fdi 49%

8/11/2019 fdi 49%

http://slidepdf.com/reader/full/fdi-49 1/11

Presented By:-

Abhishek Bora(448)

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Contents

• Introduction

• FDI and FI I

• Types of FDI

• Modes of entry

• Advantages

• Problems

• H ighl ights for FDI in budget 2014

• Poli tical debate

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Introduction

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FDI AND FII

• FII - is Foreign Institutional Investors, i.e., foreign Investment Bankers like

Merrill lynch, Lehman bros etc...investing in Indian markets......in other

words buying Indian stocks.....FII's generally buy in large volumes which

has an impact on the stock markets.

• FDI - is Foreign Direct Investments i.e. a foreign company having a stake in

a public sector undertaking in a country for a long period and that company

is called Multinational Enterprise.

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Types of FDI

Green field Investment

Direct investment in new facilities or the expansion of existing facilities.

Create new production capacity and jobs, transfer technology, etc.Profit flows out of the host nation

Horizontal Foreign Direct Investment

Investment in the same industry abroad as a firm operates in at home.

Ex.:- Company in U.S.A running a financial consultancy services and investing a particular

amount in India in another new business unit providing financial services.

Vertical Foreign Direct Investment

Backward Vertical - Industry abroad provides inputs for a firm's domestic production

process Ex.:-Hero Honda

Forward Vertical - Industry abroad sells the outputs of a firm's domestic production

Ex.:-Circuit boards are imported from china and U.S.A fixes the main circuits and

other connections and sells it as a whole product.

To prevent the loss of resource to a competitor. Like OPEC

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Mode of Entry

Joint Venture

Green Field Strategy

Wholly owned subsidiary

Project Office

Mergers and AcquisitionsEx.:- Maruthi Suzuki (merger)

Kraft foods (acquisition)

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ADVANTAGES

Generates huge employment

Increased investment in technology

The huge tax revenue generated.

The consumer gains from the wide variety of choices and

a more diversified basket.

Availability of products at less cost.

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Problems with fdi

Crowding of local industry

Repatriation of profits

Possible exploitation of resources-material/wages

Effect on natural environment

High Real Estate Prices

Land Acquisition : Displacement of people.

Cannot provide employment to semi-literate people

Cultural difference problems

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Highlights for FDI in budget 2 14

• FDI cap in telecom raised to 100% from 74%; up to 49% through automatic route and

beyond via FIPB

• FDI cap in defense production hiked to 49%, higher investment may be considered in

state-of-the-art technology.

•FDI limit in insurance sector raised to 49% from present 26%.

• FDI up to 49% in petroleum refining allowed under automatic route, from earlier

approval route

•

FDI up to 100% through automatic route allowed in courier services

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Political Debate

• West Bengal Chief Minister Mamata Banerjee on Thursday 10th June slammed the union budget

2014, saying the Narendra Modi-led government has "become a government of the FDI, by the FDI

and for the FDI"

• The Budget announced by Finance Minister Arun Jaitley laid emphasis on FDI in the realty sector

that will not only create affordable housing but also help in easing liquidity requirement for

developers.

• BJP leader Mukhtar Abbas Naqvi has said his government's budget will be one of

progress and trust and will ensure the growth of this country.

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