Budget 2014 – 15 With Special Reference to F.D.I

Coordinted By :

Dr. Pramod Goyal Mr. M. L. Patidar

Presented By : Pawel Gautam Priti Tripathi Gautam singh Sachin Dhamodkar

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.  

Why countries seek FDI • Domestic capital is inadequate for

purpose of economic growth.• Foreign capital is usually essential, at

least as a temporary measure, during the period when the capital market is in the process of development.

• Foreign capital usually brings it with other scarce productive factors like technical know how,  business expertise and knowledge

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 increasing exports; 

Cont….• Helps in transfer of new

technologies, management skills, intellectual property

•  Increases competition within the local market and this brings higher efficiencies

•    Increases tax revenues

Latest Developments on FDI (budget 2014-15)

Defence Sector: The Defence sector has been one of the biggest

beneficiaries of the increase in Foreign Direct Investment which will be increasing from 26% to 49%. The increase in FDI in defence sector would open the doors for a several foreign players to have a local existence with full domestic management under the FIPB route.

Insurance Sector : The insurance sector at present is investment starved. Increasing the composite FDI cap in the sector from 26 to 49 & offering full management control through FIPB route will pave way for expansion of the sector as a whole said the finance minister

Manufacturing and e-Commerce Segment FDI in manufacturing sector the finance minister has underlined the government’s role on focusing on offering incentives for small manufacturers and MSMEs in order to promote entrepreneurship FDI in the manufacturing sector is today on the automatic route and the announcement of FDI in the sector would make it possible for more small manufacturers to enter the online market, banking on the marketplace business model of e-commerce portals. 

Sector • Single Brand Retail

• Telecommunications

FDI limit• 100% (upto 49%-

Automatic 49-100%-FIPB)

• 100% (upto 49%- Automatic 49-100%-FIPB)

Why FDI is Opposed by Local People or Disadvantages of FDI

. Small enterprises fear that they may not be able to compete with world class large companies and may ultimately be edged out of business.

• Domestic companies fear that they may lose their ownership to overseas company.

•  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.

SHARE OF TOP COUNTRIES - FDI EQUITY INFLOWS(Cumulative, between April 2000 to February 2011)