IMPACT OF FDI ON INDIAN ECONOMY

IMPACT OF FDI IN INDIAN ECONOMY

INTRODUCTION TO FDI:

Foreign Direct investment is the

investment, which is made to serve the
business interests of the investor in a
company, which is in a different nation
distinction from the investor’s country of
the origin.
CLASSIFICATIONS OF FDI:

There are different types of FDI they are

Inward FDI

Outward FDI

Greenfield FDI

Mergers & Acquisition

Horizontal FDI

Backward FDI

Vertical FDI and Forward Vertical FDI.

ADVANTAGES OF FDI:

 FDI develops the economy of both host and

home country.

 FDI permits the technology transfers.

 Employee enrichment in training and

operations.

 It creates new jobs and advanced technology.

 It pays an avenue to receive the funds in lower

rate of interests.
DISADVANTAGES OF FDI:

 There is a chance to spread the national secrets.

 The host country workers may dissatisfy with

the policies.

 Problem in language and culture.

 Size and condition of the market to the

advanced technology.

 Government faces the problem to control the

operations of host country FDI.
INTRODUCTION TO ECONOMY:

Orderly arrangement and management

of the internal affairs of a state or of any
establishment kept up by production and
consumption; esp., such management as
directly concerns wealth; as, political
economy.
INDIAN ECONOMY AN OVERVIEW:

In recent days India is the best performer in

world economy, but rising inflation is the
greater challenge. The rising costs of oil, food
and the resources needed for India’s
construction boom are all playing a part.
Government hopes on India’s homebred
companies. As well as taking over the domestic
reins.
SECTOR - WISE CONTRIBUTION TO ECONOMY:

Every sector contributing its best to the

Indian economy but the major impact is from the
agriculture as per the quota “Backbone of India
is Agriculture” retail and service sector.

INFLATION IN INDIA:

It’s the crucial period for India on inflation

due to high in oil prices the inflation rate touches
the limit of sky where ever seen before this last
one decay. Government taking necessary steps
to cut shorts it.
ROLE OF FDI ON INDIAN ECONOMY:

FDI plays a major role in Indian economy,

FDI creates lot of new opening and hike in
individual salary because of it the life style get
developed so automatically the growth of the
economy get leveraged.

During the year 1990 the GDP rate was

4.9% and the FDI was US$ 97 million, the year
2008 the GDP rate is 8.7% and the FDI is US$
20.10 billion so its clearly shows us that there is
a huge impact of FDI for the growth of Indian
economy. The flow of FDI also increased
gradually year after year from 2001 the FDI was
15.48 billion US$ and in 2007 it is 20.10 billion
US$.
CONCLUSION:

The growth of economy was not

commendable before 1991, after implementing
LPG (Liberalization, Privatization &
Globalization) there is a tremendous growth in
Indian economy due to flow of foreign
investment and opportunities provided in India
to receive it.

According to me FDI plays a major role to

develop the Indian economy but to safe guard
the Indian SMEs the government can reframe
the FDI policies or the FDI can put its eyes on
technology transfer.