FOREIGN DIRECT

INVESTMENT
(IMPACT OF FDI ON ECONOMY)

Definition
Advantage of FDI
Factors Influencing FDI
Origin of Statistical Data
Measures To Attract FDI
Attracting Foreign Capital
Results Encouraging
Destination India

Definition of FDI
Foreign direct investment (FDI)
occurs when investor based in one
country (the home country)
acquired an asset in other country
(the host country) with the intent
to manage the asset

Advantages of FDI
Infrastructure

& Technology

transfer
Increased productive efficiency
due to competition from
multinational subsidiaries

Advantages of FDI

Improvement in the quality of

the factors of production
Inflow in investment fund (To
fill the gape..)

Advantages of FDI
Faster

growth of output
employment
Consumer benefits
[1]Price
[2] quality
[3] varieties
Increase in exports

and

Factors Influencing FDI

This factors Influencing FDI can
be divided into three sub
factors.
1)Supply Factors
2)Demand Factors
3)Government Factors

Supply Factors Influencing FDI

Production

costs

Logistics
Resource

availability
Access to technology

Demand Factors Influencing FDI

Customer Access
Follow clients
Follow rivals
Exploitation of competitive
Advantage

Govt Factors Influencing FDI

Economic

priorities
Avoidance of trade barriers
Economic
Development incentives

Origin of Statistical Data

From

the ministries and agencies

which administer the countrys law
and regulations on FDI
Government and other surveys
which evaluate financial and
operating data of Companies

Inflow of FDI in India

2007-08 ---$15.7 billion
2006-07 --- $5.5 billion
Major player
[1] Vodafone
[2] Nokia
[3] General motors
[4] suzuki

Sectors
[1] services
[2] Electrical
Equipment
[3] Real state
[4] Transportation

Outflow of FDI from india

2007-08$15 billion
2006-07--$2.8 billion
Players
[1] Tata Groups
[2] Bhart forge
[3] Wipro
[4] Infro Sys
[5] Ranbaxy

[1]
[2]
[3]
[4]
[5]

Sectors
Pharmaceuticals
Industrial goods,
Automotive components
Software
Metal

Measures To Attract FDI

1992 --- Foreign firms obtained automatic
rights over international brand names.
1998-- FIIs-now allowed to invest in Govt
securities,listed & unlisted securities.
2000 --- 100% Foreign equity allowed in
infrastructure projects- ports
road,highways.
2002 ---Limited FDI in print media permitted.

How can FDI be better

applied to
sustainable developments?

Recommendations

Compare the Pro and the Cons

Develop strategies that targets the
right kind of FDI
Consider the long term effects to
the entire economy and the social
well
Use of Environmental friendly
technology

RESULT ENCOURAGING TO FDI

THE RESULT OF ALL THESE

EFFEORTS ARE ENCOURAGING .
THE IN FLOW OF FOREING CAPITAL
HAS BEEN STEADILY RISING FROM
YEAR TO YEAR