kuldeep fdi

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CASE STUDY ON Foreign direct investment :

PRESENTED BY: KULDEEP YADAV SECTION – A REG.NO - 6024 PGDM 2010-12 CASE STUDY ON Foreign direct investment

Foreign direct investment::

Foreign direct investment is the acquisition of assets in a country by foreign entities for the purpose of control . FDI is ownership of at least 10% of a business. Increasing foreign investment can be used as one measure of growing economic globalization. Foreign direct investment:

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Foreign direct investment (FDI) plays an extraordinary and growing role in global business. It can provide a firm with new markets and marketing channels, cheaper production facilities, access to new technology, products, skills and financing.

FDI in Indian scenario::

India has among the most liberal and transparent policies on FDI among the emerging economies. FDI up to 100% is allowed under the automatic route in all activities/sectors. Most of the sectors fall under the automatic route for FDI. In these sectors, investment could be made without approval of the central government. In few sectors, FDI is not allowed. FDI in I ndian scenario:

FDI OF VARIOUS COUNTRIES:

FDI OF VARIOUS COUNTRIES

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RANK COUNTRY AUG 1991- MAR- 2002 2002-03 (APRIL-MARCH) 2003-2004 (APRIL-MARCH) 2004-2005 (APRIL-MARCH) 2005-2006 (APRIL-MARCH) 2006-2007 (APRIL-MARCH) 2007-2008 (APRIL-MARCH) 2008-2009 (APRIL-MARCH) 2009-2010 (APRIL-MARCH) 2010-2011 (APRIL-MARCH) 1 MAURITIUS 27,446 (6,632) 3,766 (788) 2,609 (567) 5,141 (1,129) 11,441 (2,570) 19,259 (4,215) 44,483 (11,096) 50,899 (11,229) 49,633 (10,376) 23,576 (5,158) 2 U.S.A 12,248 (3,188) 1,504 (319) 1,658 (360) 3,055 (669) 2,763 (607) 2,763 (607) 4,377 (1,089) 8,002 (1,802) 9,230 (1,943) 4,247 (926) 3 U. K 4,263 (1,106) 1,617 (340) 769 (167) 458 (101) 1,164 (266) 7,525 (1,682) 4,690 (1,176) 3,840 (864) 3,094 (657) 1,765 (385) 4 NETHERLAND 3,856 (986) 836 (176) 2,247 (489) 1,217 (267) 340 (76) 2,217 (488) 2,780 (695) 3,922 (883) 4,283 (899) 3,643 (802) 5 JAPAN 5,099 (1,299) 1,971 (412) 360 (78) 575 (126) 925 (208) 237 (52) 3,336 (815) 1,889 (405) 5,670 (1,183) 4,141 (917) 6 SINGAPORE 1,997 (515) 180 (38) 172 (37) 822 (184) 1,218 (275) 2,463 (533) 12,319 (3,073) 15,727 (3,454) 11,295 (2,379) 6,198 (1,367) 7 GERMANY 3,455 (908) 684 (144) 373 (81) 663 (145) 1,345 (303) 319 (70) 2,075 (514) 2,750 (629) 2,980 (626) 473 (104) 8 SWITZERLAND 1,200 (325) 437 (93) 207 (45) 353 (77) 426 (96) 217 (47) 1,039 (258) 1,133 (257) 3,017 (629) 1,289 (278) 9 FRANCE 1,947 (492) 534 (112) 176 (38) 537 (117) 82 (18) 365 (80) 583 (145) 2,098 (467) 1,437 (303) 1,569 (340) 10 SOUTH KOREA 2,189 (594) 188 (39) 110 (24) 157 (35) 269 (60) 281 (62) 3,385 (834) 5,983 (1,287) 7,728 (1,627) 2,746 (598) TOTAL (FDI ) 92,611 (23,829) 14,932 (3,134) 12,117 (2,634) 17,138 (3,754) 24,613 (4,549) 42,138 (9,270) 98,664 (24,579) 123,025 (27,331) 123,120 (25,834) 64,083 (14,025)

SECTORS ATTRACTING HIGHEST FDI:

SECTORS ATTRACTING HIGHEST FDI

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RANK SECTOR Amount of FDI Inflows 2002-03 (APRIL-MARCH) 2003-04 (APRIL-MARCH) 2004-05 (APRIL-MARCH) 2005-06 (APRIL-MARCH) 2006-07 (APRIL-MARCH) 2007-08 (APRIL-MARCH) 2008-09 (APRIL-MARCH) 2009-10 (APRIL-MARCH) 2010-11 (APRIL-MARCH) 1 Electrical Equipments (including computer software & electronics) 3,075 (644) 2,449 (532) 3,281 (721) 1,059 (241) 11,786 (2,614) 5,623 (1,410) 7,329 (1,677) 4,351 (919) 2,617 (574) 2 Transportation Industry 2,173 (455) 1,417 (308) 815 (179) 672 (153) 4,424 (985) 6,989 (1,743) 5,212 (1,152) 5,754 (1,208) 2,399 (533) 3 Services Sector (financial & non-financial) 1,551 (326) 1,235 (269) 2,106 (469) 1,708 (388) 21,047 (4,664) 26,589 (6,615) 28,516 (6,138) 20,776 (4,353) 11,885 (2,596) 4 Telecommunications (radio paging, cellular mobile, basic telephone services) 1,058 (223) 532 (116) 588 (129) 688 (156) 2,155 (478) 5,103 (1,261) 11,727 (2,558) 12,338 (2,554) 4,962 (1,093) 5 Fuels (Power + Oil Refinery) 551 (118) 521 (113) 759 (166) 81 (19) 401 (89) 5,729 (1,427) 1,931 (412) 1,328 (272) 2,421 (529) 6 Chemicals (other than fertilizers) 611 (129) 94 (20) 909 (198) 741 (169) 930 (205) 920 (229) 3,427 (749) 1,707 (362) 1,238 (271) 7 Food Processing Industries 177 (37) 511 (111) 174 (38) 156 (36) 21,047 (4,664) 26,589 (6,615) 12,621 (2,801) 13,586 (2,844) 4,569 (999) 8 Drugs & Pharmaceuticals 192 (40) 502 (109) 1,343 (292) 452 (103) 1,731 (390) 930 (205) 5,212 (1,152) 5,754 (1,208) 2,399 (533) 9 Cement and Gypsum Products 101 (21) 44 (10) 1 (0) 1,967 (447) 2,121 (467) 8,749 (2,179) 8,792 (2,028) 13,516 (2,862) 3,762 (834) 10 Metallurgical Industries 222 (47) 146 (32) 881 (192) 479 (109) 7,866 (173) 4,686 (1,177) 4,157 (961) 1,935 (960) (407) 4,402

BENEFITS OF FDI:

BENEFITS OF FDI Economic growth. Transfer of technology. Employment opportunities. Opening Export windows.

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Economic growth- This is one of the major sectors, which is enormously benefited from foreign direct investment. A remarkable inflow of FDI in various industrial units in India has boosted the economic life of country. Trade- Foreign Direct Investments have opened a wide spectrum of opportunities in the trading of goods and services in India both in terms of import and export production. Products of superior quality are manufactured by various industries in India due to greater amount of FDI inflows in the country. Employment and skill levels- FDI has also ensured a number of employment opportunities by aiding the setting up of industrial units in various corners of India.

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Technology diffusion and knowledge transfer- FDI apparently helps in the outsourcing of knowledge from India especially in the Information Technology sector. It helps in developing the know-how process in India in terms of enhancing the technological advancement in India. Linkages and spillover to domestic firms- Various foreign firms are now occupying a position in the Indian market through Joint Ventures and collaboration concerns. The maximum amount of the profits gained by the foreign firms through these joint ventures is spent on the Indian market.

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YEAR FDI (US $ IN MILLION) including advance 1991-1992 (Aug.-Mar.) 165 1992-1993 393 1993-1994 654 1994-1995 1374 1995-1996 2141 1996-1997 2770 1997-1998 3682 1998-1999 3083 1999-2000 24834 2000-2001 22834 2001-2002 23334 2002-2003 25834 2003-2004 23834 2004-2005 25833 2005-2006 25334 2006-2007 25633 2007-2008 23834 2008-2009 21834 2009-2010 25834 INDIA--YEAR WISE FDI (1991-2010 )

Disadvantages: :

Disadvantages: Company may loose ownership. Difference in language and culture. Country secrets may be disclosed . Policies adapted may not be appreciated. During distribution of profits made on investment. Defense of the country may face problems. The size of market as well as condition of host country matters.

Thank you…..:

T hank you …..

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