FDI (Foreign direct investment )

Submitted To:- Submitted By:-

(Group-1)
PROF. Shilpa Arora Dhruv
Divyanshi
Ashish
Siddhant
Tarun
Muskan
 FDI ( FOREIGN DIRECT INVESTMENT )
• Foreign direct investment (FDI) is an investment made
by a firm or individual in one country into business
interests located in another country.
• Generally, FDI takes place when an investor establishes
foreign business operations or acquires foreign
business assets, including establishing ownership or
controlling interest in a foreign company.
• Foreign direct investments are distinguished from
portfolio investments in which an investor merely
purchases equities of foreign-based companies.
 IMPORTANCE OF FDI
Providing
Giving access to global
opportunities for Optimal utilization of
managerial skills and
technological resources.
practices.
development.

Making Indian
Providing access to
industries highly Opening up new
international quality
competitive in export market.
goods and services.
international markets.

Providing backward ,
vertical , horizontal
and forward linkages.
 ADVANTAGES OF FDI
• Raising the level of investment.
• Upgradation of technology.
• Exploitation of resources.
• Development of economic reforms.
• Improvement in balance of payment position.
• Benefit to consumers.
• Improvement in export competitiveness.
• Revenue to the government.
 DISADVANTAGES OF FDI

• Destruction of domestic industries.

• Increase competition.
• Exploitation of resources.
• Increase Pollution.
• Decline in profits of domestic industries.
• Monopoly of market.
• Effect on political decision of host industries.
 DETERMINANTS OF FDI

Legal and
Political Size of
regulatory
stability. market.
framework.

Price and Access to

exchange rate. basic inputs.
 IMPACT OF FDI ON RETAIL SECTOR
• The Indian Parliament, in December 2012, took a significant step regarding
FDI, when it approved of the Central government’s decision which allowed
FDI in multi-brand retailing.
• This paved the way for foreign retailers to set up retail stores with 51%
ownership in major cities to sell a large variety of products together under
one roof.
• It is to be noted that foreign capital was already allowed in single-brand
retailing and this was, therefore, an extension of that policy to multi-brand
retailing.
• Furthermore, several indirect channels, such as franchise agreements, cash
and carry wholesale agreements, strategic licensing agreements,
manufacturing, and wholly owned subsidiaries have existed prior to the
Parliament’s assent to FDI, through which foreign companies including
large retailers have already had access to the Indian market.
 WHAT IS RETAILING ?
• According to a definition attributed to Philip
Kotler, retailing includes “all the activities
involved in selling goods or services directly to
the final consumers for personal, non-
business use.”
• Although selling goods or services directly to
the final consumers constitutes the primary
activity in retailing, a number of auxiliary
activities are also associated with it.
POSITIVE IMPACT OF FDI ON RECTAIL
SECTOR

Higher Consumer
Infusion of Capital Technology Transfer
Wellbeing

Benefits to the Farmers,

Competition and Local Suppliers, and Employment and
Inflation Control Domestic Revenue Generation
Manufacturers
NEGATIVE IMPACT OF FDI ON RETAIL
SECTOR

Real estate
will win

More
middlemen

Job losses
Unorganise
(Especially
d retailers
in mfg.)

Entreprene Exports &

urial talent imports

False claims
of Law Disintermed
unemploym breakers iation
ent
.