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FDI to developing countries like india inthe 1990s was the leading source of

external financing and has become a keycomponent of national developmentstrategies for almost all the countries in theworld as a vehicle for technology flows

and an important source of non-debtinflows for attaining competitive efficiencyby creating a meaningful network ofglobal interconnections.

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Foreign direct investment (FDI) occurswhen an investor based in one country(the home country) acquires an asset inanother country ( the host country) with

the intent to manage the asset.

Foreign direct investment happens

when a firm invests directly in facilities ina foreign Country.

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By Direction By Target By Motive

INWARD GREENFIELD RESOURCE

INVESTMENT SEEKING

OUTWARD HORIZONTAL MARKET

FDI SEEKING

VERTICAL EFFICIENCY

FDI SEEKING

STRATEGIC

SEEKING

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BY DIRECTION:-

INWARD: Inward FDI or Inbound FDI is a formof inward investment where foreign capital is

invested in local resources.

OUTWARD: Outward FDI or direct investment

abroad is when local capital is invested inforeign resources.

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BY TARGET;-

GREENFIELD INVESTMENT: Investments in newfacilities or expansion of existing facilities. Resultsare: New jobs, new technology & know-how,

enhanced R&D, etc.

HORIZONTAL FDI: It occurs when a multinational

company makes investments in other countriesbut in the same industry to which it belongs.

Example: Ford builds an automobilemanufacturing facility in Mexico.

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VERTICAL FDI: It occurs when a MNCacquires a stake in a foreign company

that either uses its output or provides it theinputs. The foreign company can be asupplier or a customer.

Example-If Ford builds an engine productionfacility in Mexico which ships engines to it

manufacturing site in Texas. or if Ford buysseven dealerships in Mexico City which ituses to distribute its cars made in Texas.

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BY MOTIVE:-

RESOURCE SEEKING: It occurs when theinvestments seek to acquire factors of productionthat are more efficient than those available in thehome country of the investor

This characterizes Foreign Direct Investment intodeveloping countries, for example seeking cheaplabour in Eastern Europe and Southeast Asia, or

natural resources in the Middle East and Africa.

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MARKET SEEKING: It includes investments that aimsat penetrating new markets or maintaining existing

markets. FDI with this motive is common amongMNCs.

STRATEGIC SEEKING: A tactical investment toprevent the gain of resource to a competitor.

EFFICIENCY SEEKING: It includes the investors who

invest with the hope of exploiting the benefits ofeconomies of scale, cost effectiveness & profitmaximization.

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Command and Control Economy

Allocation of resources by the Government

(budgetary grants)

Government took active part in setting prioritiesfor the economy

Self-Reliance was the buzz word Nationalization of Banks

Limited scope for private participation

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Liberalization and Globalization of Indian

Economy Increased emphasis on private sector

participation

Limited extent of FDI participation

Gradual improvement in the enablingenvironment

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Political Coalitions have started providingstable government

Government to get out of owning andmanaging businesses: Disinvestment Policy

Gradual relaxation in the FDI Policy

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Automatic Route - No prior Government approval

is required if the investment to be made falls withinthe sectoral caps specified for the listed activities.

Only filings have to be made by the concerned

company with the concerned regional office of the

Reserve Bank of India (RBI) within 30 days ofreceipt of remittance and within 30 days of issuance

of shares.

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FIPB Route - Investment proposals falling outside the

automatic route would require prior Government approval.

Foreign Investment requiring Government approvals are

considered and approved by the Foreign InvestmentPromotion Board (FIPB). Decision of the FIPB usually

conveyed in 4-6 weeks. Thereafter, filings have to be

made by the Concerned company with the RBI

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CCFI Route - Investment proposals falling outside the

automatic route and having a project cost of Rs. 6,000

million or more would require prior approval ofCabinet

Committee of Foreign Investment (CCFI). Decisionof CCFI usually conveyed in 8-10 weeks. Thereafter,

filings have to be made by the Concerned company with

the RBI

- Investment proposals falling within the automatic routeand having a project cost of Rs. 6,000 million or more do

not require to be approved by CCFI

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Private sector Banking - 49% Non-banking financial companies (stock

broking, credit cards, financial consulting,

etc.) - 100% Insurance - 49% Telecommunications - 49% Broadcasting-74%

Housing and Realstate- 100% Trading - 51% Power exchange 49% Pharmaceuticals - 100%

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Single brand retail- 100 %, multi brand retail-51% Tourism - 100% Mining - 74% Advertising - 100% Airports - 74% Films - 100% Domestic airlines - 49% Mass transit - 100% Pollution control - 100%

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FDI is not permittedin the following industrialsectors:

RAILWAY TRANSPORT

Atomic Energy.

Arms and ammunition.

Gambling and Betting

Lottery Business

Agriculture (with certain exceptions) and Plantations(Other than Tea plantations)

Railways

Arms & Ammunition

April 2011 to March 2012 A Department of Industrial Policy

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Rank 1: MauritiusInvestment: Rs 247,092 crore ($55,203 million)

Rank 2: SingaporeInvestment: Rs 58,090 crore ($13,070 million)

Rank 3: United States of AmericaInvestment: Rs 42,898 crore ($9,529 million)

Rank 4: The United KingdomInvestment: Rs 29,451 crore ($6,643 million)

Rank 5: The Netherlands

Investment: Rs 25,799 crore ($5,739 million)

Rank6:JapanInvestment: Rs 25,001 crore ($5,511 million)

Rank 7: CyprusInvestment: Rs 22,702 crore ($4,982 million)

Rank 8: GermanyInvestment: Rs 13,607 crore ($3,051 million)

Rank 9: FranceInvestment: Rs 11,244 crore ($2,484 million)

Rank 10: United Arab Emirates

Investment: Rs 8,683 crore ($1,910 million)

April 2011 to March 2012 A Department of Industrial Policyand Promotion Fact sheetmentioned Indias Top 10 FDIgenerating Countries

0

10000

20000

30000

40000

50000

60000

Mauritius

Singapore

USAUK

Netherlands

Japan

Cyprus

Germany

France

ArabEmirates

Investment in $ Million

Investment in $ Million

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Low wage rates Low transactions costs High rates of return Labour mobility Matured capital market Modern financial system Efficient infrastructure Special economic zones, EPZs etc One of ten fastest economies of the world

Largest pool of technical manpower Rich in mineral and natural resources Low wage rates and low production costs High Return and Huge domestic market

Service Sector

Rubber Goods

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Service Sector

Computer Software & Hardware

Telecommunications

Construction Activities

Automobile Industry

Power Chemicals

Real Estate

Drugs & Pharmaceuticals

Electrical Equipments

Cement & Gypsum Products

Food Processing Industries

Electronics

Consultancy Services

Petroleum & Natural Gas

Hotel & Tourism

Trading Textiles

Information & broadcasting

Hospital & Diagnostic Centers

Coir

Air Transport

Timber Products

Rubber Goods

Machine Tools

Ports

Industrial Machinery

Agricultural Machinery

Paper and Pulp Agriculture Services

Diamond, Gold Ornaments

Glass

Industrial Instruments

Tea and Coffee

Sugar

Vegetable Oils & Vanaspati

Railway Related Components

Education

Fertilizers

Printing of Books Soaps,Cosmetics & Toilet

Ceramics

Coal Production

Sea Transport

Mining

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I t ti l R t il Ch i

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International Retail ChainsSome of the international retail chains that will eye India include

Walmart Carrefour

Metro

Tesco

Schwartz

Kroger

Home Depot

Costco Aldi

Target

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The Indian retail market -- one of India'sfastest growing industries -- is expected togrow from US$ 35 billion to US$ 60 billion by2012.

According to Euromonitor International, theIndian Retail market has growing valueterms by a total of 39.6 per cent between2006 and 2011, averaging growth of almost7 per cent a year.

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Creates new jobs

Technology transfer

Economic growth

Revenue to Government

Relationship with the world

Positioning in global market

Increase the standard of living

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Improvement in Farming Sector1st step towards liberalising the retailsectorAllow to connect directly with consumersPositive impact on infrastructure facilitiesI

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PRESENTED BY:SAHIL

ROLL NO.: 6161