resources/chinaei.pdf 2. www.rbi.org.in2. www.rbi.org.in

FDI equity limit-Automatic route

Insurance – 26% Domestic airlines – 49% Telecom services- Foreign

equity 74% Private sector banks- 74% Mining of diamonds and

precious stones- 74% Exploration and mining of

coal and lignite for captive consumption- 74%

FDI requiring prior approval

Defense production – 26% FM Broadcasting - 20% News and current affairs-

26% Broadcasting- cable, up-

linking – 49% Trading- wholesale cash and

carry, export trading, etc., 100%

Tea plantation – 100% Development of airports-

100% Courier services- 100%

Engineering & Manufacturing sectors

Roads & Highways, Ports and Harbors

Industrial model towns/industrial parks

Hotels & Tourism

Pollution Control and Management

Advertising & Film industry

Power generation (hydro-electric, coal/lignite, oil or gas

based)

Information Technology including E-Commerce

Profitability: Attract where return on investment is higher

Costs of production: Encouraged by lower costs of production like

raw materials, labor . Economic Conditions: Market potential, infrastructure, size of

population, income level etc Government policies: Policies like foreign investment, foreign

collaboration, remittances, profits, taxation, foreign exchange control, tariffs etc.

Political factors: Political stability, nature of important political parties and relations with other countries.

Foreign Institutional Investors (FIIs) are allowed to invest in the primary

and secondary capital markets in India through the portfolio investment

scheme (PIS). Under this scheme, FIIs/NRIs can acquire shares/debentures

of Indian companies through the stock exchanges in India

List of companies in which FII investment is allowed upto limits fixed by companies as indicated against their names

1 Amtek Auto Ltd (74%)

2 Advanta India Limited 49%

3 Amtek India Ltd (74%)

4 Ahmednagar Forgings Ltd (74%)

5 Anant Raj Industries Ltd. (40%)

6 ANG Auto Ltd (49%)

7 Apollo Hospitals (74%)

8 Aptech Ltd (74%)

9 Arshiya International Limited (49%)

10 Bombay Rayon Fashions Ltd (40%)

Year 1995-96 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07(P)FIIs*

(US $ Milloin)2009 1926 979 -390 2,135 1847 1505 377 10,918 8,686 9,926 3,225

Foreign Institutional Investors(FIIs) in India

*Represents inflow of funds (net) by Foreign Institutional Investors (FIIs).

Source:-RBI Bulletin of 13th Feb 2008.

Net inflows by foreign institutional investors (FIIs) aggregated to US $ 26.8 billion during the current financial year so far (up to January 11, 2008). The number of FIIs registered with the SEBI increased from 997 at end-March 2007 to 1,219 at end-December 2007.

The main objective of the study is to know about in which sector the

industries are invest our money FDI or FII.

To identify factors which inhibit higher FDI or FII flows and suggest

remedial steps.

To examine policy reforms towards mergers and acquisition for attracting

FDI or FII

To suggest changes in institutional apparatus and organizations, both in

Centre and States, for attracting the FDI or FII flows.