PRESENTED BY RADHEY SHAYAM KUMAWAT

Portfolio investment Investment that does not involve obtaining a degree of control in a company

Foreign Direct Investment Purchase of physical assets or a significant amount of the ownership (stock) of a company in another country to gain a measure of management control

Investing in India

Automatic Route Automatic Route Automatic Route

General Rule General Rule General Rule No prior permission No prior permission No prior permission required required required Inform Reserve Bank Inform Reserve Bank Inform Reserve Bank within 30 days of within 30 days of within 30 days of inflow/issue of shares inflow/issue of shares inflow/issue of shares

Prior Permission Prior Permission Prior Permission (FIPB) (FIPB) (FIPB)

By Exception By Exception Prior Government Prior Government Approval needed. Approval needed. Decision generally Decision generally within 4-6 weeks within 4-6 weeks

   

Increase investment level and thereby income & employment Increase tax revenue of government Facilitates transfer of technology Encourage managerial revolution through professional management

  

Increase exports and reduce import requirements Increase competition and break domestic Improves quality and reduces cost of inputs monopolies

 

Flow to high profit areas rather than main concern areas Through their power and flexibility, MNC can undermine economic autonomy and control

  

Sometimes interferes in the national politics Sometimes engage in unfair and unethical trade practices Sometimes result in minimizing / eliminating competition and create monopolies or oligopolistic structures

Year
2001 2002 2003 2004 2005 2006 2007*

India(Amount US $ Billion)
4.02 6.13 5.03 4.32 6.05 8.961 17.59

*Jan.*Jan.- Nov. SourceSource- 1. http://siteresources.worldbank.org/CHINAEXTN/Resources/chinaei.pdf 2. www.rbi.org.in

FDI equity limitAutomatic route

  

 

Insurance 26% Domestic airlines 49% Telecom services- Foreign equity 74% Private sector banks- 74% Mining of diamonds and precious stones- 74% Exploration and mining of coal and lignite for captive consumption- 74%

FDI requiring prior approval

    

  

Defense production 26% FM Broadcasting - 20% News and current affairs- 26% Broadcasting- cable, uplinking 49% Trading- wholesale cash and carry, export trading, etc., 100% Tea plantation 100% Development of airports100% Courier services- 100%

] Engineering & Manufacturing sectors ] Roads & Highways, Ports and Harbors ] Industrial model towns/industrial parks ] Hotels & Tourism ] Pollution Control and Management ] Advertising & Film industry ] Power generation (hydro-electric, coal/lignite, oil or gas based) ] Information Technology including E-Commerce

Pr fita ilit : Attract C sts f r

ere ret r

invest ent is i her lower costs of roduction like

ction: Encourage

raw materials, la or . Economic Conditions: Market otential, infrastructure, size of opulation, income level etc Government policies: Policies like foreign investment, foreign colla oration, remittances, profits, ta ation, foreign e change control, tariffs etc. Political factors: Political sta ilit , nature of important political parties and relations with other countries.

Foreign Institutional Investors (FIIs) are allowed to invest in the primary and secondary capital markets in India through the portfolio investment scheme (PIS). Under this scheme, FIIs/NRIs can acquire shares/debentures of Indian companies through the stock exchanges in India

List of companies in which FII investment is allowed upto limits fixed by companies as indicated against their names
1 2 3 4 5 6 7 8 9 10 Amtek Auto Ltd (74%) Advanta India Limited 49% Amtek India Ltd (74%) Ahmednagar Forgings Ltd (74%) Anant Raj Industries Ltd. (40%) ANG Auto Ltd (49%) Apollo Hospitals (74%) Aptech Ltd (74%) Arshiya International Limited (49%) Bombay Rayon Fashions Ltd (40%)

Foreign Institutional Investors(FIIs) in India

Year 1995-96 FIIs* 2009 (US $ Milloin)

1996-97 1926

1997-98 979

1998-99 1999-2000 2000-01 -390 2,135 1847

2001-02 1505

2002-03 377

2003-04 10,918

2004-05 8,686

2005-06 2006-07(P) 9,926 3,225

*Represents inflow of funds (net) by Foreign Institutional Investors (FIIs). Source:-RBI Bulletin of 13th Feb 2008. Net inflows by foreign institutional investors (FIIs) aggregated to US $ 26.8 billion during the current financial year so far (up to January 11, 2008). The number of FIIs registered with the SEBI increased from 997 at end-March 2007 to 1,219 at end-December 2007.

The main objective of the study is to know about in which sector the industries are invest our money FDI or FII.

To identify factors which inhibit higher FDI or FII flows and suggest remedial steps.

To examine policy reforms towards mergers and acquisition for attracting FDI or FII

To suggest changes in institutional apparatus and organizations, both in Centre and States, for attracting the FDI or FII flows.

The result of all these efforts are encouraging: the inflow of foreign capital has been steadily rising year to year so that FDI is better then FII

Investors based in many countries have taken advantage of the India-Mauritius bilateral tax treaty to set up holding companies in Mauritius which subsequently invest in India, thus reducing their tax obligations. By industry, the largest destinations for FDI are electrical equipment (including computer software and electronics), services, telecommunication & transportation.