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Thursday, May 19, 2011

PowerPoint Presentation On FDI




1. Portfolio investment
Investment that does not involve obtaining a degree of control in a company

Foreign Direct Investment
Purchase of physical assets or a significant amount of the ownership (stock) of a company in another country to gain a measure of management control

2. Advantages of FDI

Increase investment level and thereby income & employment
Increase tax revenue of government
Facilitates transfer of technology
Encourage managerial revolution through professional management
Increase exports and reduce import requirements
Increase competition and break domestic monopolies
Improves quality and reduces cost of inputs

3. Limitations of FDI

Flow to high profit areas rather than main concern areas
Through their power and flexibility, MNC can undermine economic autonomy and control
Sometimes interferes in the national politics
Sometimes engage in unfair and unethical trade practices
Sometimes result in minimizing / eliminating competition and create monopolies or oligopolistic structures

4. FDI equity limit-Automatic route
Insurance – 26%
Domestic airlines – 49%
Telecom services- Foreign equity 74%
Private sector banks- 74%
Mining of diamonds and precious stones- 74%
Exploration and mining of coal and lignite for captive consumption- 74%

FDI requiring prior approval
Defense production – 26%
FM Broadcasting - 20%
News and current affairs- 26%
Broadcasting- cable, up-linking – 49%
Trading- wholesale cash and carry, export trading, etc., 100%
Tea plantation – 100%
Development of airports- 100%
Courier services- 100%

5. 100% FDI permitted in India

Engineering & Manufacturing sectors
Roads & Highways, Ports and Harbors
Industrial model towns/industrial parks
Hotels & Tourism
Pollution Control and Management
Advertising & Film industry
Power generation (hydro-electric, coal/lignite, oil or gas based)
Information Technology including E-Commerce

6. Factors affecting FDI

Profitability: Attract where return on investment is higher
Costs of production: Encouraged by lower costs of production like raw materials, labor .
Economic Conditions: Market potential, infrastructure, size of population, income level etc
Government policies: Policies like foreign investment, foreign collaboration, remittances, profits, taxation, foreign exchange control, tariffs etc.
Political factors: Political stability, nature of important political parties and relations with other countries.

7. FII

Foreign Institutional Investors (FIIs) are allowed to invest in the primary and secondary capital markets in India through the portfolio investment scheme (PIS). Under this scheme, FIIs/NRIs can acquire shares/debentures of Indian companies through the stock exchanges in India

8. List of companies in which FII investment is allowed upto limits fixed by companies as indicated against their names

Amtek Auto Ltd (74%)
Advanta India Limited 49%
Amtek India Ltd (74%)
Ahmednagar Forgings Ltd (74%)
Anant Raj Industries Ltd. (40%)
ANG Auto Ltd (49%)
Apollo Hospitals (74%)
Aptech Ltd (74%)
Arshiya International Limited (49%)
Bombay Rayon Fashions Ltd (40%)


The main objective of the study is to know about in which sector the industries are invest our money FDI or FII.
To identify factors which inhibit higher FDI or FII flows and suggest remedial steps.
To examine policy reforms towards mergers and acquisition for attracting FDI or FII
To suggest changes in institutional apparatus and organizations, both in Centre and States, for attracting the FDI or FII flows.


The result of all these efforts are encouraging: the inflow of foreign capital has been steadily rising year to year so that FDI is better then FII
Investors based in many countries have taken advantage of the India-Mauritius bilateral tax treaty to set up holding companies in Mauritius which subsequently invest in India, thus reducing their tax obligations.
By industry, the largest destinations for FDI are electrical equipment (including computer software and electronics), services, telecommunication & transportation.

11. Thanks

1 comment:

Unknown said...

Very good and its help to understand the concept of FDI.

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