how foreign direct investment help the industrial sector

7/31/2019 How Foreign Direct Investment help the Industrial Sector

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Foreign direct investment (FDI) is a measure offoreign ownership of productive assets, such asfactories, mines and land. Increasing foreign

investment can be used as one measure of growingeconomic globalization


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Improved global sentiment and strong industrial output numbers inIndia are increasingly attracting foreign investors in the country.Other factors being attributed to the revival in foreign directinvestment (FDI) in recent times include increasing consumerconfidence.

India has been ranked at the third place in global foreign directinvestments this year, following the economic meltdown, and willcontinue to remain among the top five attractive destinations forinternational investors during the next two years, according toUnited Nations

The 2009 survey of the Japan Bank for International Cooperationconducted among Japanese investors continues to rank India as thesecond most promising country for overseas business operations,after China


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India's FDI inflows touched US$ 26.5 billion in the April-December period this fiscal. The country has attracted FDIworth US$ 23.82 billion in the January-October 2009 period

and October 2009 alone witnessed a 56 per cent year-on-year jump in FDI with inflows of US$ 2.33 billion.

The Indian retail market, which is the fifth largest retaildestination globally, has been ranked the most attractiveemerging market for investment in the retail sector by A TKearney's annual Global Retail Development Index (GRDI), in2009.


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The Governments liberalisation and economic reformsprogramme aims at rapid and substantial economicgrowth, and integration with the global economy in a

harmonised manner. The industrial policy reforms havereduced the industrial licensing requirements,removed restrictions on investment and expansion,and facilitated easy access to foreign technology and

foreign direct investment.


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All industrial undertakings are exempt fromobtaining an industrial licence to manufacture,except for

(i) industries reserved for the Public Sector

(ii) industries retained under compulsory licensing

(iii) items of manufacture reserved for the smallscale sector and

(iv) if the proposal attracts locational restriction.


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Under the small scale policy, equity holding by otherunits including foreign equity in a small

scale undertaking is permissible up to 24 per cent.

However there is no bar on higher equityholding for foreign investment if the unit is willing to

give up its small scale status. In case offoreign investment beyond 24 per cent in a small scale

unit which manufactures small scalereserved item(s), an industrial license carrying amandatory export obligation of 50 per cent wouldneed to be obtained.


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Foreign Investment Implementation Authority (FIIA)was established on 9.8.1999 to assistthe foreign investors in getting necessary approvalsand thereby facilitating quick translation of ForeignDirect Investment (FDI) approvals intoimplementation.


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For conducting meeting of FIIA, the Country is divided into 4 regions as under:Region States Covered

NorthernDelhi,Chandigarh, Haryana, Himachal Pradesh, J&K, Madhya Pradesh,Chattisgarh, Punjab, Rajasthan and Uttar Pradesh, Uttaranchal

SouthernAndhra Pradesh, Karnataka, Kerala, Pondicherry and Tamil Nadu,

WesternGujarat, Maharastra, Dadra & Nagar Haveli, Daman & Diu, Goa andLakshadweep

EasternBihar, Jharkhand, Orissa, Sikkam, West Bengal, Assam, Arunachal Pradesh,Manipur, Meghalaya, Mizoram, Nagaland and Tripura, and Andaman & NicobarIslands


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Foreign Investment ImplementationAuthority has emerged as an effective

problem-solvingplatform for the foreign investors. Nearly70% of the issues received from investors inFIIA have been resolved/decided


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1)Who are the investors in the company ?Foreign promoters constitute 57 % which includeVedanta PLC Resources .27% is held by foreign institutional investors andforeign corporate bodies. They are around 338numbers and the major ones are ;a) Franklin

Templeton Investiment Funds with 8.51 %,b)Franklin Templeton & Asset Management with2.42 % and 1.29 %Total number


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2)What are the Norms to invest in thecompany for the foreigners as well as for

the locals?

Foreign investors require to obtain Reserve Bank ofIndias approval, FDI and Central Govt approval

Other shareholders need to follow the Share Marketguidelines under Bombay Stock Exchange.


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3)What benefits do investors get from thecompany by investing into it?

They get

1)Dividends2)Good trading profits in shares.


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4) Number of Investors in the company?

1,49,832 are the total number of shareholdersas on date. This include foreign investors aswell as Indian shareholders such as InsuranceCompanies, NRIs, Mutual Funds and Banksetc.


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Good Valuations .Other than the dividends which are declared,the growth in the Company in past few years has verysignificantly contributed to achieving the targets. It is theCompanies vision to be one of the top 4 iron ore mining

companies in the world, the first major milestone to become a 50Mt organisation by 2011

Eg increase in the production and exports/Sales during past

couple of years from 10 million tons to 15 million tons and atpresent to 21 million tons and commitments of the company tofocus & achieve the target of 50 million tons seems not far away;thus leading this company to reach into the top brass Companiesin the World, is luring the investors into SESA which is now a partof Vedanta Group, based in UK.


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As the company is too huge and has verygood goodwill and it is productive and seeing

the gains which this company can give,foreign investors have invested into it.For anycorporate company you should findit.Productivity - profits gains


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Who would have thought that the tiny west coast Indianstate of Goa, known for its sunny beaches and laid-backlifestyle, would become the top FDI earner in the country?

People worldwide know Goa as a tourists paradise blessedby silvery and pristine beaches, historical temples andchurches and a place of peace-loving people who cherishcommunal harmony. Very few would, however, fancy thatGoa is today turning into a fast developing economy. Thestate has been ranked among the leading states on thedevelopmental scale by national magazines. Goas economyis growing at a faster rate than that of the country as awhole. The Goan economy traditionally hinged on mining,Gulf remunerations and now on service sector mainlytourism.


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strategic location of Goa and the availability land at good locationshas attracted real estate developers. In recent years, Goa has alsoattracted huge investment for holiday homes by non-residentGoans (NRGs), NRIs and domestic buyers. According to The Timesof India, real estate prices had boomeranged by 30 percent in2004, and had been steadily increasing. Land value in Panajidoubled in the last one year while other places across the statehave seen a steady 20 percent increase.

Nearly one in every four buyers in Goa were second home seekerslooking for a good investment option

NRIs and persons of Indian origin have particularly evinced interestin buying property here and constitute 15 per cent of the demand


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After doing the project on FDI we come to a conclusion thatthe FDI plays a very important role in the development of theeconomy. Now the government has understood the value offoreign direct investments and they are doing constantefforts to bring the foreign investors to the states. Most ofthe States are making serious efforts for simplifying the rulesand procedures for setting up and operating the industrialunits.

Moreover, with a view to attract foreign investors intheir states, many of them are offering incentivepackages in the form of various tax concessions, capitaland interest subsidies, reduced power tariff, etc.


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If more foreign investors tend to invest then theindustrial sector will be benefited and will help togrow.


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THANK YOU

Done by Group 3

how foreign direct investment help the industrial sector

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