Fdi in India

Topics: Investment, Foreign direct investment, Macroeconomics Pages: 13 (3286 words) Published: August 18, 2009
FDI in India
Table of Contents

1Executive Summary2
2.1Types of Foreign Direct Investment: An Overview2
3.1Overall objective2
3.2Specific Objectives2
4To study FDI in India2
4.1Modes and routes of bringing in FDI to India2
Modes of FDI2
Entry routes for FDI in India2
4.2Sectors falling under different routes2
4.3Sectoral investment and Top Investors in India2
Sectoral Figures2
4.4Top investors in India2
4.5Major Sectors2
4.6FDI inflows2
4.7Destination India2
4.8Comparative record in FDI2
4.9Evolution of FDI in India2
5To study FDI Outflows in India2
5.1FDI Outflows2
5.2Main drivers of Outward FDI2
5.3Trend in the recent years2
5.4Net FDI flows from India2
6To study the social impact of FDI2
6.1Social Impact of FDI2
6.2Working conditions in MNEs and Local Firms2
6.3FDI affect on the wider economy2
7Road Ahead2
8Empirical Analysis2

1Executive Summary

This report is on the FDI in India. The objective is to study the impact of FDI on Indian economy. It integrates and summarizes the FDI inflows, FDI Outflows, Net FDI and various sectorial information about FDI in India.

It also integrates various analysis and recommendations with the aim of learning from past policy and thereby improving future policy. The evidence is presented in a series of charts which are backed up by statistical analysis 2Introduction

Foreign direct investment (FDI) is any form of investment that earns interest in enterprises which function outside of the domestic territory of the investor.

FDIs require a business relationship between a parent company and its foreign subsidiary. Foreign direct business relationships give rise to multinational corporations. For an investment to be regarded as an FDI, the parent firm needs to have at least 10% of the ordinary shares of its foreign affiliates. The investing firm may also qualify for an FDI if it owns voting power in a business enterprise operating in a foreign country. Control' as defined by the UN, is ownership of greater than or equal to 10% of ordinary shares or access to voting rights in an incorporated firm. For an unincorporated firm one needs to consider an equivalent criterion.

Ownership share amounting to less than that stated above is termed as portfolio investment and is not categorized as FDI.

2.1Types of Foreign Direct Investment: An Overview
This classification is based on the types of restrictions imposed, and the various prerequisites required for these investments. 1.Outward FDIs
2.Inward FDIs.
Outward-bound FDIs- It is backed by the government against all types of associated risks. This form of FDI is subject to tax incentives as well as disincentives of various forms.

Inward FDIs- Various economic factors encourage it such as interest loans, tax breaks, grants, subsidies, and the removal of restrictions and limitations

Other categorizations of FDI exist as well. They are:
Vertical Foreign Direct Investment – It takes place when a multinational corporation owns some shares of a foreign enterprise, which supplies input for it or uses the output produced by the MNC. Horizontal foreign direct investments - It happen when a multinational company carries out a similar business operation in different nations.

Foreign Direct Investment is guided by different motives.
1.Market seeking FDIs which are undertaken to strengthen the existing market structure or explore the opportunities of new markets 2.Resource-seeking FDIs are aimed at factors of production which have more operational efficiency than those available in the home country of the investor. 3.Efficiency seeking FDIs are activities may also be carried out to ensure optimization of available opportunities and economies of scale 3Objectives

3.1Overall objective
The overall objective of our study is to understand the significance and...
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