What is FDI?

Foreign direct investment (FDI) is a direct investment

into production or business in a country by an
individual 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

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

FDI in India
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
Challenges
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

FDI in India
Benefits
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. Deshpande
Page 4-7 / 24-26
FDI by Niti Sury

FDI in Defence
Overview
Defence Research and development organization
Defence ordinance factories
Defence public sector Units

Need For FDI

Substantive economic advantages.
Transfer of advanced sensitive technology.

Making India as a home market (major domestic sales

market and global manufacturing hub)
Benefit to private defence manufacturers in funding as
well as technology.

MERITS OF FDI IN DEFENCE :

INFLOW OF EQUIPMENT AND NEW TECHNOLOGY.
COMPETETIVE ADVANTAGE AND INNOVATION.

Demerits of FDI in Defence

The private sector has not been able to harness its strengths for
the defence sector.
The present 26% ceiling on FDI limits the economic incentive to
the foreign investor
The economic incentives and the profitability are the key
determinator for the foreign investors.

Regulatory Regime & Licensing

Requirements

Recommendations & Suggestions

as regards FDI in the Defence
Sector

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 SMEs 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 worlds top arms buyer for past three year, but the
domestic defence industry has attracted foreign investment worth
only about $5 million.

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 weapons
system and hardware.

Recent Achievements
The year 2013 witnessed capacity building in existing and new
strategic 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