FDI POLICIES IN INDIA

WHAT IS FDI

An investment made by a company or entity based in one country, into a

company or entity based in another country.
The investing company may make its overseas investment in a number of ways
- either by setting up a subsidiary or associate company in the foreign
country, by acquiring shares of an overseas company, or through a merger or
joint venture.
An example of foreign direct investment would be an American company
taking a majority stake in a company in China. Another example would be a
Canadian company setting up a joint venture to develop a mineral deposit in
Chile.
 FOREIGN DIRECT INVESTMENT (FDI)
FDI IS PERMITTED AS UNDER THE
FOLLOWING FORMS OF
INVESTMENTS –

 Through financial collaborations..

 Through joint ventures and technical collaborations.
 Through capital markets
 Through private placements or preferential allotments.
 FDI IS NOT PERMITTED IN THE
FOLLOWING INDUSTRIAL SECTORS:

 Arms and Ammunition.

 Atomic Energy.
 Railway Transport.
 ENTRY ROUTE – 100%AUTOMATIC

A. Agriculture
Floriculture, Horticulture, Development of Seeds, Animal
Husbandry, Pisciculture, Aquaculture, Cultivation of vegetables & mushrooms
and services related to agro and allied sectors.
B. Industry
Mining covering exploration and mining of diamonds & precious
stones; gold, silver and minerals.
C. Manufacturing
Alcohol- Distillation & Brewing
 ENTRY ROUTE - FIPB

1. Tea Sector
2. Broadcasting / Cable
3. Publishing of scientific magazines / speciality journals/periodicals
 FDI IN CURRENT SCENARIO

Declined by six per cent to USD 5.47 billion during January-March quarter in
2013, 5.84 billion in January-March 2012
Liberalised FDI policy in sectors like multi-brand retail, civil
aviation, broadcasting and power exchanges
Maximum FDI from Mauritius, followed by the UK, Singapore, Japan and
United States
 FDI IN DIFFERENT SECTORS

Sectors which received large FDI inflows during the period include
services, hotel and tourism, metallurgical, construction, automobiles and
Pharmaceuticals
Decline in foreign investments could put pressure on the country’s balance of
payments and may also impact the value of the rupee.
 FDI IN MULTI-BRAND RETAIL

FDI limit in multi-brand retail sector is at 51%

Only 11 states have allowed FDI in the sector
Foreign retailers that want to set up retail stores in India have to mandatorily
invest at least 50% of the total FDI brought in has to be invested in 'backend
infrastructure' within three years of the first tranche of FDI wherein back-end
infrastructure includes capital expenditure on agriculture market produce
infrastructure and others
At least $100 million FDI has to be brought in by the foreign investors.
 FDI IN INSURANCE SECTOR

Bill to increase FDI limit in insurance from 26% to 49% has been pending in
the Rajya Sabha since 2008
But,it remained upto 26% only
TOP INVESTING COUNTRIES
2% Mauritius
2%
4% 4% 3%
5% Singapore

7% USA

UK
9% Netherlands
Japan
Cyprus
11%
53% Germany
UAE

France
SECTOR WISE DISTRIBUTION
Services Sector
3%
4% 4%
6% Computer Software & hardware
6%
Telecommunications

10% Housing & real Estate

Construction Activities
31%
Power
11%
Automobile Industry

Metallurgical Industries
12%
13% Petroleum & Natural Gas

Chemicals
 IMPACT OF FDI IN INDIA

Quality and Hygiene

Inflow of Dollars
Creation of new jobs
Benefit to farmers
Increased technical know-how
Economic growth
 REFERENCES

 www.investopedia.com
 http://www.rbi.org.in/scripts/bs_viewcontent.aspx?Id=2513
 http://www.investinginindia.in/fdi.htm