Foreign Direct investment (FDI) is a direct investment into production or business in a country by an individual or company of another country, either by buying a company in the target country or by expanding operations of an existing business in that country. Foreign direct investment is in contrast to portfolio investment which is a passive investment in the securities of another country such as stocks and bonds.
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. FDI works at the international and national levels through its own activities and those of its members.
FDI is in official relations with the World Health Organization (WHO) and a member of the World Health Professionals Alliance (WHPA). India is the 3rd largest economy of the world in terms of purchasing power parity and thus looks attractive to the world for FDI. Even Government of India, has been trying hard to do away with the FDI caps for majority
of the sectors, but there are still critical areas like retailing and insurance where there is lot of opposition from Indian companies.
Some of the major economic sectors where India can attract investment are:
Telecommunications, Apparels, Information Technology, Pharma, Auto parts, Jewelry, Chemicals.
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 transfer of new technologies, management skills, intellectual property Increases competition within the local
market and this brings higher efficiencies Helps in increasing exports;
Increases tax revenues Types of FDI Horizontal FDI arises when a firm duplicates its home country-based activities at the same value chain stage in a host country through FDI. Platform FDI from a source country into a destination country for the purpose of exporting to a third country.
Vertical FDI takes place when a firm through FDI moves upstream or downstream in different value chains i.e., when firms
perform value-adding activities stage by stage in a vertical fashion in a host country.
Foreign investment was introduced in 1991 under Foreign Exchange Management Act (FEMA), driven by then finance minister
Manmohan Singh. As Singh subsequently became the prime minister, this has been one of his top political problems, even in the current times.
India disallowed overseas corporate bodies (OCB) to invest in India. India imposes cap on equity holding by foreign investors in various sectors, current FDI limit in aviation sector is maximum 49%.
Sunday, 30 November 2014
Sunday, 9 November 2014
Sunday Special - NABARD
National Bank for Agriculture and Rural Development (NABARD) is an apex development bank in India having headquarters based in Mumbai (Maharashtra) and other branches are all over the country. The Committee to Review Arrangements for Institutional Credit for Agriculture and Rural Development (CRAICARD), set up by the Reserve Bank of India (RBI) under the Chairmanship of Shri B. Sivaraman, conceived and recommended the establishment of the National Bank for Agriculture and Rural Development (NABARD).
NABARD was established on the recommendations of Shivaraman Committee on 12 July 1982 to implement the National Bank for Agriculture and Rural Development Act 1981. A special act by the parliament and its main focus was to uplift rural India by increasing the credit flow for elevation of agriculture & rural non-farm sector and completed its 25 years on 12 July 2007. It has been accredited with “matters concerning policy, planning and operations in the field of credit for agriculture and other economic activities in rural areas in India”. Promoting sustainable and equitable agriculture and rural development through effective credit support, related services, institution building and other innovative initiatives. In pursuing this mission, NABARD focuses its activities on: Credit functions: involving preparation of potential-linked credit plans annually for all districts of the country for identification of credit potential, monitoring the flow of ground level rural credit, issuing policy and operational guidelines to rural financing institutions and providing credit facilities to eligible institutions under various programmes. Development functions: concerning reinforcement of the credit functions and making credit more productive.
Supervisory functions:
ensuring the proper functioning of cooperative banks and regional rural banks. NABARD operates throughout the country through its 28 Regional Offices and one Sub-office, located in the capitals of all the states/union territories. NABARD is also known for its ‘ SHG Bank Linkage Programme’ which encourages India’ s banks to lend to Self Help Group (SHGs). Because SHGs are composed mainly of poor women, this has evolved into an important Indian tool for microfinance. NABARD also has a portfolio of Natural Resource Management Programmes involving diverse fields like Watershed Development, Tribal Development and Farm Innovation through dedicated funds set up for the purpose.
NABARD was established on the recommendations of Shivaraman Committee on 12 July 1982 to implement the National Bank for Agriculture and Rural Development Act 1981. A special act by the parliament and its main focus was to uplift rural India by increasing the credit flow for elevation of agriculture & rural non-farm sector and completed its 25 years on 12 July 2007. It has been accredited with “matters concerning policy, planning and operations in the field of credit for agriculture and other economic activities in rural areas in India”. Promoting sustainable and equitable agriculture and rural development through effective credit support, related services, institution building and other innovative initiatives. In pursuing this mission, NABARD focuses its activities on: Credit functions: involving preparation of potential-linked credit plans annually for all districts of the country for identification of credit potential, monitoring the flow of ground level rural credit, issuing policy and operational guidelines to rural financing institutions and providing credit facilities to eligible institutions under various programmes. Development functions: concerning reinforcement of the credit functions and making credit more productive.
Supervisory functions:
ensuring the proper functioning of cooperative banks and regional rural banks. NABARD operates throughout the country through its 28 Regional Offices and one Sub-office, located in the capitals of all the states/union territories. NABARD is also known for its ‘ SHG Bank Linkage Programme’ which encourages India’ s banks to lend to Self Help Group (SHGs). Because SHGs are composed mainly of poor women, this has evolved into an important Indian tool for microfinance. NABARD also has a portfolio of Natural Resource Management Programmes involving diverse fields like Watershed Development, Tribal Development and Farm Innovation through dedicated funds set up for the purpose.
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