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What is FDI?

Foreign direct investment (FDI) is a direct investment

into production or business in a country by anindividual or company in another country, either by

buying a company in the target country or by

expanding operations of an existing business in that

country.

Ref: www.economywatch.com

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Definition

Foreign direct investment is a type of investment

that involves the injection of foreign funds into an

enterprise that operates in a different country of

origin from the investor

Ref: www.economywatch.com

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  Determinants

Size of the market

Political Stability

Macroeconomic Environment

Legal & Regulatory framework

 Access to Basic input

Page 8-10 FDI by Niti Sury

FDI in India

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FDI in IndiaChallenges

FDI Vs. FIIS & GDRs

Infrastructure requirements & Implications for FDI “Swadeshi” and the anti-MNC Sentiments

Page 82 – 87 FDI in India by Dr. C. S. Deshpande

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FDI in IndiaBenefits

FDI is mutually beneficial

Helps in building World-class infrastructure facilities

Promotes economy and industrial growth  A means to create goodwill for foreign investors

No substitute for domestic resources

Employment Generation

Benefits to consumer Improvement in Import Competitiveness

Tax incentives

Page 88–

 91 FDI in India by Dr. C. S. DeshpandePage 4-7 / 24-26 FDI by Niti Sury

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FDI in DefenceOverview

Defence Research and development organization

Defence ordinance factories

Defence public sector Units

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Need For FDISubstantive economic advantages.

Transfer of advanced sensitive technology.

Making India as a home market (major domestic salesmarket and global manufacturing hub)

Benefit to private defence manufacturers in funding as well as technology.

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MERITS OF FDI IN DEFENCE : 

INFLOW OF EQUIPMENT AND NEW TECHNOLOGY.

COMPETETIVE ADVANTAGE AND INNOVATION.

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Demerits of FDI in Defence

The private sector has not been able to harness its strengths forthe defence sector.

The present 26% ceiling on FDI limits the economic incentive tothe foreign investor

The economic incentives and the profitability are the key

determinator for the foreign investors.

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Regulatory Regime & LicensingRequirements

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Recommendations & Suggestions

as regards FDI in the Defence

Sector

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Recent Policies FDI cap for domestic defence industry raided from 26% to 49% to

attract investments.

Rs100 crore provided to set up “Technology Development Fund”

for SME’s to support development of defence systems.

The budget allocated Rs 1000 crore for 2014-15 to implement ‘One

Rank One Pension’ for ex-servicemen.

India was world’s top arms buyer for past three year, but the

domestic defence industry has attracted foreign investment worth

only about $5 million.

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Union Budget 2014: Defence gets

big FDI Push India raised military spending for 2014-15 to Rs. 2.29lac crore,marking an increase of 12.5 per cent over the previous fiscal 2013-14

 Additional Rs.5000crore allocated for acquisition of new weaponssystem and hardware.

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Recent AchievementsThe year 2013 witnessed capacity building in existing and newstrategic areas of Indian Defence through acquisition &

development of new weapons/platforms which includes:INS Vikrant & INS Vikramaditya launched

 Agni V was successfully tested twice

Pilatus PC7 MK-II Basic trainer inducted

Boeing P-81 arrived ALH- Dhruv Squadron commissioned