Looking to the Future : Trends in FDI Inflows to India (original) (raw)

Trends in the Flow of FDI into India

2016

Foreign Direct Investment (FDI) plays a very important role in the development of the nation. It is very much vital in the case of underdeveloped and developing countries. A typical characteristic of the developing economies is the fact that these economies do not have the needed level of savings and income in order to meet the required level of investment needed to sustain the growth of the economy. In such cases, foreign direct investment plays an important role in bridging the gap between the available resources or funds and the required resources or funds. It plays an important role in the long-term development of a country not only as a source of capital but also for enhancing the competitiveness of the domestic economy through the transfer of technology, strengthening infrastructure, raising productivity and generating new employment opportunities. In India, FDI is considered as a developmental tool, which helps in achieving self-reliance in various sectors and in the overall ...

FDI INFLOWS IN INDIA

res publication, 2012

Policy regime is one of the key factors driving investment flows to a country. Apart from underlying macro fundamentals, ability of a nation to attract foreign investment essentially depends upon its policy regime - whether it promotes or restrains the foreign investment flows. There has been a sea change in India’s approach to foreign investment from the early 1990s when it began structural economic reforms encompassing almost all the sectors of the economy. During the Pre-Liberalisation Period, India had followed an extremely cautious and selective approach while formulating FDI policy in view of the dominance of “import-substitution strategy‟ of industrialisation. With the objective of b

Recent trends in FDI flows and prospects for India

2003

Abstract: Conventional wisdom has it that foreign direct investment (FDI) flows to India have not been commensurate with her economic potential and performance. India has only very recently emerged as a destination for FDI since the pre-reform years were marked with a sharp antipathy toward foreign capital unless under certain conditions. With FDI becoming a significant component of investment only recently, accounting practices in India lagged behind international norms.

Foreign Direct Investment Flows to India 1

FDI inflows to India remained sluggish, when global FDI flows to EMEs had recovered in 2010-11, despite sound domestic economic performance ahead of global recovery. The paper gathers evidence through a panel exercise that actual FDI to India during the year 2010-11 fell short of its potential level (reflecting underlying macroeconomic parameters) partly on account of amplification of policy uncertainty as measured through Kauffmann " s Index. FDI inflows to India witnessed significant moderation in 2010-11 while other EMEs in Asia and Latin America received large inflows. This had raised concerns in the wake of widening current account deficit in India beyond the perceived sustainable level of 3.0 per cent of GDP during April-December 2010. This also assumes significance as FDI is generally known to be the most stable component of capital flows needed to finance the current account deficit. Moreover, it adds to investible resources, provides access to advanced technologies, assists in gaining production know-how and promotes exports. A perusal of India " s FDI policy vis-à-vis other major emerging market economies (EMEs) reveals that though India " s approach towards foreign investment has been relatively conservative to begin with, it progressively started catching up with the more liberalised policy stance of other EMEs from the early 1990s onwards, inter alia in terms of wider access to different sectors of the economy, ease of starting business, repatriation of dividend and profits and relaxations regarding norms for owning equity. This progressive liberalisation, coupled with considerable improvement in terms of macroeconomic fundamentals, reflected in growing size of FDI flows to the country that increased nearly 5 fold during first decade of the present millennium. Though the liberal policy stance and strong economic fundamentals appear to have driven the steep rise in FDI flows in India over past one decade and sustained their momentum even during the period of global economic crisis (2008-09 and 2009-10), the subsequent moderation in

Foreign Direct Investment Flows to India

FDI inflows to India remained sluggish, when global FDI flows to EMEs had recovered in 2010-11, despite sound domestic economic performance ahead of global recovery. The paper gathers evidence through a panel exercise that actual FDI to India during the year 2010-11 fell short of its potential level (reflecting underlying macroeconomic parameters) partly on account of amplification of policy uncertainty as measured through Kauffmann"s Index. FDI inflows to India witnessed significant moderation in 2010-11 while other EMEs in Asia and Latin America received large inflows. This had raised concerns in the wake of widening current account deficit in India beyond the perceived sustainable level of 3.0 per cent of GDP during April-December 2010. This also assumes significance as FDI is generally known to be the most stable component of capital flows needed to finance the current account deficit.

An Analytical Study of FDI in India (2000-2015

Foreign Direct investment plays a very important role in the development of the nation. Sometimes domestically available capital is inadequate for the purpose of overall development of the country. Foreign capital is seen as a way of filling in gaps between domestic savings and investment. India can attract much larger foreign investments than it has done in the past. The present study has focused on the trends of FDI

Current Scenario Of Foreign Direct Investment Inflows In India

2017

Foreign Direct Investment (FDI) is an investment that is directly made into production and services in a country by a company situated in another country, either by buying a company or by expanding business in that country. In order to bridge the gap between domestic saving and investment FDI plays a very important role in overall capital formation. The objective of the current study is to analyze FDI inflows in India from 1991 to 2016, and to make predictions for next 5 years using least square method. Further inflows were studied on the basis of top countries investing in India, top sectors in which the investments are received. It was found that Mauritius alone contributed 33% of total FDI inflows to India. Mauritius and Singapore both collectively account for around 50% of the total inflows to India, subsequently the reasons for that were analyzed. The top sectors receiving FDI are Services, Construction development, Computer software, Telecommunications, Automobile, Drugs and P...

Fdi – a Growth Perspective from India

2014

Foreign direct investment (FDI) policies play a major role in the economic growth of developing countries around the world. Attracting FDI inflows with conductive policies has therefore become a key battleground in the emerging markets. The prospect of new growth opportunities and outsized profits encourages large capital inflows across a range of industry and opportunity types. In the light of the above the paper highlights the trend of FDI in India after the economic reforms, State-wise, Year-wise, sector-wise and country-wise share of FDI. The net result is that while much of the FDI cannot enhance India’s ability to earn foreign exchange through exports of goods and services and thus cover the current account gap on its own strength, large inflows of portfolio capital causes currency appreciation and erodes the competitiveness of domestic players. The falling share of manufacturing and even of IT and ITES (Information Technology Enabled Services) means that there is less likelih...

Trend of FDI in India and Its Impact on Economic Growth

Trend of FDI in India and Its Impact on Economic Growth, 2014

Foreign investments are the indispensable factors that help in boosting the growth of Indian economy. With the introduction of liberalisation policy under the finance ministry of Dr. Manmohan Singh in 1991 & with further few policy reforms, India has witnessed a change in the flow and direction of foreign direct investment (FDI) into the country. This paper has made an attempt to analyse the trend of FDI flow into the country and to find the relation between FDI, FII and GDP of the country. India has witnessed the increase in the flow of FDI from US $ 4029 million in 2001-01, to US$ 36396 million on 2013. Furthermore India has witnessed a year-on-year (y-o-y) growth of 24.2 per cent in FDI to touch US$ 3.95 billion in April-May 2013 as against US$ 3.18 billion during the same period in 2012. However, the analysis shows that the country is still far behind in comparison to some of the developing countries like China. The continuous upsurge in foreign direct investments (FDI), allowed across the industries and sectors, has proven that foreign investors have faith in the resilience of Indian markets. Furthermore, the study indicates that flow of FDI and GDP are positively correlated with each other and the country's GDP is showing a positive movement with flow of Foreign Direct Investment in India. The flow of FII and FDI also shows the positive correlation with each other.