foreign capital and economic growth of india
TRANSCRIPT
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FOREIGN CAPITAL AND ECONOMIC
GROWTH OF INDIAN ECONOMY
By : Keyur, Nikita, Jimmy, Mitesh, Digvijay, Akash
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☼ Report outline
• INTRODUCTION OF FOREIGN CAPITAL• Definition• Need in India
• FORMS OF FOREIGN CAPITAL• Types of FC forms• Sector Limitation
• DETAILS OF FDI
• GOVERNMENT INITIATIVE FOR FDI
• CONCLUSION
• REFERENCES
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FOREIGN CAPITAL
“THE CAPITAL AVAILABLE FOR ANY COUNTRY OTHER
THAN THE DOMESTIC CAPITAL IN ORDER TO FINANCCE
ANY CAPITAL NEED FOR DOMESTIC PURPUSE IS CALLED
AS FOREIGN CAPITAL.”
¤ It may be • Temporary• Permanent
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Needs of Foreign Capital
• Domestic capital is inadequate
• Economic development
• Mobilize domestic saving
• Transfer of Technology
• New job opportunities
• Increasing Income level
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FOREIGN DIRECT INVESTMENT
• Investment made by a foreign individual or company in productive capacity of another country
FORMS OF FOREIGN CAPITAL IN INDIA
• Foreign Direct Investment• Foreign Technical Collaboration• Foreign Portfolio Investment• Investment in Government Securities and Corporate
debt• Foreign Venture Capital Investment
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FOREIGN DIRECT INVESTMENT
TYPES OF FOREIGN INVESTMENT
• Greenfield investment • Mergers and Acquisition
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FOREIGN DIRECT INVESTMENT
FORBIDDEN TERRITORIES FOR FDI
• Arms and ammunition• Atomic Energy• Railway Transport • Coal and lignite• Mining of iron, manganese, chrome, gypsum, sulphur, gold,
diamonds, copper, zinc. • Gambling and betting• Lottery Business• Agricultural or plantation activities of Agriculture
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DETAILS ON FDI EQUITY INFLOWS IN INDIA
CUMULATIVE FDI EQUITY INFLOWS
• FROM AUGUST 1991 TO JULY 2009 – Rs. 5,04,793 CRORE– MEANS US$ 1,17,032 MILLION
• (HERE 1 US $ = 43.132 Rs)
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FINANCIAL YEAR-WISE FDI EQUITY FLOW IN INDIA
(Financial year: April - March)
Financial YEAR
(APRIL - MARCH)
IN RUPEES CRORES
IN US $ MILLION
2000 – 2001 12,646 2908
2001 – 2002 19,361 4222
2002 – 2003 14,932 3134
2003 – 2004 12,117 2634
2004 – 2005 17,138 3759
2005 – 2006 24,613 5546
2006 – 2007 70,630 15,726
2007 – 2008 98,664 24,579
2008 – 2009 1,22,919 27,309
SOURCE: RBI’S BULLETIN-SEPTEMBER 2009 Dt: 10-09-2009 (Table No. 46-FOREIGN INVESTMENT INFLOWS)
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• In Financial year 2009 – 2010, it is expected that FDI equity inflows reach to around – Rs 1,60,500 crores
• While around Rs 51,256 crores FDI equity inflows is achieved during April 2009 to July 2009
FOREIGN DIRECT INVESTMENT
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SHARE OF TOP INVESTING COUNTRIES FDI EQUITY INFLOWS (FINANCIAL YEAR)
RANK COUNTRY 2006 – 07 (APRIL - MARCH)
2007 – 08 (APRIL - MARCH)
2008 – 09 (APRIL - MARCH)
2009 – 10 (APRIL –
JULY ‘ 09)
CUMULATIVE INFLOWS
(APRIL’00 TO JULY’09)
1 MAURITIUS 28,759(6363)
44,483(11,096)
50,794(11,208)
22,257(4555)
1,83,529(41,419)
2 SINGAPORE 2662(578)
12,319(3073)
15,727(3454)
3692(759)
37,544(7221)
3 U.S.A 3861(856)
4377(1089)
8002(1802)
4261(886)
32,220(7221)
4 U.K 8389(1878)
4690(1176)
3840(864)
542(112)
23,446(5338)
5 NETHARLANDS 2905(644)
2780(695)
3922(883)
1334(278)
17,187(3866)
Amount Rupees in crores (US $ in million)
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SHARE OF TOP TEN INVESTING COUNTRIES FDI EQUITY INFLOWS (APRIL’00 TO JULY’09)
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SECTORS ATTRACTING HIGHEST FDI EQUITY INFLOWS
RANK SECTOR 2006 – 07 (APRIL - MARCH)
2007 – 08 (APRIL - MARCH)
2008 – 09 (APRIL - MARCH)
2009 – 10 (APRIL –
JULY ‘ 09)
CUMULATIVE INFLOWS
(APRIL’00 TO JULY’09)
1 SERVICE SECTOR (financial & non
financial)
21,047(4664)
26,589(6615)
28,411(6116)
10,432(2141)
94,885(21,390)
2 COMPUTER SOFTWARE & HARDWARE
11,786(2614)
5623(1410)
7329(1677)
1361(280)
40,857(9234)
3 TELECOMMUNICATION
(radio, paging, cellular mobile, basic telephone
services)
2155(478)
5103(1261)
11,727(2558)
4897(993)
33,264(7369)
4 HOUSING & REAL ESTATE
2121(467)
8749(2179)
12,621(2801)
6892(1419)
30,675(6931)
5 CONSTRUCTION ACTIVITIES
(including roads & highways)
4424(985)
6989(1743)
8792(2028)
3781(777)
25,958(5968)
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TOP TEN SECTORS ATTRACTING HIGHEST FDI EQUITY INFLOWS (USD IN MILLION)
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GOVERNMENT’S INITIATIVES FOR FOREIGN CAPITAL
• Foreign Investment Policy
• Facilitating foreign investment
• Number of policy changes reduced the discriminatory
bias against foreign firms
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WHY INDIA’S FALLING BEHIND INFOREIGN INVESTMENT?
• Needs to focus on the real barriers
• Infrastructural bottlenecks
• Case backlogs
• 'Bandwagon effect'
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GOVERNMENT’S INITIATIVES FOR FOREIGN CAPITAL
• Foreign Investment Policy
• Facilitating foreign investment
• No. of policy changes reduced the discriminatory
bias against foreign firms.
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WHY INDIA’S FALLING BEHIND INFOREIGN INVESTMENT?
• Needs to focus on the real barriers
• Case backlogs
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CONCLUSION
• Foreign capital has a key role in economic development
• Economic reforms for more foreign investment• Management of capital inflow is a complex process• Sound macroeconomics policies and well
functioning add to the benefits foreign capital inflow• Precious role of government in foreign investment
policy
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“FOREIGN INVESTMENT RESULTS FROM GROWTH AND CONTRIBUTES TO GROWTH”
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☺ REFERENCES• business.mapsofindia.com
• mpra.ub.uni-muenchen
• finmin.nic.in
• www.rbi.org
• www.southasiaanalysis.org
• dipp.nic.in
• www.ems.bbk.ac.
• www.indianindustry.com/
• www.altiusdirectory.com/B
• www.indiajuris.com/
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Thank You
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