Impact of Foreign Direct Investment on indian economy

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  • Gola Ram Kali, Dharwal Mridul, Agarwal Ankur, “Role of Foreign Direct Investment in the Development of Indian Economy”
  • KHAN IRAM, “IMPACT OF FOREIGN “DIRECT INVESTMENT (FDI) ON INDIAN ECONOMY: A SECTORAL ANALYSIS”
  • Ramanaih Venkata M. “FOREIGN INSTITUTIONAL INVESTORS AND INDIAN STOCK MARKET”
  • Iqbal Zafar, Masood Imran, Ramzan m., “Foreign Direct Investment and Economic Growth:: Comparative Position off Chinese and Indian Economies”
  • United Nations Conference on Trade and Development (UNCTAD)
  • Gross Domestic Product (GDP)
  • Impact of Foreign Direct Investment on indian economy

    1. 1. Impact of FDI on Indian Economy Presented by: Divyansha Leekha & Yashaswee Sarkhel 1st Year, Symbiosis Law School, Noida
    2. 2. F. D. I.???.... • Foreign source I.e. from outside the country • Direct Investment • Into Production or Manufacturing or any Business • By an individual or a company or a firm • By way of buying a whole existing company or a part of it or by expanding business operations of an existing company
    3. 3. FDI in India • Introduced in 1991 • Under FERA act (now FEMA i.e. Foreign Exchange Management Act 42 of 1999) • According to the latest policy by cabinet 51% FDI in multi brand retail is allowed • 100% is the cap in single brand retail • Not allowed in the sectors like arms & ammunition, atomic energy, Railway, Minerals (Coal, Iron, Manganese etc.)
    4. 4. Objectives • Secondary Research to study the FDI in India as to know the growth and development of the country. the impact of FDI in India in terms of GDP, EXPORT, cash inflow etc and  To establish a relationship between FDI and the economic growth in India
    5. 5. Literature Review • Kali Ram Gola, Mridul Dharwal, Ankur Agarwal have emphasized, with the increasing trend of globalization the essentiality of FDI in economic development has remained undisputed the spirit in which the economy has been liberalized and exposed to the world economy at the late eighties and early nineties has not been achieved after so many years. this calls for a judicious policy decision towards FDI at the sartorial level.
    6. 6. Contd.. • Iram Khan has highlighted that India is a desired investment destination all over the globe. The impact of FDI on India has been calculated taking the GDP of India in account. The overall positive effect of GDP on Indian economy has been acknowledged. Although the there has been positive impact of FDI on overall growth of the economy and India has registered tremendous growth in FDI inflows during last decade and total inflows crossed the level of US$ 30 million, when it is compared with other countries and continents the figure of FDI inflows are not encouraging.
    7. 7. Contd.. • M. Venkata Ramanaiah has discussed the effects of FDI on Indian economy in post liberalization era. The growth of gross domestic product (GDP) in the last two quarters of 2006 was in the range of 8.5 – 9.2 per cent. In this, service sector accounted for a greater part. FDI not only facilitates the inflow of funds but also transferring the technology, innovative management and marketing expertise. Helps expand host country market and foreign trade.
    8. 8. Contd.. • Zafar Iqbal, Imran Masood, M. Ramzan, have done a comparative analysis of the Indian and Chinese conditions. They concluded China has a better infrastructure, better economic activities and favorable business environment. However India has better political and legal systems. They preferred democracy to communism for FDI. In other words according to them mixed economy is more preferable than socialist economy.  India has a fair chance to attract FDIs.
    9. 9. Current Stats and Facts • Started from a baseline of less than $ 1 Billion in 1990 • Second most desired FDI destination. Next to only China (2010-2012 UNCTAD survey) • Sectors attracting higher inflows Services Telecommunication Computer software hardware Construction activities
    10. 10. Contd.. • Leading sources are  Mauritius  Singapore  US  UK • FDI flow $ 10.4 Billions (UNCTAD data) • Inflows during last decade and total inflows more than $ 30 Millions • Not encouraging when compared to the inflow figures of other countries and continents
    11. 11. Effect on Indian GDP (comparison with China) • In India every 1% rise in FDI results in 0.02% growth in GDP. • In China every 1% rise in FDI results in 0.07% growth in GDP. • Although the impact of FDI on Indian GDP is significant, however it is less than the global trend and significantly falls short from the expectations. • Biggest competitor China is doing well owing to the reasons mentioned by Zafar Iqbal Imran Masood and M Ramzan.
    12. 12. Variation in Inflow
    13. 13. Potential positive effects • boost efforts for the development in many ways, for instance boosting export, • creating new employment opportunities, • increasing technological capabilities and • increasing total financial resources • Hence contributing to overall development of the economy of the country.
    14. 14. Thank You..

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