18-05-2013, 01:03 PM
Foreign Direct Investment in India
Foreign Direct Investment.ppt (Size: 654.5 KB / Downloads: 35)
Command and Control Economy
Allocation of resources by the Government (budgetary grants)
Government took active part in setting priorities for the economy
Self-Reliance was the buzz word
Nationalisation of Banks
Limited scope for private participation
Phases of Indian Economy1991-2000
Liberalization and Globalization of Indian Economy
Increased emphasis on private sector participation
Limited extent of FDI participation
Gradual improvement in the enabling environment
Consensus on Economic Liberalisation
Change in perception
Indian Business Houses
Government
Legal Framework: shift from a Positive List to a Negative List (FERA FEMA)
Gradually all sectors moving to ‘Choice’ and ‘Competition’ (Multiple Player Model)
Present Picture
India: Fourth largest economy in terms of Purchasing Power Parity
Tenth most industrialized economy
GDP growth rate of 8.1% - Second highest in the world.
Considerable improvement in FDI inflows
FII inflows:
For the period, July 2003 – Jan 2004 FII inflow has exceeded USD 7 bn, which is more than the cumulative FII inflow in the last five years.
Still a big gap between India and China
Foreign Direct Investment
Foreign direct investment (FDI) is defined as "investment made to acquire lasting interest in enterprises operating in the host economy of the investor.“
The FDI relationship, consists of a parent enterprise and a foreign affiliate which together form a transnational corporation (TNC).
In order to qualify as FDI the investment must afford the parent enterprise control over its foreign affiliate.
The UN defines control in this case as owning 10% or more of the ordinary shares or voting power of an incorporated firm or its equivalent for an unincorporated firm; lower ownership shares are known as portfolio investment.
The Industrial Policy
Industries reserved for the Public Sector: (1) Atomic Energy and (2) Railway Transport
Compulsory licensing needed in the following industries:
Distillation and brewing of alcoholic drinks
Cigars and cigarettes and manufactured tobacco substitutes
Electronic aerospace and defence equipment of all types
Industrial explosives including detonating fuses, safety fuses, gun powder, nitrocellulose and matches
Certain hazardous chemicals