INDIAN INVESTMENT IN ABROAD- FDI: INDIAN INVESTMENT IN ABROAD- FDI PRESENTED BY: ARCHANA CONTENT: CONTENT INTRODUCTION CLASSIFICATION OF FDI REGULATORY AUTHORITIES INDIAN POLICY FRAMEWOR BENEFITS OF FDI PROBLEMS WITH FDI WHAT IS FDI?: WHAT IS FDI? Foreign direct investment (FDI) refers to cross –border investment made by a resident in one economy (the direct investor) with the objective of establishing a lasting interest in an enterprise (the direct investment enterprise) that is resident in a country than that of the direct investor CLASSIFICATION OF FDI: CLASSIFICATION OF FDI TYPES OF FDI BY DIRECTION BY TARGET BY MOTIVE INWARD GREENFIELD INVEST MENT RESOURCE SEEKING OUTWARD Horizontal and Vertical FDI MKT & Efficiency Seeking NEED FOR FOREIGN CAPITAL: NEED FOR FOREIGN CAPITAL Domestic capital is inadequate for purpose of economic growth During the period in which the capital market is in the process of development , foreign capital is essential as a temporary measure Foreign capital brings with it other scare productive factors; technical know how, business experience and knowledge. Authorities dealing with FI: Authorities dealing with FI Foreign investment promotion board (FIPB) Expedite clearance process. Periodically review implementation of cleared proposal Review general and sectoral policy guidelines Undertake investment promotion activities. PowerPoint Presentation: Secretariat for industrial assistance ( sia ) Acts of gateway to industrial investment in India. Assist entrepreneurs and investors in setting up projects Liaise with govt. bodies seek necessary clearance PowerPoint Presentation: Foreign investment implementation authority (FIIA). Quick implementation of FDI approval. Resolution of operational difficulties faced by foreign investors. Gather feedback from foreign investors PowerPoint Presentation: Other authorities involved: Investment commission Project approval board RBI OF INDIA Government policy: Government policy Foreign investment is allowed in all areas except following sectors where foreign investment is prohibited. Atomic energy Agriculture (except floriculture, horticulture, seed development etc.) Lottery business/gambling and betting. Plantations (except tea plantations) MOBILIZATION OF FUNDS: MOBILIZATION OF FUNDS Different options for Indian corporate, Investment through GDRs and ADRs Mobilization of funds through preference shares. Mobilization of funds through external commercial borrowings. Foreign currency exchangeable bonds. PRIMARY REASONSS FOR FDI INVESTMENT IN INDIA: PRIMARY REASONSS FOR FDI INVESTMENT IN INDIA Local market demand – 68% Low cost operations -29% Ease of making FDI- 29% Labour availability -29% Entry of other players 24% Political Stability 24% Time zone advantage- 14% Benefits of FDI: Benefits of FDI Play a complementary role in overall capital formation Employment generation and productivity enhancement Encourages the transfer of management skills, intellectual property and technology. Improves Forex position of the country. Promotion of the competition within the local input market. Development of human capital resources. PowerPoint Presentation: Increase in exports Increases tax revenues Problem with FDI: Problem with FDI A company may lose out on its ownership to an overseas company. Govt. has less control over the functioning of the company that is functioning as the wholly owned subsidiary of an overseas comp. FDI entering and taking the control of already established market, where local companies are meeting the requirement of the market. PowerPoint Presentation: Invest in machinery and intellectual property, not in wages Large giants can set up monopolies in highly profitable sector.