2. FOREIGN INVESTMENT
PRESENTING BY-
Monica Kalwani , Surabhi Agarwal, Vivek
Singh, Madhu Verma, Anurag Kushwaha

3. Flows of capital from one nation to another in
exchange for significant ownership stakes in
domestic companies or other domestic
assets. Typically, foreign investment denotes
that foreigners take a somewhat active role in
management as a part of their investment.
Foreign investment typically works both
ways, especially between countries of
relatively equal economic stature.

4. There are various ways to invest in foreign
business but there are three main options that
many investors use. Consider the following.
You can choose to invest in an equity acquisition.
In this situation, you are buying shares of an
existing company. You could also be purchasing
shares in an enterprise just created.
Another option is to make loans. You may be a
parent company loaning funds to others.
You may be a profit reinvestment option. In this
situation, you invest in the further expansion of
businesses.

5. Domestic capital is inadequate for purpose of
economic growth.
During the period in which the capital market
is in the process of development, foreign
capital is essential as a temporary measure.
Foreign capital brings with it other scarce
productive factors; technical know
how, business experience and knowledge.

6. Foreign Direct Investments
Loan investments
Mutual funds

7. American co’s
Exchange traded funds
Global real estate mutual funds (REITs)

8. Official flow
A commercial loan

9. Governing
Automatic route
Prior approval route
Sectoral guidelines

10. Foreign Investment Promotion Board(FIPB)
 Expedite clearance process
 Periodically review implementation of cleared
proposals
 Review general and sectoral policy guidelines
 Undertake investment promotion activities
Secretariat for industrial assistance(SIA)
 Acts as gateway to industrial investment in india
 Assist entrepreneurs & investors in setting up
projects
 Liaise with govt.bodies to seek necessary clearance.

11. Foreign Investment Implementation Authority(FIIA)
 Quick implementation of FDI approvals
 Resolution of operational difficulties faced by
foreign investors
 Gather feedback from foreign investors
Other authorities involved:
 Investment comission
 Project approval board
 RBI

12. Foreign investment is allowed in all areas
except following sectors where foreign
investment is prohibited:
 Atomic energy
 Agriculture(except
floriculture,horticulture,seed development
etc.)
 Lottery business/gambling & betting
 Plantations(except tea plantations)

13. Different options for Indian Corporates
 Investment through GDRs & ADRs
 Mobilization of funds through preference
shares
 Mobilization of fund through external
commercial borrowings
 Foreign currency exchangeable bonds

14. FI Equity Inflow By Countries
Maturities
3%3%
4% Others
4%
Singapure
5%
U.S.A
43%
8%
U.K
Netherlands
9%
Cyprus
Japan
21%
Germany

15.  Local market demand-86%
 Low cost operations-29%
 Ease of making FDI-29%
 Labour availability-29%
 Entry of other players-24%
 Political stability-24%
 Time zone advantage-14%

16.  Play a complementary role in overall capital
formation.
 Employment generation & productivity
enhancement.
 Encourages the transfer of management
skills, intellectual property,& technology.
 Improves Forex position of the country.
 Promotion of the competition within the local
input market.
 Development of the human capital resources.
 Increase in exports.
 Increase tax revenues.

17.  A co’s may lose out on its ownership to an
overseas co’s.
 Govt.has less control over the functioning of the
co’s that is functioning as the wholly owned
subsidiary of an overseas co’s.
 FI enterning & taking the control of already
established market, where local co’s are meeting
the requirements of the market.
 Invest in machinery & intellectual property. Not in
wages.
 Large giants can set up monopolies in highly
profitable sector.

18. FII is eligible & get registered with SEBI. such as
pension funds University Funds
mutual funds Endowments
investment Trusts Foundations
Banks Broad based Funds
Charitable Societies Re-insurance Companies
Foreign Central Bank Foreign Government Agencies
Charitable Trusts Insurance International or Multilateral
Companies Organizations/Agency
Sovereign Wealth funds

19. FII can be made in two capacities
Behalf of
An Its
for on
Sub-
accounts.

20. SEBI grants registration to the FII and subaccount
which is permanent unless suspended or cancelled
by SEBI, subject to payment of fees and filing
information every three years.
The FIIs can also access FDI route for investments in
an Indian company.