FDI In India

Presented By-Akanksha Sharma (10ECE007)Abhilekha Bhardwaj (10ECE003)

Contents

What is FDI?

History

FDI In India

Advantages

Challenges

Recommendations.

Responsibilities.

Conclusion

Introduction

Foreign Direct Investment (FDI) is fund flow between the countries in the form of inflow or outflow.

one country is able to gain some benefit from their investment.

Another can exploit the opportunity to enhance the productivity and find out better position through performance.

Types of fdi Procedure For FDI

Government route Automatic route

HistoryAfter independence in India 1947, FDI gained attention of the policy makers for acquiring advanced technology and to mobilize foreign exchange resources.

In 1973 government of India set up Foreign Investment Board and enacted Foreign Exchange Regulation Act in order to regulate flow of FDI to India.

Due to economic crises in 1991 a new policy was removed all unnecessary rules and given liberal environment to foreign investors for FDI inflows under automatic route rather than government route.

Growth Of FDI in India

1948 1964 1974 1980 1990 2000 20100

20000

40000

60000

80000

100000

120000

140000

Amount(In crores)

Year

Sales

Muritius

Singapore

U.S.A.

U.K.

Nether-lands

Japan

Cyprus

Germany

France

42%

9%

7%

5%

4%4%

2%

4%

2 2.5 3 3.5 4 4.5 5 5.5 6 6.5 70.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

FDI Growth Rate %

Global share Of FDI

India

Russia

Brazil

China

Global Comparison Of FDI in India

Why India is attractive place for investors

2nd largest Developing economy

Availability of high quality talent

5th largest economy

2nd Largest number of consumers

Big retail sectors

Aggregate demands

Ill local industries

lack of infrastructure

FDI Process

bureaucracy

Availability of talent

state economic policy

0% 20% 40% 60% 80%

40%

55%

60%

Doing business in 30 state is like doing business with different 30 countries.

Educated employees are available but lack of employable talent.

To set a plant we need approval for many things constituting a long process.

Government policy is not clear regarding FDI

Hard to find economical raw material due to lack of infrastructure like roads etc .

20%

25%

Problems Faced by foreign investors

Advantages Decreased cost of production

Farmers will be paid 60% more than price paid at mandies.

Small and Medium Enterprises will be forced to increase the quality of their product.

Transfer of new technologies and expertise.

GDP will be improve and inflation will decrease.

More people will get employment and that would rehabilitate economy. Optimizing utilization of human and natural resources and competing internationally with higher efficiency

Gaining access to global managerial skills and practices

Challenges

Small entrepreneurs will be deprived of trade business causing unemployment.

Economy growth will be vulnerable as it will depend on other countries.

FDI favors urban areas neglecting the rural and backward regions.

Profit making is the only priority of FDI investors.

Indian political environment is not constant.

Recommendations

Proper utilization of foreign investment in sectors such as infrastructure , healthcare, production, education , employments, exports

FDI should be invested in export oriented products and services.

Government policies regarding FDI should be agriculture based.

Rural region should be given priority.

Promote research and development to maintain fine economy under FDI.

Stabilize political environment.

Decentralization of FDI project in all over India.

Responsibilities

Illegal businesses should not be started with FDI.

Fraud , corruption , quality fault , incomplete legal formalities should not happen in FDI.

Natural resources should not be exploited.

Regional industrial development should take place under FDI.

Policy should be made which gives maximum control to host country.

ConclusionForeign Direct Investment (FDI) as a strategic component of investment is needed by India for its sustained economic growth and development. We should see it as a new hope for economy rather than criticizing it. FDI policy should be such that FDI inflow can be utilized as means of enhancing domestic production.

Ultimately the development of India is in my hand, this emotion should be created in the heart of every Indian. It is our collective responsibility.