This document analyzes the extent to which foreign capital inflows have improved domestic business in India. It identifies net FDI and FII inflows to India from 2006-2007 to 2011-2012. It finds that GDP has a fairly positive relationship with FII. It also examines sector-wise FDI investments, finding that services is the top sector. The document concludes that while FDI can complement local development and boost the economy, growth in India has depended on domestic enterprises and demand, and domestic businesses will face challenges from large foreign competitors entering the market.

1. Analyse the extent to which foreign
capital inflow improved domestic
business in India
Economics Assignment

2. Team Members
Name RRno
DINESH GOPINATH.P 120292601016
GAYATHRI.S 120292601022
GOKULA PRIYA.D 120292601025
HARIKUMAR.S 120292601027
MOHAMED VASEEM.A.M. 120292601043
MOHAMED TOUSEEF.H 120292601061
MOHAMED ASHFAQ.C.M. 120292601062

3. Contents:
• Identifying net FDI and FII inflow of India
• Which Nation invested more FDI in India
• Sector-wise FDI investment in India
• Correlation between GDP and FDI, Trade balance, Internet users
• Conclusion

4. Identifying Net FDI and FII inflow of
India
Years FDI – Y1(in Rs Billion) FII – Y2(in Rs Billion) GDP-X(in Rs Billion)
2006-07 349.10 0.124018 39532.76
2007-08 637.76 0.298945 45820.86
2008-09 1001.00 -0.17885 53035.67
2009-10 860.00 0.550055 60914.85
2010-11 429.00 0.585927 71574.12
2011-12 1032.00
Correlation 0.12 0.61
Low positive Fairly positive
From the correlation analysis GDP has a fairly positive relation
with FII in the above table. Hence we infer that GDP increases
with increase in FII to a certain extent.

5. Which Nation invested more FDI in India
When we see the country wise investment, Mauritius holds the lions share.
Rank Country 2008-09 2009-10 2010-11 2011-12 2012-13 Aggregate
1 Mauritius 50794 42924 31,855 46,710 39,258 211541
2 Singapore 15727 8188 7,730 24,712 8,253 64610
3 UK 3840 1841 12,235 36,428 3,272 57616
4 Japan 1889 5197 7,063 14,089 8,614 36852
5 USA 8220 7577 5,353 5,347 2,054 28551
APRIL, 2000 TO NOVEMBER, 2012
Rank Countries
Amount of Foreign Direct Investment Inflows
(in rs Crores)
1 Mauritius 328,729.06
2 Singapore 85,840.61
3 United Kingdom 77,933.08
4 Japan 66,464.78
5 U.S.A 49,942.79

6. Sector-wise FDI investment in India
Rank Sector 2008-09 2009-10 2010-11 2011-12 2012-13 Aggregate
1 Services Sector 28411 17074 15,053 24,656 19,794 104988
2
Construction
Activities 8792 10543 7,552 15,236 5,539 47662
3
Tele
communications 11727 11442 7,542 9,012 386 40109
4
Chemical
(Excluding
Fertilizers) 3427 1258 10,612 18,422 905 34624
5 Power 4382 6088 5,796 7,678 2,488 26432
1. Clearly, India has attracted significant overseas investment interest in services.
2. It has been the main destination for off shoring of most services as back-office processes,
customer interaction, and technical support that’s the reason why we find Service sector at
the top.
3. Sectors like pharmaceuticals, cement industries, telecommunications which were not doing
well in the past have picked up many investments in the past few years.

7. Correlation between GDP and FDI, Trade balance,
Internet users
X Y1 Y2 Y3 yrs
GDP FDI
In Billion
Trade Bal =
Export - import
Internet users
In Billion
Exports
In Billion
Imports
In Billion
45820.86 637.76 -3564.48 0.046 2008 6558.64 10123.12
53035.67 1001.00 -5336.81 0.05 2009 8407.55 13744.36
60914.85 860.00 -5182.02 0.063 2010 8455.34 13637.36
71574.12 429.00 -5405.45 0.082 2011 11429.22 16834.67
82326.52 1032.00 -8866.92 0.119 2012 14592.81 23459.73
Correlation 0.131242 -0.89 0.969004
Low and positive Highly Negative Highly Positive
1. From the above table the correlation analysis states that GDP increases with
increase in the internet users.
2. The FDI has very low positive relation with GDP.
3. Trade balance doesn’t have a say at the GDP since it has been having a steep
downward growth

8. Conclusion
 Comparing the correlation relationship of our analysis states that FII has a
fairly positive relationship GDP. FDI has a low positive relationship with GDP.
 By improving FDI which will in-turn complement local development efforts in a
number of ways, including boosting export competitiveness; generating
employment and strengthening the skills base; enhancing technological
capabilities and increasing financial resources for development for domestic
business activities.
 India's growth strategy has depended predominantly on domestic enterprises
and domestic demand.
 Growth in India slipped to a 9 year low in 2012 as persistent high inflation cut
into consumer spending, power and political gridlock hampered meaningful
economic reforms.
 The Retail sectors 60% growth has come to the rescue..
 The Domestic business(MSME) in India will be tested, the firms like Walmart
which comes into India with huge investments will surely put forth a challenge
before the domestic players.
 These Domestic business players should be optimistic and they should
remember that these Huge foreign concerns were once small domestic firms.

9. Any Questions?

10. Source
• http://www.internetworldstats.com/top20.htm
• http://dbie.rbi.org.in/dbie/dbie.rbi?site=home
• http://www.dipp.nic.in/english/sitesearch.aspx
• http://www.sebi.gov.in/sebiweb/
Referred journals and research papers:
1. Impact of foreign institutional investment on stock market.
2. Net fii flows into India: a cause and effect study – by Maram srikanth and Braj Kishore
3. Foreign investments in India – ISMR
4. Foreign institutional investors: investment preferences in India by p. Krishna Prasanna
5. UNCTAD training manual on statistics for fdi and the operations of Tncs - New york and
Geneva, 2009
6. structure of foreign direct investment in india during globalization period by
Dr.s. N. Babar, Dr. Khandare.
7. India’s foreign direct investment: current status, issues and policy by Mohd. Shamim Ansari

11. Thankyou