UNIT2

New Age Economies

Economic systems, Circular Economy- Concept of Circular Economy, difference between
Linear and Circular Economy, Role of Circular Economy in Sustainable Business and
Innovation. GIG Economy. Industrial Revolutions- Meaning and Nature of Industry 4.0
and Latest Trends. The changing nature of Globalization. Foreign Direct Investment,
Foreign Institutional Investment, Regulation of Foreign Trade, Disinvestment in Public
Sector Units.
CIRCULAR ECONOMY:
 Meaning: It is an economy where products are designed for durability, reuse and
recyclability and thus almost everything gets reused, remanufactured, and recycled into a
raw material or used as a source of energy.
 Efficient Use of Resources: It includes 3 R’s (Reduce, Reuse and
Recycle), Refurbishment, Recover, and Repairing of materials.
Example: If a person is planning to discard his/her mobile, it can be given to someone else
(i.e. giving the mobile second life-Reuse), rather than throwing it just like that.
Once the mobile reaches its end of life, it can be ensured that everything embedded in it,
aluminium, copper, plastic etc. should be brought back to production cycle so that the circle
of the economy gets completed.
 Response to the Linear Process: Many countries follow a linear process in which raw
materials are taken from the environment, turned into new products which are then
disposed of after use.
 Benefits:

o For Industry:

 Fulfills the need for raw materials: The output produced by industries in a
circular economy comes back to the industries in the form of input, for
example, when parts of a mobile will be segregated, copper and aluminum will
become raw materials for some industries.
 Efficient utilization of resources: This helps industries in earning cash
profits equivalent to 3-5% of their turnover. Ultimately, QCDF (Quality, Cost,
Delivery, and Flexibility) and sustainability level of industries get improved.
o For Environment:

 Problem of disposal of waste gets solved as in a circular economy, waste is

converted into raw materials.
 Also solves the problem of air pollution, water pollution, and land
pollution.

o For Consumers:

 Cost-Effective: The products in the circular economy are more cost effective
for consumers as they tend to be more efficient, besides having a longer shelf
life.
 Efficient Products: Increased Efficiency leads to a reduction in the cost of
maintenance as well as that of disposal, which otherwise a consumer has to
incur in a huge amount.
o Global Response: Germany and Japan have used it as a binding principle for
reorganizing its economy, whereas China even has a law on it (Circular Economy
Promotion Law).
Further, the Sustainable Development Goals, adopted by the United Nations
Member States in 2015, include many related ambitions.

Circular Economy and India

 India is already on its path to the circular economy. Initiatives of the National
Productivity Council (NPC) and government show that.

o NPC is an autonomous organisation under the Ministry of Commerce &

Industry. Productivity Week 2019 Theme was ‘Circular Economy for Productivity
and Sustainability’.
o ‘Digital India’ Program contains a significant component of the recycling of
electronic wastes. Swachh Bharat Mission is also about making wealth out of
wastes.
 India has a huge potential for reuse and recycling as only around 20% of the total waste
generated goes into the recycling process.
 Manufacturing Sector, especially MSMEs can help a lot in transformation towards a
circular economy. The sector should ‘DECIDE’ i.e.

o Designing processes for refurbishment and easy cycling.

o Educating masses on Circular Economy and its benefits.
o Collaborative Models for smooth implementation of Circular Economy.
o Innovating Products for circularity.
o Digitization for transparency, virtualization, dematerialization, and feedback driven
intelligence for saving resources.
o Energy-Efficient for environmental sustainability.
Future trend

 India and Australia have had a strong and productive bilateral partnership since a decade
and their collaborations across a broad range of areas have yielded significant results.
 Circular Economy can lead to the emergence of more sustainable production and
consumption patterns, thus providing opportunities for developed and developing
countries to achieve economic growth and inclusive and sustainable industrial
development (ISID) in line with the 2030 Agenda for Sustainable Development.
 The transition towards a circular economy requires systematic innovations including new
innovative financing models, partnerships, business models and close integration
of industry 4.0 principles.
DIFFERENCE BETWEEN CIRCULAR ECONOMY AND LINEAR ECONOMY
A circular economy is fundamentally different from a linear economy. To put it simply, in a
linear economy we mine raw materials that we process into a product that is thrown away after
use. In a circular economy, we close the cycles of all these raw materials. Closing these cycles
requires much more than just recycling. It changes the way in which value is created and
preserved, how production is made more sustainable and which business models are used.
These aspects are explained in more detail below.
 From new raw materials to value preservation

The circular system and the linear system differ from each other in the way in which value is
created or maintained. A linear economy traditionally follows the “take-make-dispose” step-
by-step plan. This means that raw materials are collected, then transformed into products that
are used until they are finally discarded as waste. Value is created in this economic system by
producing and selling as many products as possible.
Figure 1: the large reuse of raw materials in a circular economy (PBL, 2019a).

What else is there in a circular economy?

A circular economy follows the 3R approach: reduce, reuse and recycle. Resource use is
minimized (reduce). Reuse of products and parts is maximized (reuse). And last but not least,
raw materials are reused (recycled) to a high standard. This can be done by using goods with
more people, such as shared cars. Products can also be converted into services, such as Spotify
sells listening licences instead of CDs. In this system, value is created by focusing on value
preservation.
From eco-efficiency to eco-effectiveness
The perspective on sustainability is different in a circular economy than in a linear economy.
When working on sustainability within a linear economy, the focus is on eco-efficiency, which
means we try to minimise the ecological impact to get the same output. This will extend the
period in which the system becomes overloaded. Within a circular economy, sustainability is
sought in increasing the eco-effectiveness of the system. This means that not only the
ecological impact is minimized, but that the ecological, economic and social impact is even
positive. When we focus on eco-effectivity to create a positive impact, we strengthen the
ecological, economical and societal systems by using them.
We can illustrate the difference between eco-efficiency and eco-effectivity with an example
about the production of beef. Raising cows for beef results in emissions of methane gas, a
strong greenhouse gas. In a linear economy, the production of beef is made more sustainable
by changing the way cows are fed, so that they emit less methane gas for the same amount of
meat. This makes production more eco-efficient.

In a circular economy, production is made more sustainable by not making beef from cows,
but for example by creating a meat substitute. For the beef substitute, plants are then grown
that contribute to biodiversity, employment and landscape management. In this way, the
ecological, economic and social impact of the same production of ‘beef’ is increased.

Figure 2: the difference between eco-effectiveness and eco-efficiency (EPEA GmbH, 2013).
In order to achieve eco-effectiveness, residual flows must be reused for a function that is the
same (functional recycling) or even higher (upcycling) than the original function of the
material. As a result, the value is fully retained or even increased.
For example: we grind concrete into granules that are used to produce the same or a stronger
wall.
This is different in a linear economy. An eco-efficient system typically works on downcycling:
a (part of a) product is reused for a low-grade application that reduces the value of the material
and makes it difficult to reuse the material flow again. For example: concrete residues are
processed in asphalt in the road surface. This asphalt is lower in value and it is harder to process
it and/or use it again.
Other business models
A linear model deals with raw materials in an inefficient way, because the emphasis is not on
their conservation. In a circular economy, this is the focus. This means that other business
models are also used in a circular economy, with more emphasis on services rather than
products. An example of a model that facilitates the transition to the circular economy is a
product-service combination (Product-As-A-Service System), which is seen as a model to
integrate products and services. A widespread example of a product-service combination is the
Xerox printer system, in which companies receive a printer free of charge and pay per copy.
This system fits well within the circular economy, because as a manufacturer, Xerox has an
interest in ensuring that the printer will last a long time, by being able to repair and update it.
In the linear sales system, the manufacturer often benefits if the product breaks down quickly
so that it can sell a new product.
The difference between a linear and a circular economy
Linear Circular
Step plan Take-make-dispose Reduce-reuse-recycle
Focus Eco-Efficiency Eco-Effectivity
System
boundaries Short term, from purchase to sales Long term, multiple life cycles
Upcycling, cascading and high grade
Reuse Down-cycling, recycling.
Business model Focuses on products Focuses on services

ROLE OF CIRCULAR ECONOMY IN SUSTAINABLE BUSINESS AND

INNOVATION
Circularity contributes to a more sustainable world, but not all sustainability initiatives
contribute to circularity. Circularity focuses on resource cycles, while sustainability is more
broadly related to people, the planet and the economy. Circularity and sustainability stand in a
long tradition of related visions, models and theories. Here are some examples. In addition, we
briefly explain how circularity fits in with the Sustainable Development Goals (SDGs) of the
United Nations.
Regenerative design
The idea behind restorative design, developed by American professor John T. Lyle in the
1970s, is that processes within all systems can reuse their own energy and materials. Demand
from society is also met within the limits of nature.
Performance Economy
Walter Stahel developed the vision of a closed-circle economy, including the principles of life
extension, product repair and waste prevention. Selling services instead of products is an
important part of his thinking: everyone pays for the performance of a product. This leads to
the concept of the performance economy.
Cradle-to-cradle
In the cradle-to-cradle model, developed by Michael Braungart, materials in industrial and
commercial processes are considered as raw materials for technological and biological reuse.
Design is literally from cradle to cradle – in the design process the entire life cycle of the
product and the raw materials used are considered. Technical raw materials do not contain any
components that are harmful to the environment; biological raw materials are completely
biodegradable.
Industrial Ecology
Industrial ecology is the science of material and energy flows, where waste within industrial
cycles serves as a raw material for a subsequent process. Production processes are designed in
such a way that they resemble ecological processes.
Biomimicry
Biomimicry is an approach, developed by Janine Benyus, in which inspiration comes from
nature. Biomimicry imitates designs from nature and applies these to solutions in human
society.
Green Economy
The Green Economy, defined by the United Nations Environmental Platform (UNEP), is an
economy that results in increased well-being and increased social equality, while at the same
time greatly reducing environmental risks and ecological scarcity.
Blue Economy
The Blue Economy, developed by Günter Pauli, is an economic philosophy that derives its
knowledge from the way in which natural systems form, produce and consume. This
knowledge is applied to the challenges we face, and is converted into solutions for local
environments with specific physical and ecological properties.
Bio-based Economies
A bio-based economy is an economy that does not run on fossil fuels, but an economy that runs
on biomass as a raw material. In a bio based economy it is about the use of biomass for non-
food applications.
The donut economy
The donut economy, developed by Oxford economist Kate Raworth, is a model for measuring
the earth’s prosperity, based on the Sustainable Development Goals and the planetary
boundaries. Many of the planetary boundaries relate directly to ‘unlocked’ cycles, such as those
of greenhouse gases, toxic substances, eutrophication, fresh water, aerosols and oxygen
radicals.
The circular economy and the Sustainable Development Goals
Circular economics is also a way of implementing the Sustainable Development Goals (SDGs).
In particular, there is a strong relationship with SDG 6 (clean water), SDG 7 (affordable and
clean energy), SDG 8 (work and economic growth), SDG 12 (responsible consumption and
production) and SDG 15 (life on land). Aspects of the circular economy, such as recycling of
household waste, e-waste and waste water, provide a ’toolbox’ to comply with the SDGs.
 GIG ECONOMY:
 A gig economy is a free market system in which temporary positions are common and
organizations contract with independent workers for short-term engagements.
 An estimated 56% of new employment in India is being generated by the gig economy
companies across both the blue-collar and white-collar workforce. Few reasons for this
exponential growth are:
o In the digital age, the worker need not sit at a fixed location—the job can be done
from anywhere, so employers can select the best talent available for a project
without being bound by geography.
o The millennial generation seems to have quite a different attitude to careers. They
seek to do work that they want to do rather than have careers that may not satisfy
their inner urges.
o This suits businesses as well. In a gig economy, they save resources in terms of
benefits like provident fund, paid leave and office space.
o Heightened migration and readily available job training.
Challenges

 The gig economy thrives largely unregulated, therefore workers have little job security
and few benefits.
o However, few argue that the gig economy in India with respect to workers not
getting any social security, insurance, etc. is an extension of India’s informal
labour, which has been prevalent for a long time and has remained unregulated.
o With the tech companies coming in, there is data available, making it a possibility
to enable job security.
 A worker need to be skilled enough. Unless a person is extremely talented, his
bargaining power will necessarily be limited.
 While companies routinely invest in training employees, a gig-economy worker will have
to upgrade his skills on his own at his own cost.
 There are already many more potential online independent workers than jobs, and
this demand-supply mismatch will only get worse over time, depressing wages.
Future Trend

 There is a need for the government to step in and implement radical changes in labour
laws or implement tax rebates and concessions that can be passed on directly to drivers
or delivery partners as health or insurance benefits.
o However, some experts say that this would directly affect prices of service delivered
to the end customer.
 With a population of over 1.2 billion, and a majority of them below the age of 35, relying
on the "gig economy" is perhaps the only way to create employment for a large semi-
skilled and unskilled workforce. Therefore, it is important to hand-hold this sector and
help it grow. We need policies and processes that give clarity to the way the sector should
function.
 INDUSTRIAL REVOLUTION
The Fourth Industrial Revolution is a term that describes present technological age. It is the
fourth industrial era since the inception of the initial Industrial Revolution of the 18th
century. The key elements of the fourth revolution are the fusion of technologies ranging from
the physical, digital to biological spheres.

Prime Minister gave an institutional shape to the expression by launching the Centre for Fourth
Industrial Revolution in India.

 It is an initiative of the World Economic Forum and, India becomes the fourth
country to have such a centre after US, Japan, and China. The Fourth Industrial
Revolution, in short, describes the huge changes brought about by smart technologies.
What is the Industrial Revolution?

The Industrial Revolution, which took place from the 18th to 19th centuries, was a period
during which predominantly agrarian, rural societies in Europe and America became
industrial and urban.
Prior to the Industrial Revolution, which began in Britain in the late 1700s, manufacturing was
often done in people’s homes, using hand tools or basic machines. However, these cottage
industries were enormously labour intensive, with the merchants supplying the raw materials
and collecting the finished goods later. The whole process was largely inefficient. The supply
was erratic as the self- employed workers had to tend other works. Several key innovations
changed all that. An example from the textile industry :-
 In 1764, Englishman James Hargreaves built a machine called the Spinning
Jenny that enabled an individual to produce multiple spools of threads simultaneously.
By the time of Hargreaves’ death, there were over 20,000 Spinning Jennys in use across
Britain.
 The spinning jenny was improved upon by English inventor Samuel Compton’s
spinning mule.
 Another key innovation in textiles, the power loom, which mechanized the process of
weaving cloth, was developed in the 1780s by English inventor Edmund Cartwright
(1743-1823).
Industrialization marked a shift to powered, special-purpose machinery, factories and mass
production. The iron and textile industries became the mainstay of industrial revolution. From
cooking appliances to ships, all had components of iron and steel. The process went in hyper
drive with the advent of steam engine and ships.
The industrial revolution took place in the rest of Europe after Britain. It was mainly inspired
by the growth of technology, prosperity, and power of Britain. The base of the industrial
revolution was dependent on local resources, political will and the socio-economic condition
of each individual European country.
The industrial revolution spread in all corners of the British Empire and took roots in the United
States in the 1860s, after the American Civil War (1861-65). This part of the revolution is
called the Second Industrial Revolution. This changed America from an agrarian society to an
industrial one.
Some of the innovations of the first industrial revolution:-
 Steam engine
 Flying shuttle
 Spinning Jenny
 Cotton Gin
 Telegraph
 Cement
 Modern roads
 Bessemer process
 Power loom
The Evolution of the Industrial Revolution
 The First Industrial Revolution used water and steam power to mechanize production. It
was the first instance where production shifted from cottage industry to large production
houses or factories.
 The Second industrial revolution used electric power for mass production. That is, large
scale machines were brought into the picture. Huge conveyor belts rolling products one
after the other, automobiles and production of electricity, defined this phase.
 The discovery of computers laid the path for the third revolution.
 The third phase was the most important as the machines which previously were
electrically driven became electronically driven, that is, it used electronics and
information technology to automate production. This came around in the middle of the
20th century.
 It is seen that each revolution took about a hundred years to establish and then give way
to the next revolution.
 Now a Fourth Industrial Revolution is building on the third revolution, that is, the digital
revolution that has been occurring since the middle of the last century. It is characterized
by a fusion of technologies that is blurring the lines between the physical, digital, and
biological spheres.

What is the Fourth Industrial Revolution?

 Building on the foundation given by the third Industrial Revolution, the fourth Industrial
Revolution is moving from an electronic based industry to a process which is the
combination of human beings and electronics.
 It includes cyber-physical systems, the Internet of things, big data analytics, cloud
computing, cognitive computing, artificial intelligence, 3-D printing, and autonomous
vehicles etc.
 The best example would be processed artificial intelligence has broken the distinction
between the Man, The Machine and Intelligence.
 Impact of Industry 4.0
o Services and business models improvement.
o Reliability and continuous productivity.
o IT security and better resource utilization.
o Machine safety and better working condition.
India and Industrial Revolution
 India was famous for her handicrafts from the pre-British times. In Mughal periods such
as the variety of handicrafts that it became famous in the global market.
 However, the Industrial Revolution came late to India. This was mainly because of India’s
complicated political and economic relations with Britain.
 Impact of the Revolution :-
o India dominated the cotton textile market in the 18th century. It took a severe hit
when the Industrial Revolution began in England around 1760s.
o The use of steam power in British mills reduced the cost of cotton by 85 %.
o In order to protect its domestic industry, it began to restrict textile imports from
India. On the other hand, it started to import textiles to India.
o British protectionist laws led to deindustrialization in India.
 o The new colonial law forced the farmers to grow cash crops like cotton instead of
food crops, leading to famine and poverty.
 The third Industrial Revolution started in India in 1980s. Advancement in this phase
encompasses the spread of personal computers, internet, and ICT.
 In India, the Industrial Revolution 4.0 is mainly based on Big Data and Artificial
Intelligence.

How can Industrial Revolution 4.0 help India?

 It can play a major role in alleviating poverty.
 Better and low-cost health care can be achieved through the implementation of AI-driven
diagnostics, personalized treatment, early identification of potential pandemics, and
imaging diagnostics, among others.
 Enhancing farmer’s income by providing them with the latest technologies, improvement
in crop yield through real-time advisory, advanced detection of pest attacks, and
prediction of crop prices to inform sowing practices.
 It will strengthen infrastructure and improve connectivity to the very last village.
 Artificial intelligence can be used to empower and enable specially-abled people.
 It will improve ease of living and ease of doing business using smart technologies.
 Recently, India has announced her drone policy, which will play an important role in
security, traffic and mapping.

FOREIGN DIRECT INVESTMENT (FDI)

Foreign direct investment (FDI) is a category of cross-border investment in which an investor
resident in one economy establishes a lasting interest in and a significant degree of influence
over an enterprise resident in another economy.
Ownership of 10 percent or more of the voting power in an enterprise in one economy by an
investor in another economy is evidence of such a relationship.
FDI is a key element in international economic integration because it creates stable and long-
lasting links between economies.
FDI is an important channel for the transfer of technology between countries, promotes
international trade through access to foreign markets, and can be an important vehicle for
economic development.
Foreign Direct Investment (FDI) has been a major non-debt financial resource for the economic
development of India. Foreign companies invest in India to take advantage of relatively lower
wages, special investment privileges like tax exemptions, etc. For a country where foreign
investment is being made, it also means achieving technical know-how and generating
employment.
The Indian Government’s favourable policy regime and robust business environment has
ensured that foreign capital keeps flowing into the country. The Government has taken many
initiatives in recent years such as relaxing FDI norms across sectors such as defence, PSU oil
refineries, telecom, power exchanges, and stock exchanges, among others.
Investments/Developments: Some of the recent investments and developments in the FDI
space are as follows:

 In January 2022, Google announced an investment of US$ 1 billion in Indian telecom

company Bharti Airtel, which includes an equity investment of US$ 700 million for
1.28% stake in the company, and US$ 300 million for potential future investment in
areas like smartphone access, networks, and the cloud.
  Canada’s pension fund investment board invested Rs. 1,200 crore (US$ 160.49 million)
as an anchor investor in the IPO of multiple Indian companies - One 97 communication
(Paytm), Zomato, FSN E-Commerce Ventures (Nyaaka), and PB Fintech.
 According to the Ministry of New and Renewable Energy (MNRE), India’s green
energy industry received FDI worth US$ 7.27 billion from 2014-15 till June 2021.
 The following investments were made in January 2022:
o Indian all-electric commercial original equipment manufacturer (OEM) EVage
raised US$ 28 million from US-based venture capital firm RedBlue Capital.
o Swiggy raised US$ 700 million led by investment management company
Invesco, with the food delivery startup now valued at US$ 10.7 billion.
o Analytics startup Fractal raised $360 million from private investment firm TPG
Capital, elevating Fractal to a unicorn status.
o B2B platform Moglix raised US$ 250 million, led by investors Tiger Global and
Alpha Wave Global along with Hong Kong based Ward Ferry.
o Ola Electric raised US$ 200 million, led by Tekne Private Ventures, Alpine
Opportunity Fund and Edelweiss, which now values the company at US$ 5
billion.
o Social commerce grocery startup Dealshare raised US$ 165 million from Tiger
Global and Alpha Wave Global.
o HR tech platform Darwinbox raised US$ 72 million from investors, led by US-
based Technology Crossover Ventures (TCV).

Government Initiatives: The Government of India has taken several initiatives across to
improve the FDI inflows in the country. Some of these are:

 The Government of India is considering easing scrutiny on certain foreign direct

investment from countries that share a border with India.
 The Department for Promotion of Industry and Internal Trade (DPIIT) is planning to
approach the Union Cabinet to seek its approval on changes in FDI policy in the
insurance sector, and wants to allow FDI up to 20% in the LIC of India.
 The implementation of measures like PM Gati Shakti, single window clearance and
GIS-mapped land bank are expected to further push FDI inflows in 2022.
 The government is likely to introduce at least three policies as part of the Space Activity
Bill in 2022. This Bill is expected to clearly define the scope of foreign FDI in the
Indian space sector.
 In September 2021, India and the UK agreed for an investment boost to strengthen
bilateral ties for an ‘Enhanced Trade Partnership’.
 In September 2021, the Union Cabinet announced that to boost the telecom sector,
they’ll allow 100% FDI via the automatic route in, up from the previous 49%.
 In August 2021, the government amended the Foreign Exchange Management (non-
debt instruments) Rules, 2019, to allow the 74% increase in FDI limit in the insurance
sector.

Example: India's Department for Promotion of Industry & Internal Trade (DPIIT) and
Japan's (Ministry of Economy, Trade and Industry (METI) jointly review the progress
of Japanese Industrial Townships (JITs) in India
For the annual evaluation of progress under the Japanese Industrial Townships (JITs) in India,
India (Department for Promotion of Industry & Internal Trade (DPIIT)) and Japan (Ministry
of Economy, Trade and Industry (METI)) conducted a joint meeting. From the Japanese side,
the Japanese Embassy in India and the Japan External Trade Organization (JETRO) took part.
From the Indian side, officers from the Ministry of External Affairs, the Government of India,
the Indian Embassy in Tokyo, and representatives from state governments and Invest India
were present.
To invite investment, Japanese businesses were invited to visit the JITs physically. Particular
emphasis was put on the JITs in the Delhi Mumbai Industrial Corridor (DMIC) and Chennai
Bengaluru Industrial Corridor (CBIC) regions.
Japan is the only country in India with specialised industrial townships. Unique Japan desks
for translation and facilitation support, world-class infrastructural facilities, plug-and-play
facilities, residential clusters, and special incentives for Japanese enterprises are all available
at these Japanese Industrial Townships (JITs).
Currently there are 114 Japanese companies across the JITs. Japanese companies have also
filed for and been approved for various PLI schemes that were introduced by the government
across 14 sectors.
FOREIGN INSTITUTIONAL INVESTORS
A foreign institutional investor (FII) is an investor or investment fund investing in a country
outside of the one in which it is registered or headquartered. The term foreign institutional
investor is probably most commonly used in India, where it refers to outside entities investing
in the nation's financial markets.
Foreign Portfolio Investors/Foreign Institutional Investors (FPIs/FIIs) have been a major driver
of India's financial markets, investing Rs. 50,089 crore (US$ 7.06 billion) in the calendar year
2021. The country has attracted FIIs/FPIs due to its well-developed primary and secondary
markets. The Securities and Exchange Board of India (SEBI) regulates foreign institutional
investors' (FIIs/FPIs) investments in India, while the Reserve Bank of India sets a limit on such
investments (RBI).
Type of FIIs investing in India are as below:

 Hedge Funds
 Foreign Mutual Funds
 Sovereign Wealth Funds
 Pension Funds
 Trusts
 Asset Management Companies
 Endowments, University Funds, etc.

The total market capitalisation (M-cap) of all companies listed on the Bombay Stock Exchange
(BSE) rose to a record level of Rs. 264.41 trillion (US$ 3.53 trillion) in 2021-22 (till February
1st), from Rs. 204.31 trillion (US$ 2.76 trillion) in 2020-21.
Recent Developments/Investments: Some of the recent and significant FII/FPI developments
are as follows:

 As per the depositories data, foreign portfolio investors (FPIs) invested Rs. 3,202 crores
(US$ 428.03 million) in India during the first week of January 2022.
 According to the Department for Promotion of Industry and Internal Trade (DPIIT), the
FDI equity inflow in India stood at US$ 560.78 billion between April 2000 and
September 2021.
 FDI equity inflow in India stood at US$ 13.587 billion between July 2021 and
September 2021. The foreign direct investment inflows stood at US$ 54.10 billion in
FY21(Until November 2021). According to a UN report, India received US$ 64 billion
 FDIs (foreign direct investments) in 2020, the fifth-largest recipient of inflows in the
world.
 India’s National stock exchange (NSE) had the eighth largest market capitalization in
the world with a total market value of US$3.548 trillion in FY21 (April 2021-
1st February 2022)
 Foreign direct investments in India’s pharma industry grew at 53% to Rs. 4,413 crore
(US$ 589.48 million) from April-September 2021.
 In December 2020, Embassy Office Parks REIT ('Embassy REIT'), India's first listed
REIT and one of Asia's largest by area, announced that through an institutional
placement of units, it has successfully completed a unit capital raise of Rs. 36.8 billion
(US$ 501 million).
 In the calendar year of 2021, India’s stock rally made investors rich by Rs. 72 lakh crore
(US$ 962.22 billion) with the Sensex crossing the 50,000 mark for the first time ever
reaching a lifetime high of 61,765.59 on October 18th 2021.
 In January 2022, domestic institutional investors (DIIs) were the net buyers in the
Indian equity market and accounted for Rs. 21,928 crores (US$ 2.92 billion).
 Foreign investors invested >Rs. 1.4 trillion (US$ 19 billion) in the Indian stock market
in 2020.
 In 2021, ~ 63 initial public offerings (IPOs) (including Brookfield REIT, PowerGrid
Infrastructure Investment Trust, Nykaa and Zomato) have raised Rs. 1.19 trillion (US$
15.89 billion).
 In April 2021, Amazon India launched US$ 250 million the ‘Amazon Smbhav Venture
Fund’ (the venture fund) for Indian start-ups and entrepreneurs to boost technology
innovations in areas of digitisation, agriculture and healthcare.

Government/Regulatory Initiatives: Some of the recent government initiatives and

regulations in the FII space are as follows:

 By February 2021, the Union Cabinet is planning to allow 20% FDI for LIC’s IPO.
 In October 2021, The Government allowed 100% Foreign Direct Investments (FDI) in
the Telecom sector.
 In August 2021, the Securities and Exchange Board of India (SEBI) introduced the idea
of 'accredited investors in the Indian securities market to explore a new channel for
raising funds.
 In August 2021, SEBI mandated the use of blockchain or distributed ledger technology
(DLT) to monitor the bonds status or other listed debt securities.
 In June 2021, the Securities and Exchange Board of India (SEBI) announced the revised
overseas investment limit for mutual funds (MFs) to US$ 1 billion from the previous
US$ 600 million.
 In the Union Budget 2021-22, the finance bill proposed amendments to allow foreign
portfolio investors (FPIs) to participate in debt financing of emerging investment
vehicles such as REITs and InvITs. This move is aimed at enhancing funding for
infrastructure and real estate.
 Employees provident fund organisation (EPFO) investments in the equity market were
worth Rs. 1.23 lakh crore (US$ 16.4 billion) till November 2021.
 DISINVESTMENT IN PSUs

Strategic Disinvestment Policy of 2015-20 rests on key pillars - Minority stake sale by SEBI
approved modes and Strategic Disinvestment along with transfer of management control.
Strategic disinvestment of CPSEs lies at the heart of the disinvestment policy. Strategic
disinvestment would imply the sale of substantial portion of the Government shareholding of
a central public sector enterprise (CPSE) of upto 50%, or such higher percentage as the
competent authority may determine, along with transfer of management control.

Strategic Disinvestment Proceeds from 2016-22

S.no Name of Transaction Total amount Financial

(Crore) Year
1 Air India 2700 2021-22
2 THDC India Ltd. 7500 2019-20
3 NEEPCO 4000 2019-20
4 Kamarajar Port Ltd. 2383 2019-20
5 HSCC (India) Ltd. 285 2018-19
6 Dredging Corporation of India Ltd. 1049.17 2018-19
7 PFC-REC Deal. 14499.99 2018-19
8 National Projects Constructions Corporation 79.8 2018-19
Ltd. (NPCC)
9 Divestment of strategic holdings and income 4153.65 2017-18
from management of SUUTI investment
10 HPCL - ONGC Deal 36915.00 2017-18

11 Income from management of SUUTI's 1400.00 2017-18

investment
12 Divestment of strategic holdings and income 10778.71 2016-17
from management of SUUTI investment
Source: https://dipam.gov.in/strategic-disinvestment