CONTEMPORARY ISSUE ON ForeignDirect Investment In India: Benefits &Opportunities

Submitted By: Jyoti Meena

MBA II Sem

MODI INSTITUTE OF MANAGEMENT & TECHNOLOGY, KOTA (Approved By AICTE, New Delhi & Affiliated to Rajasthan Technical University, Kota)

Introduction
*FDI refers to investment in a foreign country where the investors
retains control over the investment.

* It typically takes the form of starting a subsidiary, acquiring a

stake in an existing firm or starting a joint venture in the foreign country.

*Direct investment and management of the firms concerned

normally go together.

* Foreign direct investment (FDI) inflows in India is a defining

feature of free market, liberalisation and globalization.

Status Of FDI Inflows In India

FDI equity inflows (month-wise) during the financial year 2010-2011: Financial Year 2010-11 ( April-March ) 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. April 2010 May 2010 June 2010 July 2010 August 2010 September 2010 October 2010 November 2010 December 2010 January 2011 February 2011 Amount of FDI inflows* (In Rs. Crore) (In US$ mn) 9,697 2,179 10,135 2,213 6,429 1,380 8,359 1,785 6,196 1,330 9,754 2,118 6,185 1,392 7,328 1,628 9,094 2,014 4,725 1,042 5,785 1,274 83,687 117,622 ( - ) 29 % 18,355 24,626 ( - ) 25 %

2010-11 (up to February 2011) # 2009-10 (up to February 2010) %age growth over last year

FDI EQUITY INFLOWS (MONTH-WISE) DURING THE CALENDAR YEAR 2011:

Calendar Year 2011 (Jan.-Dec.)

Amount of FDI inflows* (In Rs. Crore) (In US$ mn) 4,725 5,785 10,510 17,341 ( - ) 39 % 1,042 1,274 2,316 3,759 ( - ) 38 %

1. January 2011 2. February 2011 Year 2011 (Up to February 2011) # Year 2010 (Up to February 2010) %age growth over last year

Sectors Attracting Highest FDI Equity Inflows

Amount inRs. crores (US$ in million)
Ranks & Sector 2008-09 2009-10 2010-11 Cumulative Inflows % age to total Inflows (Apr-Mar) (Apr-Mar) ( Apr- Feb.) (April 00 - Feb. 11)

1. SERVICES SECTOR (financial & non-financial)

28,516 (6,138) 7,329 (1,677)

20,776 (4,353) 4,351 (919) 12,338 (2,554)

14,958 (3,274) 3,490 (766) 6,398 (1,410)

120,165 (26,873) 47,619 (10,705) 47,108 (10,342)

21 %

2.COMPUTER SOFTWARE & HARDWARE

8%

3. TELECOMMUNICATIONS 11,727 (radio paging, cellular mobile, (2,558) basic telephone services) 4. HOUSING & REAL ESTATE 12,621 (2,801)

8%

13,586 (2,844)

5,070 (1,109) 4,839 (1,072)

43,112 (9,615) 40532 (9,125)

7%

5. CONSTRUCTION ACTIVITIES ) 8,792 13,516 (including roads & highways (2,028) (2,862)

7%

Ranks & Sector

2008-09 2009-10 2010-11 Cumulative Inflows % age to total Inflows (Apr-Mar) (Apr-Mar) ( Apr- Feb.) (April 00 - Feb. 11)

6. AUTOMOBILE INDUSTRY

5,212 (1,152)

5,754 (1,208)

5,962 (1,320)

26,784 (5,917)

5%

7. POWER

4,382 (985)

6,908 (1,437)

5,639 (1,237)

26,642 (5,884)

5%

8. METALLURGICAL INDUSTRIES

4,157 (961)

1,935 (407)

4,783 (1,044)

18,223 (4,174)

3%

9. PETROLEUM & NATURAL GAS

1,931 (412)

1,328 (272)

2,571 (562)

13,684 (3,142)

2%

10. CHEMICALS (other than fertilizers)

3,427 (749)

1,707 (362)

1,746 (384)

13,014 (2,878)

2%

Sector attracting highest FDI inflows on the basis of %age

Status In Housing Sector

Benefits Of FDI
Economic Growth Trade Employment and skill levels Technology diffusion and knowledge transfer Linkages and spillover to domestic firms

Opportunities
High growth prospects, in terms of increased consumption in the India. FDI opportunities in the telecommunication sector in India exist in the areas of Ecommerce. FDIinclude, housing, commercialpremises, hotels, resorts, hospitals, educationalinstitutions, recreational facilities, city and regional level infrastructure.

FDI Inflows in the construction industry in India are permissible under automatic route to ensure flexibility in construction activities which will boost the indian economy.

In power sector in India Opportunities of Foreign Direct Investment (FDI) in the Power Sector in India exist in Hydro Projects, Captive Power, UltraMega Power Projects, NuclearPower, National Grid Program, Rural Electrification, Trading, Renewable etc.

Trends
India inflows dips 25% in 11 months

M&A norms to increase transparency, improve FDI inflows

FDI opening in multi-brand retail

Conclusion
The constant efforts of the Government of India in making the country an investor friendly destination are reaping dividends. Alongside the United Nations Conference on Trade. The report further forecasts, India to be among the top five attractive destinations for international investors . FDI inflow rose by more than 100 per cent to US$ 4.66 billion foreign currency assets went up by 2.23 billion to 284.53 billion.