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Foreign Direct Investment

This presentation provides an overview of foreign direct investment (FDI). It defines FDI as investment made by a company in another country, where the investor owns at least 10% of shares. The document notes that global FDI increased 5.1% in 2007. It discusses the advantages of FDI, such as economic development, job creation, and technology transfer. The presentation also provides statistics on FDI in India between 2000-2008, noting it received $5.3 billion in 2004 but less than China. It concludes by explaining why FDI is preferred over foreign institutional investment.

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2K views9 pages

Foreign Direct Investment

This presentation provides an overview of foreign direct investment (FDI). It defines FDI as investment made by a company in another country, where the investor owns at least 10% of shares. The document notes that global FDI increased 5.1% in 2007. It discusses the advantages of FDI, such as economic development, job creation, and technology transfer. The presentation also provides statistics on FDI in India between 2000-2008, noting it received $5.3 billion in 2004 but less than China. It concludes by explaining why FDI is preferred over foreign institutional investment.

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© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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PRESENTATION ON FDI

PREPARED BY:
SHAGUN GUPTA
SHALABH AGARWAL
SHALINI SINGH
SHASHI PRATAP SINGH
SHISHIR PUROHIT
What is FDI?
 FDI or Foreign Direct Investment is any form of
investment that earns interest in enterprise which
function outside of the domestic territory of the
investor.

 FDIs require a business relationship between a parent


company and its foreign subsidiary.

 The parent firm needs to have at least 10% of the


ordinary shares of its foreign affiliates.

 The investing firm may also qualify for an FDI if it owns


voting power in a business enterprise operating in a
foreign country.
FDI movement in the world
• Increased by 5.1% and stood at US $
947 bn in 2007.

• Number of projects 11,574 (2007).

• Top 10 destinations for FDI :


China, US, India, UK, France, Germany,
Russia, Spain , Poland and Romania.
Foreign Direct Investment (FDI) in India

• FDI has helped the Indian economy grow.

• FDI investments are permitted through financial


collaborations, through private equity or preferential
allotments.

• FDI is not permitted in the arms, nuclear, railway, coal &


lignite or mining industries.

• By 2004, India received $5.3 billion in FDI, big growth


compared to previous years, but less than 10% of the
$60.6 billion that flowed into China.
ADVANTAGES
• Economic development of the host

• Transfer of technology

• Development of human capital resources

• Creation of jobs

• Opening export window


DISADVANTAGES

• Difference in language and culture

• Country secrets may be disclosed

• Policies adapted may not be appreciated


FDI INFLOWS
Year (April-March) Amount of FDI inflows
SINCE 2000. (In US$ million)
2000-2001 2,908
2001-2002 4,222
2002-2003 3,134
2003-2004 2,634
2004-2005 3,755
2005-2006 5549
2006-2007 15,700 TGT 12,000
2007-2008 24,570 25,000
NEW NORMS
• Set to bring in additional foreign equity
inflow into indian companies.
• Dilutes the foreign investment ceiling in
sensitive sectors.
• The cornerstone of the new norms is the
notion of control by the resident indians.
• There is no concept of indirect holding.
WHY FDI PREFERED OVER FII

 FDI is more stable than FII


 FDI is a long term investment while FII is
generally not for such long time.
FDI aims to increase the productivity/capacity

Along with cash it brings better management,


technology etc.

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