This document analyzes trends in foreign direct investment (FDI) flows to India from 2000-2014. It has two main objectives: 1) To study trends and patterns of FDI flows, and 2) To identify factors influencing FDI flows to India. The author collects data from secondary sources like RBI to analyze FDI magnitudes and factors. Key findings include that major investing countries are Mauritius, Singapore, and the UK, while most FDI goes to services, construction, and telecommunications. Factors found to affect FDI include profitability, costs, economic conditions, government policy, political stability, and ease of doing business.

1. FOREIGN DIRECT INVESTMENT
FLOWS IN INDIA –
AN EMPIRICAL ASSESSMENT
BY:
M SAIRAM
Siva Sivani Institute of Management

2. IMPORTANCE OF STUDY
As Foreign Direct Investment (FDI) is one and only major
instrument of attracting economic integration in any economy.

3. OBJECTIVES OF STUDY
This study covers the following objectives:
 To study the trends and pattern of flow of FDI.
 To identify the factors which influence the flow of FDI in India.
RESEARCH OF METHODALAGY
 The data is collected from secondary sources and RBI website.
 The magnitude of FDI inflows is analyzed for a period from 2000 to
2014. The factors which influence the flow of FDI into the country is
analyzed during post period i.e., 2000 to 2014.

4. FOREIGN DIRECT INVESTMENT
 Foreign direct investment
(FDI) is an investment in a
business by an investor from
another country for which
the foreign investor has
control over the company
purchased.

5. Economic
Growth
Trade
Employment
and skill levels
Linkages and
spillover to
domestic firms
Technology
diffusion and
knowledge
transfer
WHY FDI ?

6. FDI IN INDIA
 Foreign investment was introduced in 1991
under Foreign Exchange Management Act
(FEMA), driven by then finance
minister Manmohan Singh.
 Foreign investments provide a great
stimulus for growth to the Indian economy.

7. Wholly owned
subsidiaries
Joint ventures
Acquisitions
FII
Investments in
GDR’S &
FCCB’s

8. 100% FDI ALLOWED SECTORS
 Engineering & Manufacturing sectors
 Roads & Highways, Ports and Harbors
 Industrial model towns/industrial parks
 Hotels & Tourism
 Pollution Control and Management
 Advertising & Film industry
 Power generation (hydro-electric, coal/lignite, oil or gas based)
 Information Technology including E-Commerce

9. SECTORS WERE FDI IS NOT ALLOWED
 Atomic Energy
 Lottery Business
 Gambling and Betting
 Business of Chit Fund
 Nidhi Company.
 Agricultural (excluding Floriculture, Horticulture, Development of
seeds, Animal Husbandry, Pisciculture and cultivation of vegetables,
mushrooms, etc. )
 Housing and Real Estate business (except development of townships,
construction of residential/commercial premises, roads or bridges etc..,)
 Trading in Transferable Development Rights (TDRs).
 Manufacture of cigars, cheroots, cigarillos and cigarettes, of tobacco or
of tobacco substitutes.

10. COUNTRIES INVESTING IN INDIA
42%
2% 2%
14%
11%
6%
9%
6%
4%
4%
MAURITIUS
SINGAPORE
U.K.
JAPAN
U.S.A.
NETHERLANDS
CYPRUS
GERMANY
FRANCE
SWITZERLAND

11. equity Re invested earnings other capital
71%
25%
4%

12. DIRECT INVESTMENTS TO INDIA
184.04
Direct Investment to India Rupees Billion
292.45
243.97 198.30 269.47
394.57
1026.52
1394.21
1907.00
1578.00
1324.00
1548.16 1465.82
2500.00
2000.00
1500.00
1000.00
500.00
0.00
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13
Direct Investment to India Rupees Billion

13. FDI BY INDIA & TO INDIA
2500
2000
1500
1000
500
0
Sum of Direct Investment to India
Sum of FDI by India

14. INVESTMENTS IN SECTORS
27%
15%
11%
9%
8%
6%
7%
6%
6%
5%
SERVICES SECTOR
CONSTRUCTION DEVELOPMENT
TELECOMMUNICATIONS
COMPUTER SOFTWARE & HARDWARE
DRUGS & PHARMACEUTICALS
AUTOMOBILE INDUSTRY
CHEMICALS (OTHER THAN FERTILIZERS)
POWER
METALLURGICAL INDUSTRIES
HOTEL & TOURISM

15. FACTORS AFFECTING FDI
 Profitability
 Cost of production
 Economic conditions
 Government policies
 Political factors
 Ease of doing business