FOREIGN CAPITAL IN INDIA

 Refers to that Capital of other countries that is in India

in form of “Aid, Borrowings, Portfolio Investments or
Direct Investments”.
 FORMS OF FOREIGN CAPITAL:-
 Foreign Aid. ( Grants or loans by IMF or IBRD).
 Commercial Borrowings.(From MKTs,IDBI,ICICI,IFCI)
 Foreign direct Investments or Foreign Collaboration.
 Portfolio Investment. (Into Financial Markets)
 NRI’s Investments and deposits.
 “Role and Need of Foreign
Capital”
 Initial stage of development.
 Foreign Expertise.
 Underdeveloped Capital market.
 Balance of payment problems.
 Advance Know-how. ( Expensive Technology etc.)
 Purchasing Capacity.
MULTINATIONAL CORPORATIONS
(MNC’s)
 MNC’s are business organisations that undertake business
activities in more than one country.

 Its also known as Global / International Enterprise.

 MNC is therefore a corporation which operates in addition

to the country in which it is incorporated i.e in one or
more countries.

 Eg:- Hindustan unilever Ltd,Proctor and Gamble india Ltd

,Philips,Honda,Pepsi,Coca-Cola etc..
Foreign Direct Investment(FDI)
 FDI is Channeled mainly through MNC’s.

 These Investments bring with them many benefits like

market access,Technology,Management expertise etc.

 In 1991 in New industrial policy mainly the doors to

FDI were opened in India.
 Current FDI’s limits in India
 Investments in NBFC’s ( Non-Banking Financial
Institutions) to the limit of 100%.
 Telecom services:- 100 %.
 Private Banks:- 74 %.
 Insurance sector:- 49 %.
 Defence Industry:-49 %.
 Railways:- 100 %.

 “FDI in India has increased by 500 percent

in the past decade”
 Causes of FDI in India
 Government Planning. ( Development, MRTP Act etc.)
 Source of technology. ( Must and Required)
 Cost benefits. (Favored Destination)
 Crucial Inputs. ( From other foreign countries).
 Low cost opportunities.
 Rapid economic progress. ( Flexibility, Relaxations etc)
 Less barriers or Permissions needed.
rahulmukherjee24@yahoo.in