1. Submitted to: Submitted by: Prof. Harpreet Kaur PRIYA VERMA 1115

3.  Currently there is a trend toward globalization whereby large, multinational firms often have investments in a great variety of countries. Many see foreign investment in a country as a positive sign and as a source for future economic growth. The U.S. Commerce Department encourages foreign investment through its “Invest in America” initiative.

4.  1 Causes a flow of money into the economy which stimulates economic activity  2 Employment will increase  3 Long run aggregate supply will shift outwards  4 Aggregate demand will also shift outwards as investment is a component of  Aggregate demand

5.  1 Inflation may increase slightly  2 Domestic firms may suffer if they are relatively uncompetitive  3 If there is a lot of FDI into one industry e.g. the automotive industry then a  country can become too dependent on it and it may turn into a risk that is why  countries like the Czech Republic are "seeking to attract high value-added  services such as research and development  (e.g.) biotechnology)"  4 Foreign investment creates employment, and can lead to technological  development through technology transfers.

6.  When it comes to investment, many people turn to foreign companies to invest in. People want to invest in other countries’ businesses because of their economies. You may find that another nation’s economy is much better than your own, and you can see a larger profit by investing in their businesses. Businesses want foreigners to invest in their companies because it helps their business grow and spread to other nations.

7.  There are two different types of foreign loan investments, including commercial loans and official loans. A commercial loan is a loan granted for the use of a business, rather than for personal use. Commercial loansare generally short-term loans issued to foreign businesses.Commercial loans

8. . Automatic Route  Government Route

9.  Indian companies can raise foreign currency resources abroad through the issue of ADRs/ GDRs, in accordance with the Scheme for issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Receipt Mechanism) Scheme, 1993 and guidelines issued by the Government of India thereunder from time to time.

10.  A company can issue ADRs / GDRs, if it is eligible to issue shares to persons resident outside India under the FDI Scheme. However, an Indian listed company, which is not eligible to raise funds from the Indian Capital Market including a company which has been restrained from accessing the securities market by the Securities and Exchange Board of India (SEBI) will not be eligible to issue ADRs/GDRs.

11.  Investment by SEBI registered FIIs is regulated under SEBI (FII) Regulations, 1995 and Regulation 5(2) of FEMA Notification No.20 dated May 3, 2000, as amended from time to time. FIIs include Asset Management Companies, Pension Funds, Mutual Funds, Investment Trusts as Nominee Companies, Incorporated / Institutional Portfolio Managers or their Power of Attorney holders, University Funds, Endowment Foundations, Charitable Trusts and Charitable Societies.

12.  SEBI registered FIIs and NRIs have been permitted to subscribe to the Perpetual Debt instruments (eligible for inclusion as Tier I capital) and Debt Capital instruments (eligible for inclusion as upper Tier II capital), issued by banks in India and denominated in Indian Rupees, subject to the following conditions :  Investments by all NRIs in Rupee denominated Perpetual Debt instruments (Tier I) should not exceed an aggregate ceiling of 24 per cent of each issue and investments by a single NRI should not exceed 5 percent of each issue.

13. A SEBI registered Foreign Venture Capital Investor has general permission from the Reserve Bank of India to invest in a Venture Capital Fund (VCF) or an Indian Venture Capital Undertaking (IVCU), in the manner and subject to the terms and conditions specified in Schedule 6 of RBI Notification No. FEMA 20/2000-RB dated May 3, 2000, as amended from time to time. These investments by SEBI registered FVCI, would be subject to the SEBI regulation and sector specific caps of FDI.

14.  Periodic FDI arises when a firm duplicates its home country-based activities at the same value chain stage in a host country through FDI  Annual 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. [ [

15. The government has undertaken various liberal policy decisions to make the whole process of foreign investment in India hassle free. Some of the foreign investment policies include: 1. The list of industries that are eligible for automatic approval of foreign investment has been expanded by the Ministry of industry. 2. The upper limit of the rate of foreign investment in India has been raised to 74% from the earlier 51%; in some cases this has been increased to 100%.

16.  To ensure quick clearing of proposals for foreign investment :  Periodically review the implementation of the cleared proposals  Regular review the policies pertaining to FDI with concerned agencies including government bodies and private bodies in various sectors.  Doing investment promotion activities consisting of establishing contacts and inviting overseas companies to do business in India