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INTRODUCTION
International capital flows have significant potential benefits for
economies around the world.
Capital flows are most helpful when the magnitude of those flows is steady
and stable.
The international capital flow such as direct and portfolio flows has huge
contribution to influence the economic behavior of the countries positively
and negatively.
Costs of production
Economic condition
Government policies
Import export
Growth in economy
Government benefits
Competition
Global relationship
190670
157056
118908
85,206
2004-05
105152
2005-06
166162
189001
128888
2006-07
193820
117580
2007-08
2008-09
2009-10
FOREIGN INVESTMENTS
Wholly Owned
Subsidiary
Direct Investment
(FDI)
Joint Venture
Acquisition
Foreign Investment
Portfolio Investment
(FPI)
Institutional
Investment (FII)
Investment In
GDRs, ADRs
MEANING OF FDI
Foreign direct investment is investment of foreign assets into domestic
structures, equipment, and organizations.
TYPES OF FDI
2. Joint venture
3. Acquisition
SIGNIFICANCE OF FDI
Financial transfer in foreign
exchange
Physical resources like machinery
tools equipment etc.
Worldwide contacts
TYPES OF FIIS
1. Portfolio Investment
ADVANTAGES OF FII
Increase forex reserve
Large availability of capital
Increases domestic saving and investments
FDI is prohibited in
FII is prohibited in
Chit funds
Railway Transport
Agriculture & Plantation
Gambling and Betting including casinos etc.
Lottery Business including Government
/private lottery, online lotteries, etc.
Manufacturing of Cigars, cheroots and
cigarettes, of tobacco or of tobacco
substitutes
FII
It is long-term investment
40000
46847
41874
34835
1.4
37745
1.2
34847
30000
0.8
22826
20000
52%
40%
10000
0
4029
6130
5035
4322
6051
0
-18%
-10000
1.6
-14%
48%
0.6
53%
34%
8961
0.4
0.2
20%
-8%
-8%
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12
FDI In Flow
4029
6130
5035
4322
6051
8961
22826
34835
41874
37745
34847 46847
% INCREASE
0
52%
-18%
-14%
40%
48%
146%
53%
20%
-8%
-8%
34%
0
-0.2
-0.4