FOREIGN DIRECT

INVESTMENT
 Definition
 Foreign direct investment is that investment,

which is made to serve the business interests

of the investor in a company, which is in a
different nation distinct from the investor's
country of origin. A parent business
enterprise and its foreign affiliate are the two
sides of the FDI relationship. Together they
comprise an MNC.
 Methods of Foreign Direct Investments
 The foreign direct investor may acquire 10% or
more of the voting power of an enterprise in an
economy through any of the following methods:
 by incorporating a wholly owned subsidiary or
company
 by acquiring shares in an associated enterprise
 through a merger or an acquisition of an
unrelated enterprise
 participating in an equity joint venture with
another investor or enterprise
Foreign direct investment incentives may take the following
forms:

 low corporate tax and income tax rates

 tax holidays
 other types of tax concessions
 preferential tariffs
 special economic zones
 investment financial subsidies
 soft loan or loan guarantees
 free land or land subsidies
 relocation & expatriation subsidies
 job training & employment subsidies
 infrastructure subsidies
 R&D support
 derogation from regulations (usually for very large projects)
 Entry Mode
 The manner in which a firm chooses to

enter a foreign market through FDI.

◦ International franchising
◦ Branches
◦ Contractual alliances
◦ Equity joint ventures
◦ Wholly foreign-owned subsidiaries
 MONTH WISE FDI INFLOW IN THE YEAR 2010
amont of fdi inflows
calendar year 2010 in crore

JANAURY 9,386
FEBRUARY 7,955
MARCH 5,497
APRIL 9,697
MAY 10,135
JUNE 6,429
JULY 8,359
AUGUST 6,196
SEPTEMBER 9,754
OCTOBER 6,185
year up to october 2010 79,593
Year wise investments
Top 5 investing countries in India
Share of FDI inflows, August 1991 to July 2010

28.08

Mauritius
Singapore
42.09 USA
UK
Netherlands
Japan
Other

3.55

4.17

5.17

7.48
9.46
 Percentage of FDI In Sectorwise
25

20

15

10

5
Percentage of FDI

0
or e
ar ion itie
s s le te er s) ts s ts ct
s s g s m a) s
ct w o bi sta ow zer Por trie en u l Ga din vice ris edi t rie
Se rd ca
t iv e P il i s m rod ra Tr
a r u m dus
es ha uni Act to
m
al ert ndu uip P tu Se To nt n
e a y
rvi
c & m on Au R
n
F
al i
Eq um N nc an d
Pr
i
c .i
re i & a c l s & a . s
Se wa m ct g h i
rg tric Gyp um
a lt el cl i
f t eco tru s in ert l u su Hot (In M
l al c e n
rS
o
Te on
s ou O
th
et El
e t & tro
l
Co in
g
e C H ( en e s t
t s M P a
pu al m dc
m ic Ce o a
Co h em Br
C &
n
t io
a
r m
fo
In
Regional Investment

State 2008-09 Amount in USD mn percentage

Maharastra 12409.20 45.44

Gujarat 2825.80 10.35

Karnataka 2026.10 7.42

New Delhi 1868.10 6.84

Tamil Nadu 1724.20 6.31

Andra Pradesh 1237.80 4.53