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16 views13 pages

Presentation 5

Uploaded by

ramanirahul04
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Impact of FDI on economic growth of india.

Introduction

IMPACT OF FDI ON ECONOMIC GROWTH OF INDIA .


• Meaning
• What is FDI
• Types of FDI
• Pros and Cons of FDI
• Reasons for the decline in FDI , inflow and their remedies
• Major investors
• Restriction
• Conclusion
MEANING :

IMPACT OF FDI ON ECONOMIC GROWTH OF INDIA .


• Any investment from an individual or firm that is located in a foreign
country into a country is called foreign direct investment .

• Generally , FDI is when a foreign entity acquires ownership or controlling


stake in the shares of a company in one country , or establishes businesses
there .

• It is different from foreign portfolio investment where the foreign entity


merely
buys equity shares of a company .
FDI In India :
• the investment climate in india has improved tremendously since 1991 when
the government opened up the economy and initiated the LPG strategies .

• The improvement in this regard is commonly attributed to the easing of FDI


norms .

• Many sectors have opened up for foreign investment partially or wholly since
the economic liberalization of the country .

• Currently , india ranks in the list of the top 100 countries in ease of doing
business .

• In 2019 , india was among the top ten receivers of FDI ,totaling $ 49 Billion , as
per a UN report .this is a 16% increase from 2018.

• In February 2020, the DPIIT notifies policy to allow 100% FDI in insurance
intermediaries .
Pros of FDI :
• Increased Employment and Economic Growth .

• Human resources development .

• Development of backward areas .

• Easy international trade .

• Increase in exports .

• Exchange Rate Stability .

• Stimulation pf economic Development

• Increased productivity .

• Increment in income .
Cons of FDI :
• Hindrances to domestic investment .

• Risk from political change .

• Negative influence on exchange rates .

• Higher cost .

• Expropriation .

• Negative impact on the country


investment .
Reasons for decline in FDI , inflows and their remedies
.
Reasons for decline :

• Ease of doing business .

• Sectoral impact .

• Foreign trade .

• Uncertainty regarding taxes .

• Export challenges .

• Global permission .
Types of FDI .
• Horizontal FDI : investment in same type of business . ( for example Zara opening
new outlet in india )

• Vertical FDI :
• Backward vertical : acquisition of supplier in it’s supply chain. ( for example UK
manufacturing company buying a type factory in india.
• Forward vertical : Gives a company more control over it’s distribution . ( for example
a vehicle manufacturing buys a car retail business )

• Conglomerate FDI : investment in totally different type of business . ( for example


Walmart invest in Tata motors. )

• Platform FDI : expansion of business in another country but to export the production
to a 3rd country . ( for example ford purchase a manufacturing plant in india to export
cars to other countries .)
Reasons for the decline in FDI , inflow and their remedies .
Remedies for decline :
• Liberalized FDI regulations .

• “Make in india” and “Atmanirbhar Bahrat” .

• Revised E-commerce FDI rules.

• Investment – boosting scheme .

• Real state broking services .


Major investors .
Sector – wise Investment of FDI in Indian economy .

• FDI inflow stands at $971.521 in last 23 year.


• 48% of total FDI has been captured by major five sectors .

Services – 16%
Computer Software – 15%
Trading – 6%
Telecommunication – 6%
Automobile industry – 5%
• FDI inflow follow the rising trend except in some uncertain situation.
 Covid
 Russia-Ukraine War
 Inflation
Major investors .

FDI equity inflow.

• FDI Equity inflow has been fluctuating for last


4-5 years .

• Fluctuations occurs due to various economic and


geographical instability which impacted the
major economics .
• These Dips impacted the major sectors of Indian
economy . ( computer software and hardware )
that comprises 16% of total FDI in flow .
Restriction.

Up to 100% FDI permitted under government route .


• Banking ( Public sector ) – 20%

• Broadcasting content Services (FM radio, unlinking of news


and current affairs TV channels ) – 49%

• Uploading / Streaming of ‘News and Current affairs’ through


digital media – 26%.

• Investment by foreign airlines – 49%.

• Core Investment Company – 100% .

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