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fdi

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shimul bijoor

on 1 February 2013

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Transcript of fdi

Foreign Direct Investment A boon or bane? An introduction to FDI

Foreign Direct Investment, (FDI) is an investment made by a company or entity based in one country, into a company or entity based in another country. Transnational Corporation: Parent
enterprise plus foreign affiliate.
Parent enterprise control over its foreign affiliate.
(The UN defines control in this case as owning
10% or more of the ordinary shares of an
incorporated firm or its equivalent for an
unincorporated firm) The FDI Relationship FDI in Retail Advantages of FDI in Retail Sector

Will affect 50 million merchants in India

Profit distribution, investment ratios are not fixed

An economically backward class person suffers from price raise

Retailer faces loss in business

Market places are situated too far which increases traveling expenses

Workers safety and policies are not mentioned clearly

Inflation may be increased

Again India become slaves because of FDI in retail sector FDI in Aviation the government policy FDI in Aviation FDI in China and India China came out of economic isolation in the 1970s.
Deng Xiopeng, the leader who brought path breaking reforms, also threw open the economy for foreign investment policy of 1978, which has proved to be very beneficial.
With the setting up of SEZ zones in the country, and inducing a competitive spirit to the economy, China used foreign direct investments, to increase its exports, eventually becoming the manufacturing hub of the world. China's story of FDI The leaders of India had the notion that foreign investments- portfolios or direct, might make India a victim of economic subjugation and exploitation once again.
But for a country like a India
Foreign Investments are
necessary to make up for
domestic savings gap and
importantly bring in tech-
nological knowhow.
In 1991, Narsimha Rao, with the introduction of economic liberalization also gave a new impetus to FDI in the country. India's story of FDI Trends of FDI in India Trends in China Infrastructure is inadequate. Power failures, rigid labor laws hinder pace of production.
India is not economically self reliant as yet when it comes to need for capital. China’s FDI environment is much more consistent and competitive. Due to rapid growth initially led by investments, China is now moving away from an investment led growth path to consumption led growth path. It has infrastructure, power as well as skilled and unskilled laborers to work in factories set up by multinationals. India’s FDI remained very inconsistent. We have labour and huge market potential but decision making is slow. It faces significant trade deficits, and has not reached a stage where it can sustain growth without foreign investments Types of FDI It helps in transfer of financial resources, technology and innovative and improved management techniques.
Substantial foreign inflows help in
achieving the required investment
to accelerate economic growth
and development.
Acts a catalyst for domestic
industrial development.
It helps in speeding up economic
activity and brings with it other
scarce productive factors such as technical knowhow and managerial experience. Role of FDI in India's economic growth Resilience during financial crises.
Helps in increasing export competitiveness.
It provides better access to foreign markets. Sector-wise FDI inflows in India April 2000 to April 2010 Advantages of FDI Limitations of FDI India and the WTO Opposition BJP claimed that the FDI in retail violates the international investment protection treaties and undertakings under WTO
It also mentioned that the right of the State government to reject entry of multi-national food chains under the newly-approved 51% foreign direct investment (FDI) in multi-brand retail policy does not satisfy the conditions and treaties. The Congress spokesperson however said that it was a choice of the state
The FDI policy is not covered in BIPA
BIPA- Once an investor enters India, he must be treated as a domestic investor. Thank You This presentation was put together by: Rhea D'costa
Kavya Ravindranath
Varada Shrotri
Rhea Antony
Scyon Quinny Shimul Bijoor
Shyama Balachandran
Akshra Pandey
Supratik Banerjee
Siddhant Babu Types of FDI -Opposition BJP claimed that the FDI in retail violates the international investment protection treaties and undertakings under WTO
-It also mentioned that the right of the State government to reject entry of multi-national food chains under the newly-approved 51% foreign direct investment (FDI) in multi-brand retail policy does not satisfy the conditions and treaties. India and trade agreements The Congress spokesperson however said the decision left to state government does not violate any international agreements.
The FDI policy is not covered in BIPA as it is a pre-established stage.
(BIPA- Once an investor enters India, he must be treated as a domestic investor)
Congress spokesman further clarified that India has not under taken any commitments in this are under GATS.
Also it does not affect WTO policies as investment is not a part of WTO disciplines. FDI and foreign agreements India and trade agreements (contd.) Disadvantages of FDI in retail sector FDI In Retail FDI In Retail Proper Use Of Natural Resources
Employment Generation
Development Of Managerial Pool
Technology Upgrade
Consumer Benefits
Revenue To Government Will increase economic growth by dealing with different international products
1 million (10 lakh) people will be employed in three years
Billions of dollars will be invested in Indian market
Will help in the spread of import and export businesses in different countries
Farmers will get good price for their goods FDI is not an unmixed blessing. Governments in developing countries have to be very careful while deciding the magnitude, pattern and conditions of private foreign investment.
1.When foreign investment is competitive with home investment, profits in domestic industries fall, leading to fall in domestic savings. 2. Contribution of foreign firms to public revenue through corporate taxes is comparatively less because of liberal tax concessions, investment allowances, disguised public subsidies and tariff protection provided by the host government.
3. Foreign firms reinforce dualistic socio- economic structure andincrease income inequalities.
Foreign firms stimulate inappropriate consumption patterns through excessive advertising and monopolistic market power. 
Foreign firms are able to extract sizable economic and politicalconcessions from competing governments of developing countries. 6.Continual outflow of profits is too large in 
many cases, putting pressure on foreign exchange reserves. 
7. With large, efficient retailers, the corporate profits are not spent in the areas where they're generated, hence killing the local economy. The Cabinet Committee on Economic Affairs has approved the proposal of the Department of Industrial Policy and Promotion for permitting foreign airlines to make foreign investment, up to 49 percent in scheduled and non-scheduled air transport services. 

 
Foreign carriers like Lufthansa, Emirates and Singapore Airlines can now pick up to 49% equity stake in domestic airlines.


Until now, foreign airlines were allowed to participate in the equity of companies operating cargo airlines, helicopter and seaplane services, but not in the equity of an air transport undertaking operating scheduled and non-scheduled air transport services.

  Most of the Indian carriers are suffering losses because of high taxes on jet fuel, rising airport fees, costlier loans, poor infrastructure and cut-throat competition.

Except IndiGo, all airlines have posted losses in the financial year ending on March 31, 2011

Kingfisher Airlines, which is burdened with a debt of over Rs 7,000 crore, has been in the forefront of pushing for permission to allow foreign airlines to invest in domestic carriers.

The average tax on jet fuel in India is 24%, second only to Bangladesh (27%). Due to this, fuel costs account for about half the operating cost. In the past year, jet fuel prices rose 40%. Facts What is retail?

What is Walmart?

Why is there so much chaos around this?

What is the issue? Independent stores will close, leading to massive job losses.
few thousand jobs may be created, but millions will be lost.
Walmart will lower prices to dump goods, get competition out of the way, become a monopoly, then raise prices.
India doesn't need foreign retailers, since homegrown companies and traditional markets may be able to do the job.
Work will be done by Indians, and the profit will go to the foreigners
Remember East India Company.
It entered India as a trader and then took over politically.
Smaller states will not be able to handle it The Controversies
Full transcript