BUSINESS ENVIRONMENT PRESENTATION

MASTER OF COMMERCE, HONOURS

(MCOM-HONS)

FOR THE BATCH 2020-2022

UNDER
HONOURS SHOOL SYSTEM
AT
UNIVERSITY BUSINESS SCHOOL
PANJAB UNIVERSITY
CHANDIGARH
DATE OF PRESENTATION: FEBRUARY 13,
 1. Meaning & features of international business
management
2. Globalization: It’s forces & dimensions
3. Stages of globalization & MNC
4. Technology transfer
CONTENT 5. Globalization Boon or Bane
6. Global Business environment
7. FDI's current status, different sectors
8. India’s involvement in FDI & government
policy of India towards FDI &“FDI policy
2020”
 International Business conducts
business transactions all over
the world.
These transactions mainly
INTRODUCTION includes-
 Transfer of goods, services,
technology, managerial
knowledge, and capital.
 They include components-
Export and Import
INTERNATIONAL BUSINESS

International business means carrying on business activities(like goods, capital)beyond national

boundaries, even if the management is located in a single country.
It is also called as ‘Global Business’.
All commercial transactions that take place between two or more countries-including sales,
investments and transportation.
For example- When any company in India sells products in China, UK will be termed to be an
international business.
INTERNATIONAL BUSINESS
MANAGEMENT
It is the management of business operations in an organization serving markets
and operating in more than one country.
It requires knowledge and skills above and beyond the normal business expertise
such as competitive conditions, the legal and financial environment, the
capability to do multicurrency transactions and managing across borders.
FEATURES OF INTERNATIONAL BUSINESS MANAGEMENT
Large scale operations

Integration of economies

Dominated by developed countries and MNC’s

Benefits to participating countries

Keen competition

Special role of science and technology

International restrictions

Sensitive nature
 In international business, all the
operations are conducted on a very
large scale.
1. Production and marketing activities
are conducted on large scale.
Large Scale It first sells its goods in the local
Operations market and then the surplus goods are
exported to international markets.
 It combines or integrate the economies of
many countries because it uses finance from
one country, labour from another country and
infrastructure from another country.
2. It designs the product in one country,
produces its parts in other countries and
Integration of assembles the product in another country and
sells the final product in many different
economies countries(international market).
3. DOMINATED BY DEVELOPED COUNTRIES AND MNC’S

At present , MNC’s from USA ,Europe and Japan dominate or fully control foreign trade
because they have large financial and other resources. They also have best technology and
research and development(R&D).
The developed countries mainly have highly skilled employees and managers because they give
high salaries and other benefits.
Therefore, they produce quality goods and services at low prices. This help them to capture and
dominate the world market.
4. BENEFITS TO PARTICIPATING COUNTRIES

Every country whether developed or developing country gets the benefit.

Developed country gets the benefit in terms of foreign capital and technology.
They can also get benefit of rapid industrial development. All this will result in
the economic development. Therefore, developing countries open up their
economies through liberal economic policies.
5. KEEN COMPETITION
International business has to face too much of competition in the
world market and the competition is between the unequal
partners(developed and developing countries) and in this competition,
developed countries also have many contacts in the world market ,
that’s why developing countries find it very difficult to face
competition from developed countries.
6. Special role of science and technology

International business give a lot of importance to science and

technology as it helps the business to have large-scale
production.
Developed countries having surplus technology always
dominate global business and international business helps them
to transfer such top high-end technologies to the developing
country.
7. International restrictions

International business faces many restrictions on the inflow and

outflow of capital, technology and goods. Many countries
government do not allow international businesses to enter their
countries. They have many trade blocks, tariff barriers, foreign
exchange restrictions. They cause harm to international business.
8.Sensitive nature

Any change in the economic policies, technology, political

environment has a huge impact in the international business.
Therefore, it must conduct marketing research to find out and
study these changes. They must adjust their business activities and
adapt according to the changes.
 SLIDE 1

GLOBALISATIO
N
MEANING 16

Is the free movement of people, goods, &

services across boundaries.

It is the process of interaction &

integration among people, companies, &
governments worldwide.

It is the intensification of worldwide social

relations which link distant localities in such a
way that local happenings are shaped by events
occurring many miles away & vice versa.
 ETYMOLOGY 17

FIRST:
1930s, but only in the
context of education &
the term failed to gain
traction.

THEODORE LEVITT:
Brought it into the
mainstream business
audience later in the
middle of 1980.
 DEFINITION
According to ROBERTSON,
“Globalisation is a process that comprises two
simultaneous processes: global compression of the
world & the intensification of consciousness of the
world as a whole. Globalization does not simply refer
to the objective process of increasing
interconnectedness. It also refers to conscious &
subjective matters (namely the scope & density) of
the consciousness of the world as a single place”.

According to WHO,
Globalization can be defined as ” the increased
interconnectedness & interdependence of peoples &
countries. It is generally understood to include two
inter-related elements: the opening of international
borders to increasingly fast flows of goods, services,
finance, people & ideas; & the changes in institutions
& policies at national & international levels that
facilitate or promote such flows.”
EXAMPLE
S
 Pepsi

 Coca-Cola
 Kentucky Fried
Chicken
McDonald’s
 FEATURES 20

LIBERALISATIO
LIBERALISATIO N OF IMPORT-
N EXPORT
SYSTEM

PRIVATISATIO
FREE TRADE Upcoming Deposits N

GLOBALISATIO ECONOMIC
N OF ECONOMIC REFORMS
ACTIVITY
 FORCES
ADVANCEMENT OF
TECHNOLOGIES

INCREASE IN
CONSUMER DEMAND
REDUCTION IN
CROSS-TRADE
BARRIERS
HIGH COMPETITION
 ADVANCEMENT OF
TECHNOLOGIES
Since 1990s, enhancement in
telecommunications & Information
Technology (IT) has marked remarkable
improvements in access of information &
increase in economic activities. This
advancement in technologies has led to
the growth of various sectors of
economies throughout the world.
Technology shaped & set the foundation
for modern globalization.
 Over the years, with increase
in the level of income &
standard of living, the
demand of consumers for
various products has also
INCREASE increased. As domestic
IN markets become more &
Upcoming Deposits
more saturated, the
CONSUMER opportunities for growth are
DEMAND limited & global expanding is
a way most organizations
choose to overcome this
situation thus facilitating
globalization.
 REDUCTION IN
CROSS-TRADE
BARRIERS
Gradual relief in the cross-border trade
restrictions by most governments, in
turn, increases the growth rate of an
economy. Liberalized trading rules &
deregulated markets lead to lowered
tariffs & allowed foreign direct
investments in almost all over the
world.
 The frequent increase in
competition in the
domestic market compels
organizations to go
HIGH global. Thus, various
Upcoming Deposits

COMPETITION organizations enter other

countries (for selling
goods and services) to
expand their market
share.
DIMENSIONS
POLITICAL ECOLOGICAL
GLOBALISATIO GLOBALISATIO
N N

CULTURAL
GLOBALISATIO
N

ECONOMIC
GLOBALISATIO
N
 It is the intensification & stretching of economic
interrelations around the globe. It refers to the
ECONOMIC widespread international movement of goods,
capital, services, technology & information.
GLOBALISATION EXAMPLE: Ford has plants in Mexico, Coca
Cola, Nike, Shell are all over the world.

It is the intensification & expansion of political

POLITICAL interrelations around the globe & refers to the
growth of the worldwide political system, both
GLOBALISATION in size & complexity.
NAFTA: Free trade between US, Canada, &
Mexico is example of free trade & economics
replacing nationalism & protectionism.
 It is the intensification & expansion of cultural
flows across the globe. It refers to the transmission
of ideas, meanings, & values around the world in
such a way as to extend & intensify social relations.
CULTURAL Example: McDonald, Employing a market strategy
GLOBALISATION to establish their brands as an essential part of the
way people see themselves, they have captured a
large global market, particularly in the younger
generation.

It refers to facilitating environmental

conservation by promoting efficient use of
natural resources & increasing awareness
ECOLOGICAL concerning environmental degradation.
GLOBALISATION Example: Hybrid cars that are produced in
developed countries are currently being used in
various parts of the world to reduce carbon
dioxide emission.
 STAGES OF
GLOBALIZATION
&
MNC
 STAGES OF GLOBALIZATION
S t a g e 1 : - Pu re ly D o m e s t ic C o m pa n y
T h i s I s T h e I n i t i a l F o r e i g n I n v o l v e m e n t . I t I s T h e A r m ’s L e n g t h S e r v i c e A c t i v i t y O f A n
D o m e s t i c C o m p a n y W h i c h M o v e s I n t o N e w M a r k e t O v e r s e a s B y L i n k i n g U p Wi t h L o c a l
Dealers And Distributors.

S t a g e 2 : - In t e r n at io n a l C o m pa n y
Here Some Of The Domestic Companies Start Thinking Of Expanding Their Operations
In The International Market. There Main Strategies For Entering The Market Are:
a) Global Outsourcing
b) Exporting
c) Licensing
d) Direct Investments
e) Franchising
Stage 3:- Multinational company
after sometime the international companies realize that the domestic model and practices
adopted through extension policies do not serve the purpose . The foreign customers may not
prefer the products which are sold in the domestic market. Hence these companies responds
to different needs of these customers and produce goods and services that will satisfy them.
Stages 4 :- Global
The global company adopts global strategy for marketing its products. It may produce either
in the home country or in any other single country and market its products throughout the
world. It may also produce the products globally and market them domestically.
Transnational company
It operates at the global level by way of utilizing global resources to serve the global
market. It has geocentric orientation and integrated network. Transnational Company
operates at the global level by way of utilizing global resources to serve the global markets.
It has geocentric orientation and has integrated network. Its key assets are dispersed and
every sub-unit of the company contributes towards achievement of the company objectives.
It produces best quality raw materials from the cheapest source in the world, process them in
the country wherever it is economical and sells the finished products in those markets where
prices are favorable.
 MULTINATIONAL CORPORATIONS
MNC’s are the networks of affiliated units in the different countries presided over
by the parent firm of some specified nationality.
It is a business that involves two or more nations but joined together by a common
business strategy .They are multifaceted organizations in the sense that they are
different in structure and operates in different countries and from industry to
industry.
 CHARACTERISTICS AND SIGNIFICANCE OF MNC’S
MNC’s are highly specialized and organized and work from different subsidiaries of different
nations at the same time.
Gargantuan size :- Some MNC’s are very large in size . The size depends on the no. of
countries they operate in, the amount of output they produce and the market power. In 2006
the total sales of 200 top ranking MNC’s were bigger than the combined GDP of 187
countries ,so the MNC’s are all very powerful in every ways.
Rapid evolution :- MNC’s are under rapid evolution process this involves constant efforts
on their part to improve their products, technology, and other operational strategies.
 Oligopolistic structure :- the oligopolistic structure is derived from the fact that different
branches or firms producing similar products combine themselves to form a large unit or
have collusive relationship among smaller individual units.
 Four actors : - this includes
1. Home country of MNCs .
2. Host country of MNCs.
3. The MNCs themselves.
4. The international community.
 Collective transfer of resources :- MNCs are involved in operation in those countries
where market is vast like in India the resources are cheap and plenty. This helps in
keeping the minimum level of cost of production.
All- pervasive :- The MNCs remain active in all the important spheres including
manufacturing works , agriculture and mining , banking industries ,trade ,transfer of
technology , food industries, communication ,transport ,energy and oil productions
and so forth.
Wielding political and economic influences :- MNCs not only field influences on
the economic policies of the host country ,but also in the running of political
machinery. With the help of the host country and the international institutions such
as world bank , WTO ,IMF , the MNCs turn the tide in their favor through policy
changes so that they can do business in the host country with confidence and
without permission.
 PROS OF MNCS
1. Their size benefits the consumer.
2. They can help a country in many ways.
3. They are cost effective .
4. They can create job and wealth.
5. They helps the others companies as well.
6. They adhere to the best brand standard.
7. They improves the standard of living .
8. There profits are consumed for development and research.
9. They allow for wider market.
 CONS OF MNCS
1. They might dominate the market unfavorably.
2. They might exploit the workforce.
3. They can push local firms out of the market.
4. They take advantage of consumer expenses.
5. They are willing to gain high profits at any cost.
6. They are great environmental threat.
7. They strive for a monopolized business.
 SLIDE 1

TECHNOLOGY
TRANSFER
INTRODUCTION

 Technology is the technical knowledge used in production or

embodied in capital or machinery
 So from the word TECHNOLOGY TRANFER implies the transfer
of technical knowledge from one country to another..
 Agencies involved in transfer of such technology are
government, MNC's , private agencies or international non
profits organizations.
Most of the Indian Companies buy the updated technology from
advanced countries as Japan.U.K and Germany.
Presently transfer of technology is a very important factor which fosters
international business.
MNC’s bring new products , new process & technology to host
countries, which may be old in home countries but relatively new in host
countries e.g :-Cellphones in India.
Technology can be transferred in two ways:-
PHYSICAL CAPITAL
 HUMAN CAPITAL
Channels of Technology Transfer….

• Import of capital and Investment

• Through foreign investment & associated transfer of
knowledge,knowhow or equipment.
• Licensing and Patents
• Import of Techniques
• Flow of knowledge,ideas,books,journals
• With the movement of people from one country to another.
Measures of Technology Transfer

• Technology transfer is necessary for either manufacturing the final

product or processing intermediate inputs; it also includes product
design,manufacturing techniques etc.
• So there are distinctly three processes in technology transfer . Such
as:-

Adoptio
Rooting Diffusion
n
Problems of Technology Transfer
• Technology Transfer has been the high cost and limited capability of
the resources.
• Technology does not remain flexible.
• Appropriateness
• Dependence
• Obsolescence/Outdated technology
GLOBALIZATION
BOON
OR
BANE
Why INDIA need Globalization?
Globalization is an important component of New Economic Policy 1991.There
were several reasons for same :-

Fall in Foreign Exchange Reserves

High Inflation

Adverse Balance of Payments (BOP)

Mounting fiscal deficit

All the above reasons gave birth to this policy.

IMPORTANCE OF Globalization:-

• There will be unrestricted flow of goods and services,

technology and expertise among different countries in
the world.
• There will be an increased cooperation of Indian
economy with different economies across the world.
Positive Impacts of Globalization:-
• Increase in Foreign Exchange Reserves:-Large
amount of forex reserves reflects robustness of the economy
and enhances the confidence of the global investors.
• A Vibrant economy:-

Indian economy has benefitted from globalization . Results

are evident in terms of an impressive increase in the growth
rate of GDP.
• A Check on Inflation
When there is a great flow of goods and services in the
economy there has been a check on the rate of Inflation.
• A drift from Monopoly market to
competitive Market:-
Indian markets are now increasingly shedding its
monopolistic character and becoming more and more
competitive in nature
• Consumer Sovereignty
• Consumer Sovereignty has increased widened. Such as
International brands like Puma , Gucci etc are investing in the
Indian market with the changing of fashion statement of
Indians.
Additional Advantages of Globalization
are:-
• India is the 3rd largest global telecom market . The mobile
subscriber has grown from 0,3 million in 1996 to over 250 million.
• Big shopping malls , Multiplex movie halls and high rise residents
are seen in every cities.
• Telecommunication and Software Industries are booming in India.
• Foreign universities collaborating with Indian universities which had
a positive impact on Education .
Negative Impacts of Globalization
Neglect of Agriculture:-Agricultural sector has suffered a set back
due to globalization
Indian farmers is shifting the production of cash crops for foreign
markets.
Causing a shortfall of domestic supplies of food grains.
Unequal wealth Distribution:-
• Some section of people in India , basically poor and very poor
, tribal groups , they did not feel the heat of globalization at
all.
• They remain poor and poorest as they were.
Cultural Erosion:-
• Globalization has also caused cultural erosion of the Indian society.
Everybody wants to be economically independent and well off,
regardless of his responsibility towards the family or society.
Spread of Consumerism:-
• A variety of global trends in the market has lured the masses to
become spend thrift even beyond their means.
Additional Problems:-

• High growth but problem of unemployment

• Price hike of every daily usable commodities.

• MNC’s by selling their new innovative products are dominating the

Indian Markets and hence domestic producers are being marginalized.

• Ethical responsibility of business has been diminished.

A CASE STUDY ON COCA -COLA
Coca cola’s exploitation of labor and resources is the perfect
example of the destructive power:-

• Coca cola began its set up its factories in India many

problems occurred shortly after

• Once the factories started built in INDIA ,land had cleared

out which resulted in devastating loss of agricultural land.

• It exploits the resources in India such as Water.

• Coca cola factories are water inefficient and they take
advantage of this resource without considering how it will affect
the citizens of India.

• Nine years prior to the opening of coca cola factory the level of
ground water fell three meters which is the only natural
because people in India continue to use it in their daily lives ,
and nine years after the opening of the factory the level of
ground water had dropped a shocking amount-22.36 meters.
CONCLUSION…

• Flowing with globalization India is shining in nearly every

prospects .
• India is getting a global recognition and slowly moving
towards to become a major economic and political
strength.
• Though the development is progressing rapidly still many
basic problems like rural poverty , corruption and political
instability remained unsolved.
GLOBAL BUSINESSS ENVIRONMENT
 MEANING OF GLOBAL
BUSINESS
ENVIRONMENT
The global business environment can be defined.
as the environment in different sovereign
countries, with factors exogenous to the
home environment of the organization, influencing
decision making on resource use and capabilities.
EXAMPLES OF GLOBAL BUSINESS
FEATURES OF GLOBAL
BUSINESS
ENVIRONMENT
1 LARGE SCALE OPERATIONS

2 EARNS FOREIGN EXCHANGE

3 INTEGRATES ECONOMIES

4 LARGE NUMBER OF MIDDLEMEN

5 HIGH RISK

6 INTENSE COMPETITION

7 INTERNATIONAL RESTRICTIONS
IMPORTANCE OF GLOBAL BUSINESS ENVIRONMENT

1 Global business leads to creation of new jobs.

2 Global trade raises living standards.
3 Global business improves international relations.
4 Global business helps in expansion and diversification.
5 Global business helps to spread business risks.
6 Global business helps in increasing organization efficiency.
7 Global business is needed to get benefits from the government
 SOCIAL FACTORS

POLITICAL FACTORS FACTORS AFFECTING LEGAL FACTORS

GLOBAL BUSINESS
ENVIRONMENT

TECHNOLOGICAL
ECONOMIC FACTORS
FACTORS
1 SOCIAL FACTORS

These factors are related to changes in social structures. These factors

provide insights into behaviour, tastes, and lifestyles patterns of a
population. Buying patterns are greatly influenced by the changes in the
structure of the population, and in consumer lifestyles. Age, gender, etc
all determine the buying patterns.

2 LEGAL FACTORS
For a successful business operation it is important that the businesses
consider the legal issues involved in a particular situation and should
have the capability to anticipate ways in which changes in laws will affect
the way they must behave. Laws keep changing over a period of time
3 ECONOMIC FACTORS

These factors involve changes in the global economy. A rise in living standards would
ultimately imply an increase in demand for products thereby, providing greater
opportunities for businesses to make profits. This would imply that in case of a rise in
economic activity the demand of the product will increase and hence the price will
increase. In case of reduction in demand the prices will go down. Global business
should be developed keeping in mind the fluctuations in the economy.
4 POLITICAL FACTORS
This refers to the changes in government and government policies. Political factors
greatly influence the operation of business. Business must consider the stability of the
political environment, government’s policy on the economy

5 TECHNOLOGICAL FACTORS
These factors greatly influence business strategies as they provide opportunities for
businesses to adopt new innovations, and inventions. This helps the business to reduce
costs and develop new products. Organisations need to consider the latest relevant
technological advancements for their business and to stay competitive. Technology
helps business to gain competitive advantage, and is a major driver of globalization.
 • Foreign Direct Investment (FDI)

Foreign Direct Investment occurs when a company takes a

Slide 1 ownership in a business entity in another countries.
controlling
Generally, FDI takes places when investor establishes foreign
business operation or acquires foreign business assets in foreign
company.
For example- if an American multinational firm opens up
operation in India , either by opening its own premises or by
partnering with local firms that investment would be
considered as part of FDI.
METHODS OF FOREIGN DIRECT INVESTMENT 73

Joint ventures- it is a form collaboration between two or more firms to create a jointly
owned enterprise in a host country

Acquisitions- An acquisition refers to direct investment or purchase of an existing

company.

Wholly owned subsidiary- it occurs when the company in foreign country is

entirely controlled/owned by one single company.

 Green field investment- it refers to investment in a new type of project which is not
done before or it may be an investment which will not disturb the ecological balance and will
improve environment.

Your Logo Here

 FORMS OF FDI 74

Horizontal: when a business expands its domestic operation to a foreign

country. but in this case the business conducts the same activities manufactures
same product with the same type and methods of production which it uses in
domestic country but now it is also being conducted in foreign country. For
example: McDonald's opening restaurants in japan would be considered as
horizontal FDI.
Vertical: In case of vertical FDI, each stage of production is performed in a
country where the cost of production is lowest. It can in two ways: forward and
Backward vertical
In case of forward vertical FDI, the input produced in home country are
sent overseas to complete the production process there. For example- if any
assembly plant is established in foreign country by the home country MNC
or TATA motors buying a car distributorship in America.

Your Logo Here

 In case of backward, foreign investment overseas(host country) is used to 75

provide the necessary inputs for the expansion in home country. Example-
Toyota acquiring a tyre manufactures.
• Conglomerate: In case of conglomerate FDI, the FDI produces a product
in the host country, which is entirely new and it does not produce such product in a
home country.
The basic purpose is to capture the market and have control over a
particular type of product, which is in high demand in the host country.
Such an FDI are highly competitive in nature and its availability is also
much limited the world.
For example- SAMSUNG is primarily known as manufacturers of
smartphones. But when addition to that Samsung builds ships, undertake
other project like food processing etc.

Your Logo Here

• ADVANTAGES • DISADVANTAGES

• Leads to capital inflow • Foreign investor may repatriate a large

• New and improved technology brings to amount of profit to their home profit and
do not generate significant value added in
host country.
host country.
• Due to better production method , low • Foreign investors, particularly the MNCs
cost production and better technology are engaged in dishonest practices
the host country may like to enter including bribery, corruption, and so on
foreign market in the host country
• FDI can also contribute to positively to • If capital is procured from inside the host
solve the problem of balance of country then it also leads to capital
payments and increases foreign outflow.
exchange reserves.
• Foreign investors may try to influence
• It also leads to growth of the country. national policies and politicize may
important industries issues.
CURRENT SCENARIO OF FDI IN INDIA (APRIL- 77

SEPTEMBER 2020)
Singapore emerged as the largest source of FDI in India during the
period of April-September with USD 8.3 Billions investments.
USA was emerged as the second largest source of FDI replacing the
Mauritius with an investment of USD7.12 Billion followed by Cayman
island with USD 2.1 billion and then Mauritius with USD 2 billion
investment and Netherlands with USD 1.5 billion.
Foreign direct investment (FDI) into grew by 15% to USD 30 billion
during the first half of the fiscal .
In July , the country had attracted USD 17.5 billion of foreign
investment.
 78

According to data of Department for Promotion of Industry and

Internal Trade (DPIIT) , Sectors which attracted maximum foreign
inflow during April-September includes computer software and
hardware(USD 17.55), Services(USD 2.25 billion), trading (USD
949 billion), chemical (USD 437 million) and automobile(USD 417
million ).
Among states, the highest recipient of FDI inflows this fiscal year
has been Gujarat with Rs. 1.19 lakh crore. Karnataka and
Maharashtra both received Rs. 27000 crore of FDI inflows while
Delhi received Rs. 19863 crore.
INDIA’S INVOLVEMENT IN FDI
& GOVERNMENT POLICY OF
INDIA TOWARDS FDI
&
“FDI POLICY 2020”
 INTRODUCTION
FDI has been given a significant role in the growth dynamics of India especially after
the liberalisation and deregulation of the economy since 1991.
Over the years many structural changes have taken place in the Indian economy to
make India a lucrative place for foreign investment.
Every year, different types of foreign investment including portfolio investment and
FDI are pouring into the country.
 GOVERNMENT POLICY OF INDIA TOWARDS FDI
A. Pre – Liberalisation policy on foreign investment:
 Before the period of liberalisation (1991), FDI was much restricted.
 Only in high- priority areas where technology import was considered necessary, foreign
capital and technology were given restricted permission.
 In some cases however,
 Foreign technology, but not foreign investment was permitted.
 Foreign investment was permitted on a selective basis.
 Foreign collaboration was not considered necessary.
 Foreign equity participation was limited to only 40%.
Foreign exchange regulation act (FERA) of 1973 was established according to which, for a
foreign company or person, prior permission from the RBI was necessary to conduct business,
trade of industrial or commercial nature, and purchasing shares of Indian companies.
Other acts that restricted the entry of foreign investment were the MRTP Act (1969) and the
Patents Act (1970).
The public sector industries were assigned a dominant position, and the scope of private
investment both Indian and foreign were limited.
The economic crisis in India in the 1980s and the spread of the ideals of globalization were
indirectly associated with the change in India’s stance on foreign investment in India.
Another factor that was responsible for the change in India’s foreign investment policy was the
advice from the International Monetary Fund (IMF) as conditionality against the huge loan that
India had to obtain from IMF.
B. Post - Liberalisation Policy on Foreign Investment:
Foreign investors were allowed to freely compete along with the domestic investors to
increase the pace of competition. The investment limit was raised from 49 to 100%.
The two important institutional development that took place after 1991 was the
establishment of Foreign Investment Promotion Board (FIPB) and Foreign
Investment Implementation Authority (FIIA).
These two institutions were working in coordination to not only promote FDI, but also
to eliminate all types of difficulties and procedural problems faced by foreign investors.
The FERA has been amended to abolish the restrictions placed on foreign companies.
In order to promote foreign investment, India has joined the Multilateral Investment
Guarantee Agency. It shows good results in attracting FDI.
In 1996 – 97, the following major changes were made in the area of foreign investment:
Foreign investment promotional council (FIPC) has been set up to prepare project report
in critical selected areas to facilitate foreign investment.
The list of industries eligible for automatic approval up to 51% foreign equity has been
expanded from 38 to 48.
Nine categories of industries have been given the approval of foreign equity participation up
to 74%.
In the mining sector, 3 industries have been made eligible to get automatic approval up to
50% foreign equity.
Detailed guild lines has been announced by the government for considering foreign
investment proposals for 100% foreign equity.
FDI POLICY 2020
 MAIN REASON BEHIND REVISING FDI POLICY
The main target behind revising the FDI policy was China.
The People’s Bank of China (China’s central bank) increased its stake in India’s largest non –
banking mortgage provider, HDFC, from 0.8 percent to 1 percent just as HDFC lost about a
third of its share price due to economic disruption caused by the corona virus pandemic.
Such purchase of the share by the Chinese bank crashes the India’s share market and in order to
restricts such a exploitations by the China (involving other neighbouring countries who shares
border with India) under a situation of Covid 19, the government plans to revise the FDI policy.
Thus, govt took measures to change the policy and comes up with new “FDI Policy 2020”.
INDIA’S CONSOLIDATED FDI POLICY 2020: KEY
ASPECTS

INTRODUCTION
 The Department for Promotion of Industry and Internal Trade (DPIIT) and the
Ministry of Commerce and Industry (govt of India) on October 28,2020 released the
latest consolidated FDI policy document (Revised Policy).
 The DPIIT has released an updated consolidated FDI policy after a long gap of 3 years
since the last one was which was issued on 28 August 2017.
 The effective date of FDI policy 2020 is October 15, 2020
 KEY CHANGES
The revised policy is aligned with the implementation of the Foreign Exchange
Management (Non Debt instruments) Rules, 2019 (NDI rules) and Foreign Exchange
Management (Mode of Payment and Reporting of Non – Debt instruments)
Regulations 2019 under the Foreign Exchange Management Act 1999(FEMA) by
incorporating all the necessary changes.
FDI Policy 2020 subsumes and supersedes all press notes/press
releases/clarifications/circulars as well as regulations(prescribed by RBI) issued by
Department for Promotion of Industry and Internal Trade (DPIIT).
 PURPOSE OF FDI POLICY 2020
The purpose of consolidating the different presses and policies by the DPIIT was to
provide the foreign investors with single document from which they can get the latest
information on the permissible limits in the different sectors, instead of going to the
separate press notes issued by DPIIT and the rules and regulations prescribed by the
RBI from time to time.
The main purpose was to prevent the opportunistic takeover of domestic firms by
neighbouring countries on account of COVID – 19 pandemic under the FEMA law.
This was done in order to protect the domestic companies in the pandemic situation from
the neighbouring countries.
 KEY HIGHLIGHTS OF POLICY
In a bid to provide investor – friendly framework to foreign entities, the govt has granted
relaxations in a few sectors such as mining, single brand retailing, digital news etc.
The changed FDI policy made the prior approval of the government mandatory for foreign
investments from countries that share border with India( this includes- China, Bangladesh,
Pakistan, Bhutan, Nepal, Myanmar and Afghanistan).
Earlier, only investment from Pakistan and Bangladesh required the Indian government's
approval for security reasons. (AS PER FDI POLICY 2017).
Without naming China, an ordered issued by the Department for Promotion of
Industry and Internal Trade (DPIIT) and said that “the scope of the policy had been
widened to cover all neighbouring countries that share a border with India”.
This was done in order to prevent the opportunistic takeover of domestic firms on
account of COVID – 19 pandemic under the FEMA law.
A non resident entity can invest in India, subject to the FDI Policy except sectors/
activities which are prohibited.
However, an entity of a country, which shares land border with India or where the
beneficial owner of an investment into India is situated in or is a citizen of any such
country, can invest only under the Government route.
The countries sharing border with India including China if wants to invest in shares of
India above 10%, needs a government approval for the same.
A citizen of Pakistan or an entity incorporated in Pakistan can invest, only under the
government route.
No such investment is allowed from Pakistan in defence, space, atomic energy and
sectors/ activities that are prohibited for foreign investment.
This also applies to “beneficial “ owners – even if the investing company is not located in
a neighbouring country, it would still be subject to these conditions(of prior govt
approval) if its owner is a citizen or resident of such country.
Questions?
 REFERENCE
S
RESEARCH PAPERS
Migone, A. (2002). Dimensions of Globalization: Cultural and Institutional Novelties, Ethical Needs. In Global
Instability (pp. 201-218). Springer, Dordrecht.
Rifai, Irfan. (2013). Various Dimensions of Globalization and Their Implications for The Leadership and Management
of Education. Lingua Cultura. 7. 10.21512/lc.v7i2.425.
BOOKS
B.N. Ghosh, Business Environment, Oxford University Press.
Cherunilam, F. (2016). Business environment. Himalaya Publishing House.
WEBSITES
Dimensions of globalization – Wikipedia
Ecological Dimensions of Globalization - 1646 Words | Term Paper Example (ivypanda.com)
Example Of Cultural Globalization - 1107 Words | Internet Public Library (ipl.org)
Globalization Poster - Bing images
https://greengarageblog.org/17-main-pros-and-cons-of-multinational-corporations
https://theintactone.com/2019/09/29/ibm-u1-topic-5-dimensions-and-stages-in-globalization/amp/
https://timesofindia.indiatimes.com/business/india-business/finance-ministry-notifies-changes-in-fdi-policy-under-
fema/articleshow/75316305.cms
THANK YOU
Presented By:
Himani (Slides 3 to 14)
Richa Sharma (Slides 15 to 28)
Rupali (Slides 29 to 38)
Shikha (Slides 39 to 62)
Shivika Kaushik (Slides 63 to 70)
Shiwani (Slides 71 to 77 )
Simranjeet Kaur (Slides 78 to 91)