Foreign Direct Investment in India

CONTENTS

Introduction.

Types Of Investments in INDIA by Foreigners.

Entry Routes.

Retail trade- Backbone of Indian Economy.

Failure of Local Government .

Criteria for FDI .

Advantages of FDI.

Sectors where 100% FDI permitted in INDIA.

Its turn for India – Our Country.

FDI –a big benefit.

MNC Regime.

Conclusion.

Foreign Direct Investment :

Purchase of physical assets or a significant amount of the ownership

(stock) of a company in another country to gain a measure of management

control

Portfolio investment:

Investment that does not involve obtaining a degree of control in a company

INVESTING IN INDIA – ENTRY ROUTES

Automatic RoutePrior Permission

(FIPB)

Investing in India

General Rule

No prior permission

Required. Inform Reserve Bank

within 30 days of

inflow/issue of shares.

By Exception

Prior Government

Approval needed.

Decision generally

within 4-6 weeks

RETAIL TRADE : BACKBONE

OF INDIAN ECONOMY

After agriculture, Retail trade provides employment to maximum number of

persons.

1.25 crore shops - employed 4 crore people.

contributes 10% - 11% of our country’s GDP.

Sophisticated techn & more investment is not required in retail trade.

Small Retail shops provide more employment then large chain of Retail

stores.

There is no gestation period. Hence business starts from day one.

FAILURE OF LOCAL GOVERNMENT

Traders are being ignored by the government.

lagged in infrastructure, irrigation power etc.- require huge investment- govt.

feels -traders incompetent to serve.

So, instead of development of such areas- the govt. handed over retail trade to

foreigners.

FOREIGNERS - more dearer than INDIANS.

Anti – trader laws were designed.

THE CRITERIA FOR FDI

In 1991-92, the then Finance Minister and present Prime Minister Dr.

Manmohan Singh referred to certain criteria for allowing FDI in India.

They were :

1. Establishment of basic industries requiring huge capital and advanced

sophisticated technology.

2. Infrastructure projects like electricity generation road building etc.

3. Projects which would generate employment.

ADVANTAGES OF FDI

Increase investment level and thereby income & employment.

Increase tax revenue of government.

Facilitates transfer of technology.

Encourage managerial revolution through professional management.

Increase exports and reduce import requirements.

Increase competition and break domestic monopolies.

Improves quality and reduces cost of inputs.

100% FDI PERMITTED IN INDIA

Engineering & Manufacturing sectors.

Tourism & hotels.

Advertising & Film industry.

Roads & Highways, Ports and Harbors.

Industrial model towns/industrial parks.

Pollution Control and Management.

Power generation (hydro-electric, coal/lignite, oil or gas based).

Information Technology including E-Commerce.

NOW ITS TURN FOR INDIA

Kamal Nath, Union Urban Development and Poverty Alleviation Minister

said, Advantages of having backend and cold-chains formation, sourcing, quality

standardisation, etc are going to mainly help our agricultural sector.

Montek Singh Ahluwalia, Deputy Chairman of the Planning Commission, FDI is not a

threat to small retailers and it will create efficiency in supply chain infrastructure.

So that , Wastage will fall, leading to lower prices of primary commodities. In

India, 30% of fruits and vegetables, and 5-7% of grains are wasted between harvest

and consumption.

Restructuring to create entities to work in the current framework would need a lot of

thought, but managing an efficient supply chain, considering that only nine States

have given approval, will pose a big challenge, according to Rachna Nath.

FDI- A BIG BENEFIT

The FDI in multi-brand retail - benefit the farmers who will get a fair price by

selling their products directly to the retail companies.

This step will increase prices paid to farmers, reduce prices for

customers, reduce agricultural wastage and create thousands of jobs.

As many as 40 % of vegetables are rotting as there is no backend. Multi-brand

retail is a model that will work and the advantages outweigh the risks.

CONTRACT FARMING

COLLECTION OF

AGRICALTURE PRODUCTSTO OWN FACTORY

TO OWN DEPT. STORE

TO CUSTOMER

CONCLUSION

o If the FDI is in the limit and the in the control of our government, then it will

surely benefit our country.

And its also a great privilege that “India” is the second attractors of

foreigners.

Retail traders will also improve their standards

and the channelization.

This could be a big benefit, given that Indian retail chains have so far lacked

the capital and incentive to invest in supply chains.

Thank

you

R.M.K. E-CELL

Mail id: [email protected]

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Presented by

G.Sangeetha(ECE- final year).