Benefits of FDI.docx
Content
Benefits of FDI (Foreign Direct Investment) : 1. Farmers will become economically strong, because they will get more money directly from the big retail companies. 2. New employment for the peoples. 3. Consumers will get goods on comparatively low price. 4. Indian government will get approximately US$ 25-30bn through taxes. 5. Modern technology will come to India. 6. Wastage of agriculture products will go reduce. 7. Rural infrastructure will go improve. 8. Competition in the market will rise. 9. Consumers will get commodities in the same & low rate and will save from the greedy retailers. 10. Consumer will get all the commodities in one roof. 11. Consumers will get the bills for all purchases. Disadvantage or Drawbacks of FDI: 1. Small retailers will be affected and business of those retailers who are giving service from a long period will be hardly affected. 2. A big amount of money (more than the money which will government get through taxes) will go to the Foreign countries. 3. Big retail companies will buy commodities directly from farmers which will affect the entire supply chain of suppliers and distributors. 4. After some decades it may be the reason of inflation. 5. Local brands will be affected and sale of foreign brands will be increase. 6. Uneducated and semi-educated will have difficulty to get job or earning money because through these big retail shops only smart and educated people will get job. 7. Poor peoples will have difficulty in survive because they will not buy a small pack of biscuit from a air conditioned mall. 8. Shopping time of the peoples will increase because they can get commodities from a local retail shop within some minute but in these big retail store it will take big time. 9. Because of FDI, the agriculture products wastage will reduce but the wastage of packed commodities will increase because people will get no.of choices for a single type of commodity and it will be difficult for them while from local retail store they will get trusted products only because of the relation between retailer and consumers. 10. Consumers will not get commodities on credit basis without any extra tax. 11. Consumers will hesitate to buy any single product which will increase the cost of purchase indirectly.
The topic under the discussion is 'Is FDI in retail sector is good for INDIA', I will say it is partially good to India why because the investments will increase from foreigners which is useful to increase the economy rate in the same way the local business retailers will loose their sales and they will get out of the business. In clear way we can say the pro and con's are. 1. The government is highly corrupted in these days. 2. The employment problem will reduce. 3. Quality products will be obtained in reasonable prices. 4. Our central government giving 49/100 shares to others which reveals our laziness. 5. Local people have severe effect because he fail to win with big competitors. 6. We will totally depend on other goods and services which effects our developments. 7. Monopoly can be seen because all types of good available at one place. The measures to be taken are: 1. Allow the foreigners to invest in India that should not affect the local retailer. 2. Motivate the local investors to start up new technologies instead of depending on other products.
According to my view FDI is partial good for India. Now let have a look on Pro and cons of FDI in retail sector. Pro of FDI in retail sector : 1: Modernization of retail shop in which customer will get every thing under one roof. 2: Cost of final goods come down. 3: Proper competition in the market. 4: Utilization of proper fund. 5: Bring out the black money which are hided. In order to stay in business the Indian retailer need money, that money come from the hided money which they hided from every one. 6: Bring new module of business in the market. As HUL business module is totally different and healthy for the business. 7: Margin on goods for Retailer will increase as to stay in competition the company will try to give more margin to retailer so that they will sell/suggest there goods to customer. Cons of FDI in retail : 1: Affect to local retail shop. 2: margin of retailer get reduce. 3: demand for local goods get reduce.
4: employment problem. 5: chances of monopoly in the market. 6: pressurize to sell the foreign brand instead on Indian brand. Suggestion: 1: The govt. should make mandatory that the domestic rural market will be occupied for Indian industries so that the retailer of that market not get affected. As rural market people face difficulties in shifting there business. 2: CSR should be mandatory for every company. 3: The proposition of selling goods through supermarket should be in 51:49 proposition, mean 51% goods should belong to Indian company & 49% foreign good. 4: Govt should create some area range wise for super market. For ex: like with in the range of 1 km no one can open super market. 5: Govt should limit the opening of supermarket in every cities. Like in One city, not more than 2 supermarket will be allowed.
The Foreign Direct Investment means "cross border investment made by a resident in one economy in an enterprise in another economy, with the objective of establishing a lasting interest in the invest economy. FDI is also described as investment into the business of a country by a company in another country. Mostly the investment is into production by either buying a company in the target country or by expanding operations of an existing business in that country.Such investments can take place for many reasons, including to take advantage of cheaper wages, special investment privileges (e.g. tax exemptions) offered by the country. Major benefits of FDI : (a) Improves forex position of the country; (b) Employment generation and increase in production ; (c) Help in capital formation by bringing fresh capital; (d) Helps in transfer of new technologies, management skills, intellectual property (e) Increases competition within the local market and this brings higher efficiencies (f) Helps in increasing exports; (g) Increases tax revenues FDI is Opposed by Local People or Disadvantages of FDI : (a) Domestic companies fear that they may lose their ownership to overseas company (b) Small enterprises fear that they may not be able to compete with world class large companies and may ultimately be edged out of business;
(c) Large giants of the world try to monopolise and take over the highly profitable sectors; (d) Such foreign companies invest more in machinery and intellectual property than in wages of the local people; (e) Government has less control over the functioning of such companies as they usually work as wholly owned subsidiary of an overseas company.
What is the meaning of FDI ? The Foreign Direct Investment means “cross border investment made by a resident in one economy in an enterprise in another economy, with the objective of establishing a lasting interest in the investee economy. FDI is also described as “investment into the business of a country by a company in another country”. Mostly the investment is into production by either buying a company in the target country or by expanding operations of an existing business in that country”.
Such
investments can take place for many reasons, including to take advantage of cheaper wages, special investment privileges (e.g. tax exemptions) offered by the country.
Why Countries Seek FDI ? (a) Domestic capital is inadequate for purpose of economic growth; (b) Foreign capital is usually essential, at least as a temporary measure, during the period when the capital market is in the process of development; (c) Foreign capital usually brings it with other scarce productive factors like technical know how, business expertise and knowledge
(a) (b) (c) (d) (e) (f) (g)
(a) (b) (c) (d) (e)
What are the major benefits of FDI : Improves forex position of the country; Employment generation and increase in production ; Help in capital formation by bringing fresh capital; Helps in transfer of new technologies, management skills, intellectual property Increases competition within the local market and this brings higher efficiencies Helps in increasing exports; Increases tax revenues
Why FDI is Opposed by Local People or Disadvantages of FDI : Domestic companies fear that they may lose their ownership to overseas company Small enterprises fear that they may not be able to compete with world class large companies and may ultimately be edged out of business; Large giants of the world try to monopolise and take over the highly profitable sectors; Such foreign companies invest more in machinery and intellectual property than in wages of the local people; Government has less control over the functioning of such companies as they usually work as wholly owned subsidiary of an overseas company;
Brief Latest Developments on FDI (all sectors including retail):2012 – October: In the second round of economic reforms, the government cleared amendments to raise the FDI cap (a) in the insurance sector from 26% to 49%; (b) in the pension sector it approved a 26 percent FDI; Now, Indian Parliament will have to give its approval for the final shape,"
2012 - September : The government approved the (a) Allowed 51% foreign investment in multi-brand retail, (b) Relaxed FDI norms for civil aviation and broadcasting sectors. – FDI cap in Broadcasting was raised to 74% from 49%; (c) Allowed foreign investment in power exchanges
2011 – December : (i) The Indian government removed the 51 percent cap on FDI into single-brand retail outlets and thus opened the market fully to foreign investors by permitting 100 percent foreign investment in this area.
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For Knowledge Level II Explain the forms in which business can be conducted by a foreign company in India
A foreign company planning to set up business operations in India may: Incorporate a company under the Companies Act, 1956, as a Joint Venture or a Wholly Owned Subsidiary. Set up a Liaison Office / Representative Office or a Project Office or a Branch Office of the foreign company
What is the procedure for receiving Foreign Direct Investment in an Indian company? An Indian company may receive Foreign Direct Investment under the two routes as given under: i. Automatic Route FDI is allowed under the automatic route without prior approval either of the Government or the Reserve Bank of India in all activities/sectors as specified in the consolidated FDI Policy, issued by the Government of India from time to time.
ii. Government Route FDI in activities not covered under the automatic route requires prior approval of the Government which are considered by the Foreign Investment Promotion Board (FIPB), Department of Economic Affairs, Ministry of Finance. What is Scope of FDI in India? Why World is looking towards India for Foreign Direct Investments :
India is the 3rd largest economy of the world in terms of purchasing power parity and thus looks attractive to the world for FDI. Even Government of India, has been trying hard to do away with the FDI caps for majority of the sectors, but there are still critical areas like retailing and insurance where there is lot of opposition from local Indians / Indian companies. Some of the major economic sectors where India can attract investment are as follows:Telecommunications
Apparels
Information Technology
Pharma
Auto parts
Jewelry
Chemicals In last few years, certainly foreign investments have shown upward trends but the strict FDI policies have put hurdles in the growth in this sector. India is however set to become one of the major recipients of FDI in the Asia-Pacific region because of the economic reforms for increasing foreign investment and the deregulation of this important sector. India has technical expertise and skilled managers and a growing middle class market of more than 300 million and this represents an attractive market.
Background and Recent Developments for FDI in Retail Sector which has raised lot of controversies in political circles :
As part of the economic liberalization process set in place by the Industrial Policy of 1991, the Indian government has opened the retail sector to FDI slowly through a series of steps: 1995 : World Trade Organisation’s (WTO) General Agreement on Trade in Services, which includes both wholesale and retailing services, came into effect 1997 : FDI in cash and carry (wholesale) with 100% rights allowed under the government approval route; 2006 : FDI in cash and carry (wholesale) was brought under automatic approval route; Upto 51% investment in single brand retail outlet permitted, subject to Press Note 3 (2006 series)
2011 : 100% FDI in Single Brand Retail allowed’ 2012 : On Sept. 13, Government approved the allowance of 51 percent foreign investment in multi-brand retail, [ It also relaxed FDI norms for civil aviation and broadcasting sectors]’
Name the sectors where FDI is NOT allowed in India, both under the Automatic Route as well as under the Government Route? FDI is prohibited under the Government Route as well as the Automatic Route in the following sectors: i) Atomic Energy ii) Lottery Business iii) Gambling and Betting iv) Business of Chit Fund v) Nidhi Company vi) Agricultural (excluding Floriculture, Horticulture, Development of seeds, Animal Husbandry, Pisciculture and cultivation of vegetables, mushrooms, etc. under controlled conditions and services related to agro and allied sectors) and Plantations activities (other than Tea Plantations) vii) Housing and Real Estate business (except development of townships, construction of residential/commercial premises, roads or bridges to the extent specified in notification viii) Trading in Transferable Development Rights (TDRs). ix) Manufacture of cigars , cheroots, cigarillos and cigarettes , of tobacco or of tobacco substitutes.
For Knowledge Level III :
Name the authorities Dealing With Foreign Investment:
(a) Foreign Investment Promotion Board (popularly known as FIPB) : The Board is responsible for expeditious clearance of FDI proposals and review of the implementation of cleared proposals. It also undertake investment promotion activities and issue and review general and sectoral policy guidelines; (b) Secretariat for Industrial Assistance (SIA) : It acts as a gateway to industrial investment in India and assists the entrepreneurs and investors in setting up projects. SIA also liaison with other government bodies to ensure necessary clearances; (c) Foreign Investment Implementation Authority (FIIA) : The authority works for quick implementation of FDI approvals and resolution of operational difficultieis faced by foreign investors; (d) Investment Commission (e) Project Approval Board (f) Reserve Bank of India
What are the instruments for receiving Foreign Direct Investment in an Indian company? Foreign investment is reckoned as FDI only if the investment is made in equity shares , fully and mandatorily convertible preference shares and fully and mandatorily convertible debentures with the pricing being decided upfront as a figure or based on the formula that is decided upfront. Any foreign investment into an instrument issued by an Indian company which: gives an option to the investor to convert or not to convert it into equity or does not involve upfront pricing of the instruments a date would be reckoned as ECB and would have to comply with the ECB guidelines. The FDI policy provides that the price/ conversion formula of convertible capital instruments should be determined upfront at the time of issue of the instruments. The price at the time of conversion should not in any case be lower than the fair value worked out, at the time of issuance of such instruments, in accordance with the extant FEMA regulations [the DCF method of valuation for the unlisted companies and valuation in terms of SEBI (ICDR) Regulations, for the listed companies].
What are the Total Inflows of FDI in India : a.
For the FY 2012-13 (for the month of July, 2012) was US$ 1.47 billion.
b. Amount of FDI equity inflows for the financial year 2012-13 (from April 2012 to July 2012) stood at US$ 5.90 billion. c.
Cumulative amount of FDI (from April 2000 to July 2012) into India stood at US$ 176.76 billion
What are the Limits for FDI in different Sectors : ** Note / Caution : The below is only broad categorization and may need fine tuning and updations, For example in Civil Aviation and Broadcasting there are subcategories with different %ag of FDI allowed. These needs to be checked for further and updated knowledge. (a) News About Civil Aviation and Broadcasting can be read from this link. (b) Second Link for the details can be checked by clicking here
(A)
26% FDI is permitted in
Defence (In July 2013, there has been no change in FDI limit but higher investment may be considered in state of the art technology production by CCS) Newspaper and media ** Pension sector (allowed in October 2012 as per cabinet decision)
Courier Services (through automatic route)
Tea Plantation (upto 49% through automatic route; 49-100% through FIPB route)
(B)49% FDI is permitted in : Banking Cable DTH Infrastructure Telecom
network** ** investment
Insurance (in July 2013 it was raised to 49% from 26% subject to Parliament approval) Petroleum Refining (49% allowed under automatic route) Power Exchanges (49% allowed under automatic route) Stock Exchanges, Depositories allowed under automatic route upto 49%
49% (FDI & FII) in power exchanges registered under the Central Electricity Regulatory Commission (Power Market) Regulations 2010 subject to an FDI limit of 26 per cent and an FII limit of 23 per cent of the paid-up capital is now permissible. [Permitted in September 2012]
(C ) 51% is Permitted in Multi-Brand Retail (Since September 2012) Petro-pipelines
(D) 74% FDI is permitted in Atomic minerals Science Magazines /Journals Petro marketing Coal and Lignite mines Credit information comanies (raised from 49% to 74% in July, 2013) (E)100% FDI is permitted in Single Brand Retail (100% FDI allowed in single brand retail; 49% through automatic route; 49-100% through FIPB) Advertizement Airports Cold-storage BPO/Call centres E-commerce Energy (except atomic) export trading house Films Hotel, tourism Metro train Mines (gold, silver) Petroleum exploration Pharmaceuticals
Pollution control Postal service Roads, highways, ports. Township Wholesale trading Telecom (raised from 74% to 100% in July, 2013 by GoI) Asset Reconstruction Companies (increased from 74% to 100 in July, 2013. Out of this upto 49% will be under automatic route) Source : RBI website, Newpaper reports, GoI data
The topic under the discussion is 'Is FDI in retail sector is good for INDIA', I will say it is partially good to India why because the investments will increase from foreigners which is useful to increase the economy rate in the same way the local business retailers will loose their sales and they will get out of the business. In clear way we can say the pro and con's are. 1. The government is highly corrupted in these days. 2. The employment problem will reduce. 3. Quality products will be obtained in reasonable prices. 4. Our central government giving 49/100 shares to others which reveals our laziness. 5. Local people have severe effect because he fail to win with big competitors. 6. We will totally depend on other goods and services which effects our developments. 7. Monopoly can be seen because all types of good available at one place. The measures to be taken are: 1. Allow the foreigners to invest in India that should not affect the local retailer. 2. Motivate the local investors to start up new technologies instead of depending on other products.
According to my view FDI is partial good for India. Now let have a look on Pro and cons of FDI in retail sector. Pro of FDI in retail sector : 1: Modernization of retail shop in which customer will get every thing under one roof. 2: Cost of final goods come down. 3: Proper competition in the market. 4: Utilization of proper fund. 5: Bring out the black money which are hided. In order to stay in business the Indian retailer need money, that money come from the hided money which they hided from every one. 6: Bring new module of business in the market. As HUL business module is totally different and healthy for the business. 7: Margin on goods for Retailer will increase as to stay in competition the company will try to give more margin to retailer so that they will sell/suggest there goods to customer. Cons of FDI in retail : 1: Affect to local retail shop. 2: margin of retailer get reduce. 3: demand for local goods get reduce.
4: employment problem. 5: chances of monopoly in the market. 6: pressurize to sell the foreign brand instead on Indian brand. Suggestion: 1: The govt. should make mandatory that the domestic rural market will be occupied for Indian industries so that the retailer of that market not get affected. As rural market people face difficulties in shifting there business. 2: CSR should be mandatory for every company. 3: The proposition of selling goods through supermarket should be in 51:49 proposition, mean 51% goods should belong to Indian company & 49% foreign good. 4: Govt should create some area range wise for super market. For ex: like with in the range of 1 km no one can open super market. 5: Govt should limit the opening of supermarket in every cities. Like in One city, not more than 2 supermarket will be allowed.
The Foreign Direct Investment means "cross border investment made by a resident in one economy in an enterprise in another economy, with the objective of establishing a lasting interest in the invest economy. FDI is also described as investment into the business of a country by a company in another country. Mostly the investment is into production by either buying a company in the target country or by expanding operations of an existing business in that country.Such investments can take place for many reasons, including to take advantage of cheaper wages, special investment privileges (e.g. tax exemptions) offered by the country. Major benefits of FDI : (a) Improves forex position of the country; (b) Employment generation and increase in production ; (c) Help in capital formation by bringing fresh capital; (d) Helps in transfer of new technologies, management skills, intellectual property (e) Increases competition within the local market and this brings higher efficiencies (f) Helps in increasing exports; (g) Increases tax revenues FDI is Opposed by Local People or Disadvantages of FDI : (a) Domestic companies fear that they may lose their ownership to overseas company (b) Small enterprises fear that they may not be able to compete with world class large companies and may ultimately be edged out of business;
(c) Large giants of the world try to monopolise and take over the highly profitable sectors; (d) Such foreign companies invest more in machinery and intellectual property than in wages of the local people; (e) Government has less control over the functioning of such companies as they usually work as wholly owned subsidiary of an overseas company.
What is the meaning of FDI ? The Foreign Direct Investment means “cross border investment made by a resident in one economy in an enterprise in another economy, with the objective of establishing a lasting interest in the investee economy. FDI is also described as “investment into the business of a country by a company in another country”. Mostly the investment is into production by either buying a company in the target country or by expanding operations of an existing business in that country”.
Such
investments can take place for many reasons, including to take advantage of cheaper wages, special investment privileges (e.g. tax exemptions) offered by the country.
Why Countries Seek FDI ? (a) Domestic capital is inadequate for purpose of economic growth; (b) Foreign capital is usually essential, at least as a temporary measure, during the period when the capital market is in the process of development; (c) Foreign capital usually brings it with other scarce productive factors like technical know how, business expertise and knowledge
(a) (b) (c) (d) (e) (f) (g)
(a) (b) (c) (d) (e)
What are the major benefits of FDI : Improves forex position of the country; Employment generation and increase in production ; Help in capital formation by bringing fresh capital; Helps in transfer of new technologies, management skills, intellectual property Increases competition within the local market and this brings higher efficiencies Helps in increasing exports; Increases tax revenues
Why FDI is Opposed by Local People or Disadvantages of FDI : Domestic companies fear that they may lose their ownership to overseas company Small enterprises fear that they may not be able to compete with world class large companies and may ultimately be edged out of business; Large giants of the world try to monopolise and take over the highly profitable sectors; Such foreign companies invest more in machinery and intellectual property than in wages of the local people; Government has less control over the functioning of such companies as they usually work as wholly owned subsidiary of an overseas company;
Brief Latest Developments on FDI (all sectors including retail):2012 – October: In the second round of economic reforms, the government cleared amendments to raise the FDI cap (a) in the insurance sector from 26% to 49%; (b) in the pension sector it approved a 26 percent FDI; Now, Indian Parliament will have to give its approval for the final shape,"
2012 - September : The government approved the (a) Allowed 51% foreign investment in multi-brand retail, (b) Relaxed FDI norms for civil aviation and broadcasting sectors. – FDI cap in Broadcasting was raised to 74% from 49%; (c) Allowed foreign investment in power exchanges
2011 – December : (i) The Indian government removed the 51 percent cap on FDI into single-brand retail outlets and thus opened the market fully to foreign investors by permitting 100 percent foreign investment in this area.
Ads by Google
For Knowledge Level II Explain the forms in which business can be conducted by a foreign company in India
A foreign company planning to set up business operations in India may: Incorporate a company under the Companies Act, 1956, as a Joint Venture or a Wholly Owned Subsidiary. Set up a Liaison Office / Representative Office or a Project Office or a Branch Office of the foreign company
What is the procedure for receiving Foreign Direct Investment in an Indian company? An Indian company may receive Foreign Direct Investment under the two routes as given under: i. Automatic Route FDI is allowed under the automatic route without prior approval either of the Government or the Reserve Bank of India in all activities/sectors as specified in the consolidated FDI Policy, issued by the Government of India from time to time.
ii. Government Route FDI in activities not covered under the automatic route requires prior approval of the Government which are considered by the Foreign Investment Promotion Board (FIPB), Department of Economic Affairs, Ministry of Finance. What is Scope of FDI in India? Why World is looking towards India for Foreign Direct Investments :
India is the 3rd largest economy of the world in terms of purchasing power parity and thus looks attractive to the world for FDI. Even Government of India, has been trying hard to do away with the FDI caps for majority of the sectors, but there are still critical areas like retailing and insurance where there is lot of opposition from local Indians / Indian companies. Some of the major economic sectors where India can attract investment are as follows:Telecommunications
Apparels
Information Technology
Pharma
Auto parts
Jewelry
Chemicals In last few years, certainly foreign investments have shown upward trends but the strict FDI policies have put hurdles in the growth in this sector. India is however set to become one of the major recipients of FDI in the Asia-Pacific region because of the economic reforms for increasing foreign investment and the deregulation of this important sector. India has technical expertise and skilled managers and a growing middle class market of more than 300 million and this represents an attractive market.
Background and Recent Developments for FDI in Retail Sector which has raised lot of controversies in political circles :
As part of the economic liberalization process set in place by the Industrial Policy of 1991, the Indian government has opened the retail sector to FDI slowly through a series of steps: 1995 : World Trade Organisation’s (WTO) General Agreement on Trade in Services, which includes both wholesale and retailing services, came into effect 1997 : FDI in cash and carry (wholesale) with 100% rights allowed under the government approval route; 2006 : FDI in cash and carry (wholesale) was brought under automatic approval route; Upto 51% investment in single brand retail outlet permitted, subject to Press Note 3 (2006 series)
2011 : 100% FDI in Single Brand Retail allowed’ 2012 : On Sept. 13, Government approved the allowance of 51 percent foreign investment in multi-brand retail, [ It also relaxed FDI norms for civil aviation and broadcasting sectors]’
Name the sectors where FDI is NOT allowed in India, both under the Automatic Route as well as under the Government Route? FDI is prohibited under the Government Route as well as the Automatic Route in the following sectors: i) Atomic Energy ii) Lottery Business iii) Gambling and Betting iv) Business of Chit Fund v) Nidhi Company vi) Agricultural (excluding Floriculture, Horticulture, Development of seeds, Animal Husbandry, Pisciculture and cultivation of vegetables, mushrooms, etc. under controlled conditions and services related to agro and allied sectors) and Plantations activities (other than Tea Plantations) vii) Housing and Real Estate business (except development of townships, construction of residential/commercial premises, roads or bridges to the extent specified in notification viii) Trading in Transferable Development Rights (TDRs). ix) Manufacture of cigars , cheroots, cigarillos and cigarettes , of tobacco or of tobacco substitutes.
For Knowledge Level III :
Name the authorities Dealing With Foreign Investment:
(a) Foreign Investment Promotion Board (popularly known as FIPB) : The Board is responsible for expeditious clearance of FDI proposals and review of the implementation of cleared proposals. It also undertake investment promotion activities and issue and review general and sectoral policy guidelines; (b) Secretariat for Industrial Assistance (SIA) : It acts as a gateway to industrial investment in India and assists the entrepreneurs and investors in setting up projects. SIA also liaison with other government bodies to ensure necessary clearances; (c) Foreign Investment Implementation Authority (FIIA) : The authority works for quick implementation of FDI approvals and resolution of operational difficultieis faced by foreign investors; (d) Investment Commission (e) Project Approval Board (f) Reserve Bank of India
What are the instruments for receiving Foreign Direct Investment in an Indian company? Foreign investment is reckoned as FDI only if the investment is made in equity shares , fully and mandatorily convertible preference shares and fully and mandatorily convertible debentures with the pricing being decided upfront as a figure or based on the formula that is decided upfront. Any foreign investment into an instrument issued by an Indian company which: gives an option to the investor to convert or not to convert it into equity or does not involve upfront pricing of the instruments a date would be reckoned as ECB and would have to comply with the ECB guidelines. The FDI policy provides that the price/ conversion formula of convertible capital instruments should be determined upfront at the time of issue of the instruments. The price at the time of conversion should not in any case be lower than the fair value worked out, at the time of issuance of such instruments, in accordance with the extant FEMA regulations [the DCF method of valuation for the unlisted companies and valuation in terms of SEBI (ICDR) Regulations, for the listed companies].
What are the Total Inflows of FDI in India : a.
For the FY 2012-13 (for the month of July, 2012) was US$ 1.47 billion.
b. Amount of FDI equity inflows for the financial year 2012-13 (from April 2012 to July 2012) stood at US$ 5.90 billion. c.
Cumulative amount of FDI (from April 2000 to July 2012) into India stood at US$ 176.76 billion
What are the Limits for FDI in different Sectors : ** Note / Caution : The below is only broad categorization and may need fine tuning and updations, For example in Civil Aviation and Broadcasting there are subcategories with different %ag of FDI allowed. These needs to be checked for further and updated knowledge. (a) News About Civil Aviation and Broadcasting can be read from this link. (b) Second Link for the details can be checked by clicking here
(A)
26% FDI is permitted in
Defence (In July 2013, there has been no change in FDI limit but higher investment may be considered in state of the art technology production by CCS) Newspaper and media ** Pension sector (allowed in October 2012 as per cabinet decision)
Courier Services (through automatic route)
Tea Plantation (upto 49% through automatic route; 49-100% through FIPB route)
(B)49% FDI is permitted in : Banking Cable DTH Infrastructure Telecom
network** ** investment
Insurance (in July 2013 it was raised to 49% from 26% subject to Parliament approval) Petroleum Refining (49% allowed under automatic route) Power Exchanges (49% allowed under automatic route) Stock Exchanges, Depositories allowed under automatic route upto 49%
49% (FDI & FII) in power exchanges registered under the Central Electricity Regulatory Commission (Power Market) Regulations 2010 subject to an FDI limit of 26 per cent and an FII limit of 23 per cent of the paid-up capital is now permissible. [Permitted in September 2012]
(C ) 51% is Permitted in Multi-Brand Retail (Since September 2012) Petro-pipelines
(D) 74% FDI is permitted in Atomic minerals Science Magazines /Journals Petro marketing Coal and Lignite mines Credit information comanies (raised from 49% to 74% in July, 2013) (E)100% FDI is permitted in Single Brand Retail (100% FDI allowed in single brand retail; 49% through automatic route; 49-100% through FIPB) Advertizement Airports Cold-storage BPO/Call centres E-commerce Energy (except atomic) export trading house Films Hotel, tourism Metro train Mines (gold, silver) Petroleum exploration Pharmaceuticals
Pollution control Postal service Roads, highways, ports. Township Wholesale trading Telecom (raised from 74% to 100% in July, 2013 by GoI) Asset Reconstruction Companies (increased from 74% to 100 in July, 2013. Out of this upto 49% will be under automatic route) Source : RBI website, Newpaper reports, GoI data
