FDI in INDIA & CHINA

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FDI in INDIA & CHINA

  1. 1. JAVAID DAR 11109818(A25)Lpu punjab 2011-2013
  2. 2. contents IntroductionCross country comparisonIntroduction to FDIAnalysisRecommendationsConclusionReferences
  3. 3. IntroductionIndia and china emerging global players: High economic growth ratesRapid raising share in worldLarge inflows of FDIEngines of growth in demand of commoditiesPositive demographics
  4. 4. POPULATION
  5. 5. GDP COMPARISION
  6. 6. “GDP Growth 2000 to 2050”[2003 bn US Dollars] 45000 40000 35000 30000 25000 20000 15000 10000 5000 0 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 -8-Source: Goldmann Sachs: The Path to 2050
  7. 7. CHINA GDP PER CAPITA -8-Source: Goldmann Sachs: The Path to 2050
  8. 8. INDIA GDP PER CAPITA -8-Source: Goldmann Sachs: The Path to 2050
  9. 9. CHINA EXPORTS[2003 bn US Dollars]4500040000350003000025000200001500010000 Japan Russia 5000 Brazil Germany 0 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 -8-Source: Goldmann Sachs: The Path to 2050
  10. 10. INDIA EXPORTS -8-
  11. 11. “SECTOR-WISE BREAK-UP OF ECONOMIES CHINA & INDIA” 100% 50% Services Industry Agriculture 0% Sectorwise Sectorwise Sectorwise Sectorwise Break up of Break up of Break up of Break up of China GDP China India GDP India Population PopulationIndia’s 54% of population is engaged in Agriculture but only accounts for 17% of GDP -12-
  12. 12. Comparing India and China’s Growth StoriesIndicators India ChinaPolitical System Multi-party One-party Democracy authoritarian ruleSpeed of Growth Economic reforms Economic reforms started in 1991. started in 1978. Average 6% growth Average 9.5% growth rate in past two rate in past two decades. decades.Areas of Rising power in Dominant in massSpecialization software, design, manufacturing, services. electronics and heavy industrial plants
  13. 13. Comparing India and China’s Growth StoriesIndicators India ChinaGini index 47.0 (up 10 points(standard measure 36.8 from 15 yrs ago)of inequality)Foreign Direct 6.8% (up from 0.3% 17.8%Investment in 2004)Future Areas of R&D, bio- IT business, servicesgrowth technology, high- and continued value IT enabled manufacturing services, agro-based industry
  14. 14. FOREIGN INVESTMENT ForeignInvestment done by citizens and Investment government of one country (home through country) in another country (host country). Foreign Foreign Direct Institutional Investments Investors
  15. 15. WHY FDI? Economic Growth Linkages and spillover to Tradedomestic firms Technology diffusion and Employment knowledge and skill levels transfer
  16. 16. WHY FDI?
  17. 17. FDI INFLOWS
  18. 18. TOP INVESTING COUNTRIES IN INDIA 2% Mauritius 4% 3% 2% 4% 5% Singapore 7% USA UK 9% Netherlands Japan Cyprus 11% 53% Germany UAE France
  19. 19. SECTOR WISE DISTRIBUTION IN INDIA Services Sector 4% 4% Computer Software & 6% 3% hardware 6% Telecommunications Housing & real Estate10% Construction Activities 31% Power11% Automobile Industry Metallurgical Industries 12% Petroleum & Natural Gas 13% Chemicals
  20. 20. FDI-GDP CORRELATION
  21. 21. FDI-GDP CORRELATION
  22. 22. Why china is best FDI destination? T he main reasons are:Rapid economic growth since reform periodInfrastructure availabilityAbundance of labor and its low costRapid expansion of chinas domestic marketRole of overseas ChineseIncreased integration with the worldLabor lawsPolitical system and stability
  23. 23. Why India lags behind china in FDI attraction? T he main reasons are: Political structureInfrastructure gapMonetary and fiscal policiesProductivityBeurocracyAvailability of capitalTransport costsCorruption
  24. 24. “INFRASTRUCTURE * INVESTMENTS” * Transport, Communication & PowerSource: China Statistical Yearbook, RBI, Morgan Stanley Research -15-
  25. 25. OIL AND GAS bl
  26. 26. HOW CAN INDIA ATTRACT MORE FDI? Political restructuring Promote agro based export industries Remove corruption Increase infrastructure investment Accelerate privatization efforts Improve educational fitness Remove FDI hurdles Provide monetary and fiscal benefits
  27. 27. HOW CAN CHINA RETAIN FDI ATTRACT ION? Restructure the economy Further improve infrastructure Develop impartial and effective court system Consultations with foreign investors community Strengthen the financial system Reduce delays in approving FDI projects
  28. 28. ORGANISED VS UNORGANISED RETAIL Conclusion US TaiwanMalaysia Thailand OrganisedIndonesia Unorganised China India 0 20 40 60 80 100 Source-http://www.indexmundi.com/g/g.aspx?v=66&c=in&l=en retrieved on 30th Oct 2008
  29. 29. FDI IN RETAIL (INDIA) Conclusion FDI can be a powerful catalyst to spur competition in the retail industry. It can bring about: • Supply Chain Improvement • Investment in Technology • Manpower and Skill development • Efficient Small and Medium Scale Industries • Increase in exportsSource-http://www.indexmundi.com/g/g.aspx?v=66&c=in&l=en retrieved on 30th Oct 2008
  30. 30. BENEFITS TO AGRICULTURE Conclusion• Investment into warehouse and cold storage chain will result in significant efficiency on supply chain.• Farmers benefited through direct marketing and contract farming programme.• Improves farm production through modern techniques.• Increasing availability of low interest credit for farmers. Source-http://www.indexmundi.com/g/g.aspx?v=66&c=in&l=en retrieved on 30th Oct 2008
  31. 31. WHAT DO YOU CONCLUDE? ConclusionChina in a stronger position compared to India? Can INDIA surpass CHINA? Is CHINA experiencing an INVESTMENT BUBBLE? Should INDIA compete with CHINA?Source-http://www.indexmundi.com/g/g.aspx?v=66&c=in&l=en retrieved on 30th Oct 2008
  32. 32. REFERENCES www.McKinsey Quarterly.com  Article 1: China’s and India’s financial systems: A barrier to growth  Article 2: Why believe in India  Article 3: China and India: The race to growth  Article 4: Making foreign investment work for China World Fact Book http://www.tradingeconomics.com/china/indicators http://www.tradingeconomics.com/india/indicators http://www.ndtv.com/convergence/ndtv/video/video.aspx?id=42447 http://www.ser.tcu.edu/2003-Pro/SEP2003%20Yallapragada%20Paruchuri%2027-

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