Impact Fdi on Indian Economy

Topics: Investment, Economics, Foreign direct investment Pages: 15 (4943 words) Published: April 8, 2013
Study of Implications of FDI on Indian Economy
(NOV 2011)
Author: (original article never submitted/communicated at any place)

1. Srikant Misra, Research Scholar cum Sr. Instructor
Faculty of Management & Research, Integral University,
Kursi Road, Lucknow-226026 UP India
Email ID:, Mobile No: 09919494606, 09305455902

Study of Implications of FDI on Indian Economy

Foreign direct investment (FDI) is always contributing in the positive growth toward the economy of one country due to the investment by another country or country’s personnel’s. The effectiveness and efficiency of Global economy depends upon the investor’s perception, if investment seen with the purpose of long terms investment in the social-economical development then it is said that the investment contributes positively towards global economy, if it is short term for the purpose of making profit then it may be less significant than that long term and disinvestment leads negative effect. The FDI may also be affected due to the governmental trade barriers and policies for the foreign investments and leads to less or more effective toward contribution in economy as well as GDP and GNP of the country. In this paper, our aim is to point out the negative and positive implications which affect the economic scenario and also measure the level of predominance by the factors for economic contribution of particular country with special reference to India. FDI seen as an important catalyst for economic growth in the developing countries, It affects the economic growth by stimulating domestic investment, increasing human capital formation and by facilitating the technology transfer in the host countries. The main purpose of the study is to investigate the impact of FDI on economic growth in India, from the period of 1990 to 2010. In past few decades, foreign investment has rapidly increased worldwide and has enhanced economic growth in developing countries. Many developing countries like India fear that by opening up markets to competition and foreign investment without restriction, they will lose control of their strategic industries and influence on national security, social stability and economic development. This article will also be examined current international investment regime and their relation with Indian economy. This article hopes to find a new position for effectiveness and efficiency of Indian economy through integrated global market by FDI.

Key words: Foreign direct Investment (FDI), Indian economy, Economic growth, Economic efficiency & effectiveness. INTRODUCTION
FDI or Foreign Direct Investment, is Fund flow between the countries in the form of Inflow or outflow by which one can able to gain some benefit from their investment, whereas another can exploit the opportunity to enhance the productivity and find out better position through performance. The potential advantages of the FDI on the host economy are it facilitates the use and exploitation of local raw materials; it introduces modern techniques of management and marketing, it eases the access to new technologies. Our research article tries to study the gowth of FDI on Indian economy, where FDI is considered to be basic input. During the past 15 years, the importance of FDI in the world economy has increased rapidly. The total stock of FDI increased from 8% of world GDP in 1990 to 26% in 2006. Although the bulk of FDI continues to take place between OECD countries, the increase in FDI has been particularly pronounced in developing countries, largely reflecting the integration of large emerging economies, the so-called BRICs (Brazil, Russia, India and China), into the world economy. The increase of FDI into developing countries has been spectacular. The share of non-OECD countries in the global stock of inward FDI has risen from 22% in 1990 to 32% in 2005. China is by far the most important non-OECD...

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