nisha presentaion

8/12/2019 Nisha Presentaion

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Presentation

Of

Business Environment


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Foreign direct investment(FDI) is a directinvestment into production or business in a countryby an individual or company in another country,

either by buying a company in the target country orby expanding operations of an existing business inthat country.

In simple terms :- FDIis any investment made by a

foreign country in the domestic assets such ascompanies, organizations, buildings and factories.It provides foreign capital, funds, expertise and jobopportunities to the host nation.


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Foreign direct investment (FDI) in India has played animportant role in the development of the Indianeconomy.

FDI helps the country in achieving the following

aspects :- Financial Stability

Growth

Development

A number of projects have been implemented in

various areas :-

electricity generation, distribution and transmission,

as well as the development of roads and highways


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The Indian national government also grantedpermission for FDIs to provide up to 100% ofthe financing required for the construction of

bridges and tunnels .


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Economic Growth

Trade

Technology diffusion and knowledge

transfer Increased competition

Human Resources Development

Employment


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FDI has and adverse effects on competition.

FDI will be make the host country lost thecontr.

Foreign direct investment may entail hightravel and communications expenses.

Another disadvantage of foreign directinvestment is that there is a chance that a

company may lose out on its ownership to anoverseas company.


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Political Lobbying :- In the past, there have beenmany instances in which MNCs have resorted topolitical lobbying in order to get certain policies andlaws implemented in their favor. At times, theseMNCs are so large that their revenues even exceededthe Gross Domestic Product (GDP) of some smaller

nations and compel or threaten them to passjudgments and policies in their favor.

Exploitation of Resources:Exploitation of naturalresources of a host country is not an very uncommonphenomenon in the case of FDI. MNCs of othercountries have been known to indiscriminatelyexploit the resources of hosts countries in order toget short run gains and profits


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Threaten Small Scale Industries :- MNCshave large economic and pricing power dueto their large sizes. They do not have much

problem with regards to financial capital andcan hence resort to using advertising which isa costly affair. Also, these companies areglobal players . All this results in the MNChaving cheaper products and more visibilitydue to the higher amounts of advertising andhave been known to push out smallerindustries out of business.


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Technology :- Although, the MNCs haveaccess to new and cutting edge technology,they do not transfer the latest technology to

the host country with a fear that their homecountry may loose its competitive advantage,hence the maximum potential of the hosteconomy cannot be achieved as a result ofold technology transferred.


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FDI cap in telecom raised to 100 percent from 74 percent;up to 49 percent through automatic route and beyond viaFIPB.

No change in 49 percent FDI limit in civil aviation.

FDI cap in defence production to stay at 26 percent,higher investment may be considered in state-of-the-arttechnology production by Cabinet Committee on Security(CCS).

100 percent FDI allowed in single brand retail; 49 percentthrough automatic, 49-100 percent through FIPB.

FDI limit in insurance sector raised to 49 percent frompresent 26 percent.


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FDI up to 49 ppercent in petroleum refiningallowed under automatic route, from earlierapproval route.

In power exchanges 49 percent FDI allowedthrough automatic route, from earlier FIPBroute.

Raised FDI in asset reconstruction companies to

100 percent from 74 percent; of this up to 49percent will be under automatic route

FDI limit increased in credit informationcompanies to 74 percent from 49 percent.


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FDI up to 49 percent in stock exchanges,depositories allowed under automatic route.

FDI up to 100 percent through automaticroute allowed in courier services.

FDI in tea plantation up to 49 percentthrough automatic route; 49-100 percentthrough FIPB route.

No decision taken on FDI cap in airports,

media, brownfield pharma and multi-brandretail.


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Foreign Institutional Investor (FII) means aninstitution established or incorporated outsideIndia which proposes to make investment insecurities in India. They are registered as FIIs inaccordance with Section 2 (f) of the SEBI (FII)Regulations 1995.
http://www.sebi.gov.in/sebiweb/home/list/1/3/0/0/Regulationshttp://www.sebi.gov.in/sebiweb/home/list/1/3/0/0/Regulationshttp://www.sebi.gov.in/sebiweb/home/list/1/3/0/0/Regulationshttp://www.sebi.gov.in/sebiweb/home/list/1/3/0/0/Regulations


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AUTOMATIC ROUTE

FDI Policy permits FDI up to 100 % from foreign/NRIinvestor without prior approval in most of thesectors including the services sector underautomatic route. FDI in sectors/activities underautomatic route does not require any priorapproval either by the Government or the RBI.


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GOVERNMENT APPROVAL ROUTEAll activities which are not covered under theautomatic route, prior Government approval forFDI/NRI shall be necessary. An investor can make

an application for prior Government approvaleven when the proposed activity is under theautomatic route.

Proposals requiring Government Approval :- FDI up to 100% is allowed under the automatic route

in all activities/sectors except the following whichwill require approval of the Government:


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Activities/items that require an IndustrialLicense.

All proposals falling outside notified sectoral

policy/caps or under sectors in which FDI isnot permitted.

Proposals in which the foreign collaboratorhas a previous/existing venture/tie up in

India in the same.


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FDI is not permissible in the following cases

Gambling and Betting, or

Lottery Business, or

Business of chit fundNidhi Company

Housing and Real Estate business (to a certainextent has been opened. For details please seenote on Construction)

Trading in Transferable Development Rights (TDRs)


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Retail Trading

Atomic Energy

Agricultural or plantation activities orAgriculture (excluding Floriculture,Horticulture, Development of Seeds, AnimalHusbandry, Pisiculture and Cultivation ofVegetables, Mushrooms etc. under controlledconditions and services related to agro and

allied sectors) and Plantations(other than Teaplantations)


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India's pharmaceuticals sector has receivedFDI of $1 billion, the highest among the top10 segments, during the April-June periodthis year amid concerns over increasingacquisitions of domestic firms bymultinationals.

Foreign Direct Investment (FDI) in drugs and

pharmaceuticals during April-June 2012 stoodat $465 million, according to the latest dataof Department of Industrial Policy andPromotion (DIPP).


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