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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