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FDI MEANS FOREIGN DIRECT INVESTMENT..FDI IS A MEASURE OF FOREIGN OWNERSHIP OF DOMESTIC PRODUCTIVE ASSETS SUCH AS FACTORIES,LAND ETC.. FDI IS BASICALLY FOR A LONG DURATION OF TIME AND CANNOT BE EASILY LIQUIDATED..IT IS CONSIDERED AS AN IMPORTANT DRIVER OF GROWTH FOR A COUNTRY..

FINANCIAL COLLABORATIONS JOINT VENTURES AND TECHNICAL COLLABORATIONS CAPITAL MARKETS VIA EURO ISSUES PRIVATE PLACEMENTS OR PRIVATE ALLOTMENTS

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INCREASE INVESTMENT LEVEL AND THERE BY INCOME AND EMPLOYMENT. INCREASE TAX REVENUE OF GOVT. FACILITATES TRANSFER OF TECHNOLOGY INCREASE EXPORTS AND REDUCE IMPORT REQUIREMENTS.. IMPROVES QUALITY AND REDUCES COST OF INPUTS. INCREASE COMPETITION AND BREAK DOMESTIC MONOPOLIES..

FLOW TO HIGH PROFIT AREAS RATHER THAN MAIN CONCERN AREAS . SOMETIMES INTERFERS IN POLITICS SOMETIMES ENGAGE IN UNFAIR AND UNETHICAL TRADE PRACTICES. SOMETIMES RESULT IN MINIMISING COMPETITION AND CREATE MONOPOLY

FDI EQUITY LIMITS AUTOMATIC ROUTE..

INSURANCE- 26% DOMESTIC AIRLINES- 49% PRIVATE SECTOR BANKS- 74% TELECOM SERVICES-FOREIGN EQUITY 74% MINING OF COAL AND LIGNITE FOR CAPTIVE CONSUMPTION- 74%

FDI REQUIRING PRIOR APPROVAL

DEFENCE PRODUCTION- 26%
FM BROAD CASTING- 20% NEWS AND CURRENT AFFAIRS- 26% TEA PLANTATION- 100% DEVELOPMENT OF AIR PORTS- 100%

COURIER SERVICES-100%

ENGINEERING AND MANUFACTURING SECTORS HOTELS AND TOURISM INDUSTRIAL TOWNS ,PARKS. POWER GENERATION IT INCLUDING E-COMMERCE ADVERTISING AND FILM INDUSTRY ROADS AND HIGHWAYS

PROFITABILITY COSTS OF PRODUCTION ECONOMIC CONDITIONS GOVERNMENT POLICIES POLITICAL FACTORS

INDIA AS FDI DESTINATION

CONSIDERING THE ANTICIPATED LEVEL OF INFLOWS ON ACCOUNT OF FDI IN RETAIL,THERE MAY NOT BE MUCH REASON TO WORRY.DURING 2000 INDIA ATTRACTED SIGNIFICANTLY LOWER FDI THAN MANY OTHER SOUTH-EAST ASIAN COUNTRIES,SUCH AS SOUTH KOREA,THAILAND,MALAYSIA

ARGUMENTS IN FAVOUR OF FDI

IT WILL CUT INTERMEDIARIES BETWEEN FARMERS AND

THE RETAILERS,THEREBY HELPING THEM GET MORE MONEY FOR THEIR PRODUCE. IT WILL HELP IN BRINGING DOWN PRICES AT RETAIL LEVEL AND CALM INFLATION SMALL AND MEDIUM ENTERPRISES WILL HAVE A BIGGER MARKET ,ALONG WITH BETTER TECHNOLOGY AND BRANDING. IT WILL BRING MUCH NEEDED,FOREIGN INVESTMENT INTO THE COUNTRY. IT WILL ACTUALLY CREATE EMPLOYMENT THAN DISPLACE PEOPLE ENGAGED IN SMALL STORES.

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WILL LEAD TO CLOSURE OF TENS OF THOUSANDS OF MOM-AND POP SHOPS ACROSS THE COUNTRY. IT MAY BRING DOWN PRICES INITIALLY,BUT WILL FUEL INFLATION . FARMERS MAY BE GIVEN REMUNERATIVE PRICES INITALLY . SMALL AND MEDIUM ENTERPRISES WILL BECOME VICTIMS OF PREDATORY PRICING POLICIES OF MULTINATIONAL RETAILERS IT WILL DISINTEGRATE ESTABLISHED SUPPLY CHAINS BY ENCOURAGING MONOPOLIES OF GLOBAL RETAILERS.

ARGUMENTS AGAINST FDI

FDI POLICY WITH REGARD TO RETAILING IN INDIA..

FDI UP TO 100%FOR CASH AND CARRY

WHOLESALE TRADING AND EXPORT TRADING ALLOWED UNDER THE AUTOMATIC ROUTE.. FDI UP TO 51%WITH PRIOR GOVERNMENT APPROVAL FOR RETAIL TRADE OF SINGLE BRAND PRODUCTS,SUBJECT TO PRESS NOTE OF 2006. FDI IS NOT PERMITTED IN MULTI-BRAND RETAILING IN INDIA

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MAIN OBJECTIVE OF STUDY IS TO KNOW ABOUT IN WHICH SECTOR THE INDUSTRIES WILL INVEST IN OUR MONEY. TO IDENTIFY FACTORS WHICH INHIBIT HIGHER FDI OR FII FLOWS AND SUGGEST REMEDIAL STEPS TO EXAMINE POLICY REFORMS TOWARDS MERGERS AND ACQUISITION FOR ATTRACTING FDI OR FII..

The result of all these efforts are encouraging: the inflow of foreign capital has been steadily rising year to year so that FDI is better then FII Investors based in many countries have taken advantage of the India-Mauritius bilateral tax treaty to set up holding companies in Mauritius which subsequently invest in India, thus reducing their tax obligations. By industry, the largest destinations for FDI are electrical equipment (including computer software and electronics), services, telecommunication & transportation.