Download - FORIEGN DIRECT INVESTMENT IN INDIA
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.