FDI: Foreign Direct Investment





51% FDI in multi-brand retail approved
1. The Union Cabinet on 24th November approved 51% foreign direct investment in multi brand retail. The cabinet also decided to raise the cap on foreign investment in single brand retailing 100% from 51%. An estimated rupees 30 lakh crore retail sector was thus open to foreign investors by clearing a bill that allows 51% investment in multi-brand retail.
2. The decision being perceived as game changer for the estimated 590 million dollars approx 29.5 lakh crore rupees retail market, was taken at the meeting for the cabinet preceded over by Prime Minister Manmohan Singh.
3. Yeah currently allows 51% foreign investment in single brand retailers and hundred percent for wholesale operations but no FDI in multi-brand retail.
6. In the wake of apprehension that the decision would impact farmers and Kirana shops rough Riders have been imposed on the entry of multinational companies in 53 cities with population of over 1 million. The big retailers would bring in minimum investment of hundred million dollar of which app should be in the back and infrastructure like cold chain, processing and packaging. These players would have to source at least 30% of manufactured and processed products from a small scale units.
7. Battling near double inflation, government has been trying to build a consensus on the issue for the last 17 months, contending the entry of MNCs in retail would contain inflation. Considering space constraint in big cities, stores can come up with 10 km of 53 cities with 1 million population.
8. Hailing the move, india said the move would help bring in the much needed capital for the sector.
##Pros and cons of foreign equality in retailing:
Following are the main issues raised by those in favour of foreign equality in multibrand retailing and those opposed to it.
# those against:
1. It will lead to closer of tens of thousands of mom and pop shops across the country and endangered livelihood of 40 million people.
2. It may bring down prices initially, but fuel inflation once multinational companies get a stronghold in the retail market.
3. Even remunerative price initially, but eventually they will be at the mercy of big retailers.
4. Small and medium enterprises will become with themes of predatory pricing policy of multinational retailers.
5. It will disintegrate established supply chains by encouraging monopolies of global retailers.

# those in favour:

1. It will cut intermediary between farmer and retailers, more money for their produce.
2. It will help in bringing down prices at retail level and calm inflation.
3. Big retail chains have to put 50% of total investment in supply chains which will a reduce wastage estimated at 40 to 50% in case of fruits and vegetables.
4. Retailers will have to Source at least 30% of requirement from small and medium enterprises. This will give them a bigger market technology and branding.
5. It will bring much needed foreign investment into the country along with the technology and global best practices.
6. Mega store will be allowed only in cities where population is above 1 million. So it will not displace people engaged in small stores but will actually create employment.
7. Induce better competition in the market thus benefiting both Producers and Consumers.
India’s attempt at the indigenous production of Defence equipments can be described metaphorical like a child using building blocks to make a dream Masterpiece but he falters and is help along but it still unable to put it together.
Yet the languid journey towards the state goal of self Reliance in defence continues. NDA regime now intense to allow increased participation of global defence manufacturers the very best in business, to set up manufacturing partnership with Indian companies. The FDI ceiling in the sensitive defence sector has been hiked to 49% 26% with the condition that control in joint venture for manufacturing of defence equipment will remain in Indian hands. Aimed at boosting domestic defence industry of country that imports up to 70% of its military requirements.

Giving a push to the make 
in India drive the department of industrial policy and promotion under Ministry of Commerce proposals were related to foreign direct investment FDI in October 2014 of various companies including Punj Lloyed and Bharat Forge that had been pending for the last few years. This is a result of the policies changed by the BJP government in August which has raised the FDI cap in defence from 26% to 49% and permitted portfolio investments up to 24% of the total equity of the university joint venture company under automatic route and doing away with the requirement of 51% equity ownership by a single Indian investor company this allows more than one Indian company to hold a cumulative  51% share to encourage more domestic players in sector. Earlier it was mandatory for a single Indian company to own and control the company.

It may not immediately convert india into a manufacturer of high end technology like planes, warships and guns, but it will create jobs in private and public sector defence manufacturing units, besides generating a spin off and save some foreign exchange. The maximum of hundred percent will be allowed for what is classified as state of the art Technology. Globally the defence sector contributes between 2.5 to but India share is not even worth the count.
An increased FDI cannot be touted as a Panacea to get high end Technology. Military observed say new Delhi may lay hits hands on top of the line Technologies by the sheer weight of its hafty shopping purse and the reputation of being the biggest arms importer in the world, but it would be preposterous to assume that enhanced FDI will make countries teach Indian engineers how to make fighter jet at Mach 3 speed a rocket booster to propel nuclear missiles to greater distances.
The details of economic benefits are as follows:
1. Higher defence production will accelerate the overall growth of the manufacturing sector by 8 percent to 14%.
2. Savings of 30% to 50% result of import substitution and cheaper cost on account to spare and maintenance. In absolute terms, this translates into savings of more than rupees 4000 crore per year.
Main advantages of FDI in defence in India:
1. By allowing FDI in defence india can ensure that companies deliver what they have promised. Originally it can insulate itself from any sought of embargo and also curb any malpractice. The government can easily bring in necessary security clauses in the licence. Right to take over a facility is required during an operational emergency.
2. Inflow of foreign capital, capital base of domestic country increases.
3. Increase in tax revenue.
4. Boost economy by GDP growth.
5. Increase Competition productivity and efficiency.
6. Large employment opportunities, which in turn will add 2% to India’s GDP.
7. Inflow of Technology, expertise and know how.
8. Infrastructure facilities improve.
9. Reduce cost of production.
10. Increase in international trade.
11. High quality products.
12. Increase in the FDI also improve the prospects of technology transfer and the forging of meaningful ties between Indian and foreign defence companies.
13. The FDI in defence will bring in a tough competition for India’s research agency defence research and development organisation that is DRDO. Even after spending crores of Rupees on R&D, the public sector undertaking performance have been below par. By bringing FDI the government can create a competitive atmosphere for DRDO and its Agencies which would then be pushed towards bringing in pathbreaking products.
14. Considering the equipment for Defence Services are currently imported. It causes considerable burden on India’s foreign exchange. These multi-billion deals often bring in corruption but 49% FDI can curb such practices.
#Disadvantages-
1.  may cause Monopoly by foreign companies in the absence of proper control by the government.
2. Internal insecurity.
3. may exploit The domestic resources without giving benefits to the domestic country.
4. Domestic companies may feel uprooted.
5. But experts caution it could derail india’s efforts at self Reliance and may not amount to any real transfer of cutting edge Technology.

Some success:

Without any FDI and despite being hampered by the US imposed sanctions 19982 mm 10, the much critiqued defence scientist in the public sector companies owned by MoD have had some success, especially in the past few years. Helped by Russia and lately by the US and France, some very good equipments was produced locally, but critical cutting edge technology comes from abroad.
* fighter jet Tejas is powered by us produced General Electric engines.
* the Arjun tank runs on German MTU 838 KA engine and over 30% of it has German percentage.
* the latest version of dhruv helicopter now tasked for Siachen operations, flies on snemca engines from france.
* the shivalik class warships of the Navy are designed in India powered by France pielstick engines. These warships weighing about 6200 tonnes each were to use the WhatsApp grade Steel produced by the Steel Authority of India.
* vikrant, indigenous nuclear powered attack submarine and see Bonnie aircraft carrier, promises to place India in the Exclusive League of Nations. The submarine is the first such vessel constructed outside the five permanent members of uN Security Council- us, uK Russia China and France. While russia helped in design the main Hull Of The vessel was built by Indian Industry L&T. The aircraft carrier is designed by Italian shipbuilder fincantieri but built in India using Indian steel. The fighter jets on its back will be the Russian MIG 29k and the engines That Power the 40000 ton vessel are from the General Electric,US.
The purchases:
In the 5 year period from 2009 to 2013 india has emerged as the single largest by rope weapons and military equipments. During the period under study India procured fighter jets and mI 17 v5 helicopter from Russia specialised transport planes, c 130 J Super Hercules and C-17 globemaster from the US and UAVs and radar from Israel.75% of the equipment to India while the US and Israel had 7% and 6% sales respectively.
Government clears defence projects worth rupees 80000 crore.
The decision will provide relief to the depleting submarine arm of the Navy which is down to just a handful of operational submarines following accidents involving INS sindhurakshak and INS Sindhuratna. The target set in 1999 was to have 24 submarines by 2030.

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