What is India’s stance on FDIs and FIIs?

India is now taking a positive and progressive stance towards FDIs and FIIs with encouraging talks on about FDI cap increase in News Media and the ongoing debate on multiple brand retailing.

Recent talks with USA has seen India inviting the US to ‘make, innovate and invest’ in India – signaling considerable inflow of FDI in the coming months. FIIs are witnessing a surge because of the over upward trend of the economy, the markets and the recent RBI rate cut. With the economies of US and other developed and

developing countries still in the ‘recovery’ stage – worldwide investors have turned India’s way!

Trivia

 FDI was introduced in India way back in 1991 by the then Finance Minister Dr. Manmohan Singh.

 USA has the maximum incoming FDI followed by UK and other counties likeHong Kong, China etc.(not necessarily in the same order)

 Singapore has made maximum FDI in India as per F.Y. 2014’s stats. The previous 1st place was held by Mauritius!

 Service Sector has always received maximum FDI in India.

 Focus now shifting to Manufacturing sector – with the Make in India vision.

NITI AAYOG

History is all set to change with all over for planning commission and new institution know as NITI Aayog set to take his role.

The main aim of forming Niti Aayog is pro people development by following up bottom up approach and with active participation of all stakeholders. It has been set up as a think-tank for formulating a new policy framework in keeping with the changes and challenges of rapidly evolving socio-economic scenario in the country.

Sectors where FDI is NOT ALLOWED

FDI in the following sectors are prohibited completely – i.e., under both Automatic and Government routes it is not allowed.

 Atomic Energy

 Agricultural and Plantation activities

 Gambling, betting and lottery

 Nidhis and Chit Funds

 Real Estate

 Manufacture of cigarettes and tobacco

What are FIIs?

Foreign Institutional Investors (FIIs) are persons or companies incorporated outside India(companies can be Mutual funds, Pension funds, investment companies, foreign banks etc.), investing in shares of a company – where their investment is very

less. They do not have any sizeable investment – they do not have any controlling power in the company.

It is just like you and me investing in shares of Reliance Industries – only investing is done by people who are not Indian residents; and they have to be registered with SEBI to participate in the market.

So, basically FIIs are the financial market players – and the source of liquidity in the markets. Their investing in the Indian markets project a +ve image and brings in more investors.

There is a ceiling limit of 24% FII of paid-up capital of an Indian company, and 20% in case of PSU banks.

What does FDI mean to the home/ host country – India

 FDI brings in more capital into the economy.

 It brings in the much needed foreign exchange – foreign currency.

 It also boosts the domestic economy and industries and generally triggers a positive economic ripple effect.

 It brings in more revenues for the Income Tax Department.

 Advanced technology touches the shores of the host country, along with technically superior human resource.

 Creation of new jobs also happens – and in India jobs can never be few!

The above mentioned points can also be considered to be the pros or benefits from FDI.

Which leads us to the cons of FDI in India:

 It can lead to the domestic companies losing their market share.

 Domestic companies may lose out to the competition altogether.

 Thus cons are always from the point of view of the host country and how FDI will effect its own economy.

FDI IN INDIA

FDI is a hot topic, with the current government increasing the caps on many sectors; it is something that will definitely shape the economy in the months to come – also having far reaching consequences with the Make in India vision of PM Modi.

So what is FDI? How does it actually work? And some latest news!

1. What is FDI – Foreign Direct Investment?

Foreign Direct Investment is when persons/companies who/which are non-Indian, invest in Indian companies.

Thus, through FDI, the investors become the shareholders in Indian companies and usually have stake that will give them controlling power of the company. 

FDI can be done in many ways – popular of which are through acquiring of shares and merger and acquisition.

Also important to know is that there are two ‘routes’ of FDI, namely, Automatic Route(does not require RBI or CG approval) and the Government Route (requires the approvals for those not covered under the automatic route).

2. Why would anyone invest in another country?

Well, there are plenty of reasons – why would a foreign company invest in any Indian Company?

 There could be tax incentives,

 The company believes that doing a particular business will be more profitable in India,

 There could be tax exemptions favorable to the company both in India and in the company’s home country,

 Or, it might be up for some concessions in the home country as a part of the country’s trade agreement with India …

 Or, the company might be aiming at starting operations in South Asia and India is the most developing economy in this part of the world!

DIFFERENT TYPES OF CHEQUES

A cheque is an unconditional order addressed to a banker,signed by the person who has deposited money with a banker, requesting him to pay on demand a certain sum of money only to the order of certain person or to the bearer of the instrument.

TYPES OF CHEQUES

1) BEARER CHEQUE

Bearer cheque are the cheques which withdrawn to the cheque's owner.These types of cheques normally used for cash transaction.

2) ORDER CHEQUE

Order cheque are the cheques which is withdrawn for the payee(the cheque withdrawn for whose person).Before withdrawn to that payee,banks cross check the identity of the payee.

3) CROSSED CHEQUE

On that type of cheques two parallel line made on the upper part of the cheques,then that cheques formed to crossed cheques.This type of cheques payment does not formed in cash while the payment of that type pf cheques transferred to the payee account and the normal person's account who recommend by the holder on the

cheque.

4) ACCOUNT PAYEE CHEQUE

When two parallel lines along with a crossed made on the cheque and the word 'ACCOUNT PAYEE' written between these lines,then that types of cheques are called account payee cheque. The payment of the account payee cheque taken place on the person,firm or company on which name the cheque issue.

5) COMPANY CROSSED CHEQUES

When two parallel lines along with a crossed made on the cheque and the word 'COMPANY' written between these lines,then that types of cheques are called company crossed cheques.Then type of withdrawn does not taken in cash while the person on which the cheque issue,transferred on its account.Normally crossed cheque

and company crossed cheque are same.