fdi & fpi

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Presented by: Ekta (32) Neha (137) Anita (181) Ashish (182) Avirup (183) Banani (184) Saumya (239) April 21, 2022 1 FDI & FPI

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This presentation describes India's FDI & FPI investments, its policies and regulations. moreover it also contains very recent datas.

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Page 1: FDI & FPI

Presented by:

Ekta (32) Neha (137)

Anita (181) Ashish (182)

Avirup (183) Banani (184)

Saumya (239)April 8, 2023 1FDI & FPI

Page 2: FDI & FPI

CONTENTS

FDIDefinition & ConceptsConsiderations of Govt.Types Advantages & DisadvantagesRecent changesRecent data

FPIDefinitionStarting upFactors affecting FPIsFPIs benefit to societyRegulations for

FIIsNRIs / PIOsFVCs

April 8, 2023FDI & FPI 2

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• FDI stands for Foreign Direct Investment.

Foreign direct investment (FDI) is the movement of capital across national frontiers in a manner that grants the investor control over the acquired asset. Thus it is distinct from portfolio investment which may cross borders, but does not offer such control

Consistent economic growth, de-regulation, liberal investment rules, and operational flexibility are all the factors that help increase the inflow of Foreign Direct Investment or FDI

April 8, 2023 3FDI & FPI

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Requires relationship between foreign country & subsidiary

Brings out the concept of MNCs

Minimum stake of 10% of ordinary shares

Termed generally as FPI if less than stipulated 10%

April 8, 2023 4FDI & FPI

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• To explore the untapped potential market.

• Cheap labour availability

• To make profits: they sign MOU with the local partner. MOUs have to be carefully crafted and must be approved by the Govt.

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• Whether the investments are for the priority projects

• These MNCs are very powerful so Govt. must take care that they don’t repeat the history of East India Company.

• Transfer of technology must be specified in MOU

• Commodities produced must have export potential

• Profit sharing should be properly scrutinized

April 8, 2023 6FDI & FPI

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FDI

InwardOutwar

d

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Foreign direct investment, which is inward, is a typical form of what is termed as 'inward investment'. Here, investment of foreign capital occurs in local resources.

The factors propelling the growth of Inward FDI comprises tax breaks, relaxation of existent regulations, loans on low rates of interest and specific grants. The idea behind this is that, the long run gains from such a funding far outweighs the disadvantage of the income loss incurred in the short run. Flow of Inward FDI may face restrictions from factors like restraint on ownership and disparity in the performance standard

April 8, 2023 8FDI & FPI

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Foreign direct investment, which is outward, is also referred to as “direct investment abroad”. In this case it is the local capital, which is being invested in some foreign resource. Outward FDI may also find use in the import and export dealings with a foreign country. Outward FDI flourishes under government backed insurance at risk coverage

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Horizontal FDI : FDI in the same industry abroad as that in which a firm operates at home

Vertical FDI: When a multinational operates in some other related fields

April 8, 2023 10FDI & FPI

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Bringing infrastructure into the country

Bring advanced technology into the country which can be used later on in the economy

Infrastructure created will be a permanent asset of the economy

Creates more employment in the economyApril 8, 2023 11FDI & FPI

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• Inflation may increase slightly

• Domestic firms may suffer if they are relatively uncompetitive

• Too much dependency may arise and cause problems

April 8, 2023 12FDI & FPI

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April 8, 2023FDI & FPI 13

5th largest economy in the world

3rd largest GDP in ASIA & 2nd largest among emerging nations

Huge untapped markets

Large populace and cheap labour

Liberalized economy

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April 8, 202314

FDI & FPI

Main Sectors with FDI Equity/Route Limit

FDI equity limit-Automatic Route

• Insurance – 49%• Domestic airlines – 49%

(74%)• Telecom services- Foreign

equity 74%• Private sector banks- 74%• Mining of diamonds and

precious stones (certain cases)- 74% (100%)

• Exploration and mining of coal and lignite for captive consumption- 74%

FDI requiring prior approval

• Defense production – 26%• FM Broadcasting - foreign

equity 20%• News and current affairs-

26%• Broadcasting- cable, DTH,

up-linking – foreign equity 49%

• Trading- wholesale cash and carry, export trading, etc., 100%

• Tea plantation – 100%• Development of airports-

100%

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Relaxations of norms for various sectors Commodity exchanges, credit information

and aircraft maintenance are opened for overseas investors

100% investment in MRO in aviation training units

100% - Titanium bearing minerals49% - Credit information companiesHiking FDIs in public sector refineries

from 26% to 49%

April 8, 2023 15FDI & FPI

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Relaxations in norms like minimum capitalization, 3 yrs. lock - in – period

Civil Aviation sectorDomestic scheduled passenger airline sector

49% - in automatic route100% - NRIs

Non scheduled sector74% - in automatic route100% - NRIs

Real estate sector

April 8, 2023 16FDI & FPI

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FDI EQUITY INFLOWS DURING CALENDAR YEAR 2008

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SECTORS ATTRACTING HIGHEST FDI EQUITY INFLOWS

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SECTORS-WISE FOREIGN TECHNOLOGY TRANSFER APPROVALS

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522

362

STATE-WISE FOREIGN TECHNOLOGY TRANSFER APPROVALS

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It is the passive holding of securities such as foreign stocks,

bonds, or other financial assets ,none of which entails

active management or control of the securities issues by the

investor,

April 8, 2023 22FDI & FPI

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In 1992, India opened up its economy and allowed foreign portfolio investment in its domestic stock market

Since then ,FPI has emerged as a major source of private capital inflow in this country

April 8, 2023 23FDI & FPI

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Tax rates on interest or dividends

Interest rates

Exchange rates

P.I is the part of capital account on BOP

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RBI has granted permission to SEBI registered (FIIs) invest in India under Portfolio investment scheme.

All FIIs and their sub-accounts taken together cannot acquire more than24% of the paid up capital of an Indian economy

April 8, 2023 26FDI & FPI

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NRIs/PIOs can purchase/ sell shares / convertible debentures of Indian companies on stock exchanges.

An NRI or PIO can purchase shares upto5% of the paid up capital of Indian company.

All NRIs/PIOs taken together cannot purchase more than 10% of the paid up value of the company.

April 8, 2023 27FDI & FPI

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