FD I

What is FDI ?
Foreign

Direct Investment(FDI) Meaning: Foreign direct investment (FDI) refers to long term participation by country A into country B. It usually involves participation in management, joint-venture, transfer of technology and "know-how". A direct investment that allows the investor a controlling intrest in a foreign company .It may take the form of a joint venture or a wholly owned subsidiary.

Joint Venture :
A

joint venture is a shared ownership in a foreign business. The ventures is 50-50 ownership in which there are two are 2 parties each of which hold a 50% ownership stake and contributes a team of managers to share operating control.

 For

an investment to be regarded as an FDI, the parent firm needs to have at least 10% of the ordinary shares of its foreign affiliates. The investing firm may also qualify for an FDI if it owns voting power in a business enterprise operating in a foreign country.

FORMS OF FDI

BY DIRECTION : Inward , Outward BY TARGET : Horizontal FDI , Vertical FDI ,

Backward Vertical FDI

BY MOTIVE : Resource-Seeking , MarketSeeking , Efficiency- Seeking , Strategic-Asset-Seeking

Why do Companies engage in foreign investment ?

Gain

a foothold in a new geographic market . Increases a firms global competitiveness and positioning . Fill gaps in a company product lines in a global industry . Reduce cost in such areas such as R&D , production and distribution .

Factors attracting FDI in india

Low

cost but qualified , educated skilled labour pool . Stability of the economy in comparison to other countries such as Greece , Italy , France etc . Geography Easy Access to natural resources

Pros and cons of FDI

Increase

in employment and decrease in employment . Increased capital investment . Investment in needed infractructure . CONS : Technology dependence on foreign sources Cultural changes may or may not be accepted by the domestic people .

Current FDI statistics

Public Sector Enterprise's 26% FDI Private Sector Enterprise's 74% FDI allowed Insurance FDI % increased from 26% to 49%. Hotel and tourism 100% FDI is permissible through automatic route NBFCs 49% FDI is allowed from all sources on the automatic route subject to guidelines issued from RBI from time to time. Infrastructure 100% FDI allowed

 BPO

Industry FDI up to 100% is allowed subject to certain conditions. Drugs and Pharmaceuticals FDI up to 100% is permitted on the automatic route for manufacture of drugs and pharmaceutical. Power Up to 100% FDI allowed in respect of projects relating to electricity generation, transmission and distribution, other than atomic reactor power plants. There is no limit on the project cost and quantum of foreign direct investment. Telecommunication FDI is limited to 49% subject to licensing and security requirements and adherence by the companies .

THANK YOU
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