Advantages of Foreign Direct Investment

Integration into global economy - A developing country, which invites FDI, can gain a greater foothold in the world economy by getting access to a wider global market. Technology advancement - FDI can introduce worldlevel technology and technical know-how and processes to developing countries. Foreign expertise can be an important factor in upgrading the existing technical processes in a host country.

 Increased competition - As FDI brings in advances in technology and processes, it increases the competition in the domestic economy of the developing country, which has attracted the FDI. Overall, FDI improves the quality of a products and processes in a particular sector. Improved human resources - Employees of a host country in which there is an FDI get exposure to globally valued skills. Employment generation

FDI Industrywise Sectoral Caps

S. No. 1 2 3 4 Sector Private Sector Banking Non-Banking Financial Companies (NBFC) Insurance Telecom-munications Industry Cap 49% 100% 26% 49%

5 6
7 8 9

Housing and Real Estate Power Drugs & Pharmaceuticals

Hotel & Tourism Road and highways, Ports and harbours

100% 100% 100%

100% 100%

Recent happenings FDI

FDI in India rose 13 percent to US$50.81 billion in the first 11 months of 2011 Total FDI inflows grew by 25% during Jan-Nov 2011, second only to Brazil where the growth was 48%. India received maximum FDI from countries like Mauritius, Singapore, and the US at US$ 60.17 billion, US$ 14.92 billion and US$ 9.91 billion, respectively, during April 2000-August 2011.

 Technology remains the most attractive- sector with 146 projects and growth of 51% in value of FDI inflows during the first eleven months of 2011. Other attractive sectors are automotive and retail and consumer products with a growth of 38.2% and 31.7%, respectively DIPP has proposed to permit 26 per cent FDI in domestic airlines, allowing foreign airlines to hold a stake in their Indian counterparts.

Why FDI in retail MUST be supported

Lack of investment in the logistics of retail chain creating inefficiencies in the food supply chain. As per some industry estimates, 35-40% of fruits and vegetables and nearly 10% of food grains in India are wasted. FDI in retail would help in addressing this issue with compulsory investment of 50% in back-end. About 1.5 million jobs will be created in the frontend alone in the next five years.

 concern of food inflation would be addressed development of a robust supply chain that, in turn, will integrate small and medium-size enterprises into the modern trade process knowledge and skills transfer, ensuring SMEs receive higher prices for their produce/supplies a more transparent mechanism for pricing, and better access to the intermediate market