FOREIGN INVESTMENT…

Foreign investment occurs when investment vehicle from outside INDIA decides to establish a new business in INDIA or purchases property or shares in an Australian-owned business.

Investor can be a individual or a company.

How a foreign investor can do invest in india .??Two options..

FDI and FII

What is FII..??

Foreign Institutional Investment

It is most commonly in India refer to outside companies investing in the financial markets of India.

Positive correlation with SENSEX and NIFTY.

What is FDI..??

Foreign direct investment

FDI is an investment in foreign assets into domestic structures, equipment, and organizations.

The FDI relation, consists of a parent enterprise and a foreign affiliate which together form a transnational corporation relation.

Why is FDI preferred over fII ..??

FDI helps in increasing production and employment, FII does not affect production and employment.

FDI investment is more stable in compare to FII.

Types of FDI

GREEN FIELD INVESTMENT

Direct investment in new facilities in a country outside of where the company is headquartered..

BROWN FIELD INVESTMENT

A company expands an existing facility to begin new production.

FDI Procedure in India..FDI in India is approved by two routes.

Automatic approval route:

The Reserve Bank of India accords automatic approval within a period of 2 weeks provided certain parameters are met regarding equity in certain

sectors.

The FIPB OR GOVT. Approval route :

Processing of non-automatic approval cases by FIPB (Foreign Investment Promotion Board) where the parameters of automatic approval are not met.

Processing time is 4 to 6 weeks

Current FDI situation in India..

In the first half of 2016, India attracted investment of $52 billion.

After the Make in India initiative the Govt. of India relaxed the norms and policies in 25 sectors to attract FDI in these sectors.

Some of the sectors are : Infrastructure sector : 100 % FDI

Automotive sector : 100 % FDI

Service sector : 49 % FDI

Railways Sector : 100 % FDI is permitted in most of areas in railways now.

FDI is permitted in India as under the following forms of investment

The sectors attracting highest FDI

FDI trend in India

The top investing countries in India are Singapore, Mauritius, Netherlands, USA, Germany, Japan, France, UK, Cyprus and Switzerland.

The city wise highest FDI invested in India is in New Delhi, Mumbai, Bangalore, Chennai, Hyderabad, Ahemdabad etc.

FDI is prohibited in

Atomic energy

Lottery Business including Government /private lottery, online lotteries, etc.

Gambling and Betting including casinos etc.

Manufacturing of Cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco substitutes

Nidhi company

PROS

Expansion In Employment

Consumer Benefit (reduction in

price)

Technological Improvement

Import - Export

Growth In Economy (tax revenue)

Competition

Global Relationship

Manufacturing Warehousing

Logistics

CONS

• Hindrance to Domestic Investment

• Risk from Political Changes.

Possible exploitation of resources/wages.

Loss for small industries

• Negative Influence on Exchange Rates.

TERMS AND CONDITIONS For FDI In

India

30% Of Products Should Be Sourced From Small Industries

Retail Trading Through E Commerce Will Not Be Permissible For Companies

Invest In Retail FDI

FDI In Retail Is Supposed To Create Around 1crore New Jobs In Organised

Sector but not necessary in Unorganized Sector

Indian Retail Market Is Still Dominated By The Unorganised Sector

TERMS AND CONDITIONS For

FDI In India

FDI In Retail Foreign Retailers Can Open Their Shops In Only Cities With Population

More Than 1 Million .

Retailers suppose to sell both branded and local product

Now Foreign Retailers Can Invest Up To 51% IN MULTI Brands Retail

And 100% In Single Brand Retail

Minimum Investment Should Be 10million Dollars And 50% Of The

Amount Should Be Invested In Back-end Infrastructure Facilities Like

Processing, Manufacturing Warehousing Logistics Etc.

Growth Of Foreign Investment

Region /Economy 1996 1997 1998 1999 2000 2001 2007 2008 2009

World 386140 478082 694457 1088263 1491934 735146 2099973 1770873 1114189

Developed

Economies

219908 267947 484239 837761 1227476 503144 1444075 1018273 565892

Developing

Economics

152685 191022 187611 225140 237894 204801 564930 630013 478349

Asia 93331 105828 96109 102779 133707 102066 336922 372739 301367

South, East And

South-East Asia

87843 96338 86252 999901 31123 94365 258830 282440 233050

China 1st 40180 44237 43751 40319 40772 46846 83521 108312 95000

India 2nd 2525 3619 2633 2168 2319 3403 25001 40418 34613

Indonesia 4th 6194 4677 356 2745 4550 3277 6928 9318 4877

Korea 6th 2325 2844 5412 9333 9283 3198 2628 8409 5844

Malaysia 7th 7296 6324 2714 3895 3788 554 8538 7318 1381

Philippines 8th 1520 1249 1752 578 1241 1792 2916 1544 1948

Singapore 3rd 8608 10746 6389 11803 5407 8609 35778 10912 16809

Thailand 5th 2271 3626 5143 3561 2813 3759 11355 8544 5949

Background: India Transformed !!

…Today

Encouraging Foreign Investment

Strong Macro Economic Fundamentals

Growing Consumerism

Infrastructure Development

…Yesterday

Slow rate of growth

Small consumer markets

Weak infrastructure

Protected and slow market

Factors Affecting FDI To Come In INDIA

Large size of the economy

Open door policy towards FDI

Abundance of natural resources

Cost-effective and skilled labour

Large English speaking population

Factors Affecting FDI To Come In INDIA

Liberal policy towards technology and capital goods imports

Gradual reduction in barriers to trade

Good international economical & political relations

High level of compliance towards the polices of multilateral economic institution like WTO, IMF & world Bank

India an emerging power

In terms of market potential based on purchasing parity, India is 3rd largest economy in the world behind only USA and China.

India vs China..

Yet until recently India failed to get attention from investors, as generated by China.

China has more business oriented and better FDI policies .

China has better consumer purchasing power, better entry and exit procedures for business.

Future PotentialIndia has a high future potential and is expecting a very high FDI opportunity in some sectors like infrastructure sector, auto parts sector, power sector, food and grocery sector, clothing sector, furniture and fixtures, pharmacy sector, health sector, tourism sector all have the potential to receive a huge investment.

Thank you !!

prepared bySatish 15113107 &

Rajnish kumar 15113092