...FDI policy – Indian Perspective 11th September 2007 Macro-economic Overview Sustained Economic growth • Growth of over 8.0% during last 3 years • Fourth largest economy in the world in PPP terms Services account for over 50% of GDP Manufacturing sector growing annually at over 9% (17.4% in GDP) Foreign exchange reserve of over US $ 200 billion FDI inflows grew by 72% in 2005-06: the growth in 200607 was 184%. FDI inflows continue to be impressive this year as well with US$ 4.9 billion already recorded for the first quarter of 2007-08 India- Advantages as a destination for FDI Young Demographic Profile- 54% population below 25 years Abundant availability of Skilled Human Resources Adequate natural resources and raw materials Large and growing domestic market Established rule of law and a vibrant three tiered democracy Economic Reforms Industrial Policy Reforms • Compulsory licensing limited to only 5 sectors: on security, public health & safety considerations and where items are reserved for the SSI sector • FDI policy liberalisation since 1991calibrated progressive liberalisation followed • Technology collaboration liberalised Liberalization of FDI Policy New sectors opened FDI up to 100% allowed in most sectors FDI up to 100% allowed in some sectors FDI up to 74/51/50% allowed In 111 sectors Only a small negative list FDI limits Increased Procedures Further simplified Automatic Route introduced FDI up to 51% Allowed In 35 priority sectors FDI Allowed...
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...FDI IN INDIA: COUNTRY-WISE AND SECTORAL ANALYSIS Abstract: Foreign investment is a subject of topical interest. Countries of the world, particularly developing economies, are vying with each other to attract foreign capital to boost their domestic rates of investment and also to acquire new technology and managerial skills. Intense competition is taking place among the fund starved less developed countries to lure foreign investors by offering repatriation facilities, tax concession and other incentives. However. Foreign Investment is not an unmixed blessing. Governments in developing countries have to be very heedful while deciding the magnitude, pattern and conditions of private foreign investment. The wave of liberalization and globalization sweeping across the world has opened many national markets for international business. It is stated that FDI has to play a novel role in the world economy. The role of FDI has now transformed from a tool to solve the financial crises to a modernizing force. In past liberalization regime India has experienced tremendous growth in FDI inflows from an average of US $5-6 billion during previous five years; it has crossed the level of US $30 billion. But it still receives far less FDI flows than China and the USA or much smaller economies in Asia like Hongkong and Singapore in terms of GDP or Gross Fixed Investment. IT is not surprising, As India’s growth strategies have been reliant primarily on domestic enterprises; Mindset has changed...
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...Vijetha Sai Mohini Apts., Barkatpura, Hyderabad - 500027. Mobile : 9000400076, E-mail : svivekbhurat@gmail.com Abstract The purpose of this article is to highlight the important determinants of FDI inflow in India & China. This article attempts to answer the question: "What are the important factors attracting FDI inflow in China then that of India?" It is concludes that market size, population, low labor cost, quality infrastructure, open policies to international trade, economic policies, tax policies, etc. are important factors of FDI inflow. Theoretically, it will fill the gap in the literature and help to the economists and investors to understand the This study aims to helps to know the future of india in terms of development in reference to Foreign Investment. The changing trends in the government & economy of india have been the indicators of development of India. The main objective of this study is to compare the flow of FDI in INDIA & CHINA and to bring the revolution in the development of india by the schemes taken by india to attract foreign investment. The crucial step in this revolution is the campaign “Make in India” an intiative by Shri Narendra Modi, Honourable Prime Minister of India. This paper also highlights the foreign direct investment (FDI) policy under the campaign “Make in India”. Introduction India & China has the huge population. Therefore these countries are the hot destinations for investment among Asian developing countries...
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...This article provides information about the role of FDI in Insurance Sector! Even after the liberalisation of the insurance sector, the public sector insurance companies have continued to dominate the insurance market, enjoying over 90 per cent of the market share. FDI is the process whereby residents of one country acquire ownership of assets for the purpose of controlling the production, distribution and other activities of a firm in another country. A major role played by the insurance sector is to mobilize national savings and channelize them into investments in different sectors of the economy. FDI in insurance would increase the penetration of insurance in India; FDI can meet India’s long term capital requirements to fund the building of infrastructures. Insurance sector has the capability of raising long-term capital from the masses, as it is the only avenue where people put in money for as long as 30 years even more. An increase in FDI in insurance would indirectly be a boon for the Indian economy. The insurance sector has also been fast developing with substantial revenue growth in the non-life insurance market. Over the years, FDI inflow in the country is increasing. However, India has tremendous potential for absorbing greater flow of FDI in the coming years. The role of Foreign Direct Investment in the present world is noteworthy. It acts as the lifeblood in the growth of the developing nations. The wave of liberalisation and globalization sweeping across the...
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...Answer: Foreign Direct Investment (FDI) has been an important part of the economic transition, business liberalization and macro-economic growth story in Bangladesh over the last decade. Since the last decade, there has been a considerable change in global flows of trade and finance including a surge in FDI. Despite being a recent phenomenon, several underlying factors have contributed to increasing the FDI inflow in Bangladesh, such as trade and exchange liberalization, current account convertibility, emphasis on private sector led development, liberalization of the investment regime, opening up of infrastructure and services to the private sector-both domestic and foreign, and above all the interest of foreign investors in energy and telecommunication sector. It is argued that more open trade policies are associated with the presence of foreign firms and economy-wide technological and productivity gains in developing countries like Bangladesh. There also exists evidence of a strong positive correlation between increasing share of FDI in GDP and diversification to high-technology exports in countries that have open trade regimes. Foreign Direct Investment (FDI) has played a key role in the modernization of the Bangladesh economy for the last 15 years. Bangladesh received FDI of $1.13 billion last year compared to $910 million in 2010. This increase of about 25% is higher than the average 23% worldwide growth of FDI. According to the 2012 World Investment Report (WIR)...
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...The issue of FDI, inclusive growth, and institutions which have been investigated in this dissertation is highly relevant for Indonesia because of three reasons. The first is: Indonesia faces high income inequality while it has high economic growth. This evidence indicates that Indonesia’s economy is not inclusive which means that many people are still excluded from economic activity. The second is: Indonesia still relies upon foreign investment to support the economy. Central government who is responsible for managing FDI provides policies to attract more FDI. However, some evidence in some part of Indonesia regions showed that high FDI did not ensure prosperity of those regions. The evidences also demonstrate that expected positive impacts...
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...Contents Introduction 3 Literature review 4 Research methodology 9 Analysis 11 Case study: Tata’s Croma 16 Findings 20 FDI in Retail in India 21 Growth drivers in India for retail sector 22 Discussion 23 FDI in INDIA SECTOR WISE 23 Conclusion 25 Bibliography 27 Introduction Foreign Direct Investment (FDI) is fund flow (inflow/outflow) between the countries wherein one gains benefit from their investment whereas another can exploit the opportunity to enhance the productivity and find out better position through performance. Foreign Direct Investment (FDI) is the flow of funds between countries wherein one country reaps benefits from the investments and the other can make the most of the opportunity to improve the productivity and stabilize their position through performance. The Dictionary of Economics has defined FDI as investment in an overseas country through the acquisition of a company there of an operation on a new site. In other words, the capital inflows from abroad that is invested in to improve the production capability of the economy. Two forms of FDI: * Inward FDI * Outward FDI FDI is an important factor for growth and development in both developed and developing countries. FDI has seen a spectacular growth in the last two decades globally. Policies are formulated in order to accelerate inward flows. FDI provides good opportunities and benefits for both the host and home countries in terms of investments. The “home” countries benefit...
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... Perspectives on China's Outward Foreign Direct Investment Randall Morck Bernard Yeung Minyuan Zhao Abstract Recent economic data reveal that, at the infant stage, China’s outward foreign direct investment (FDI) is biased towards tax haven countries and South East Asian countries and are mostly conducted by State controlled enterprises with government sanctioned monopoly status. Further examination of China’s savings rate, corporate ownership structures, and bank dominated capital allocation suggests that, although a surge in China’s outward FDI might be economically sensible, the most active players have incentives to conduct excessive outward FDI while capital constraints limit players that most likely have value-creating FDI opportunities. We then discuss plausible firm-level justifications for China’s outward FDI flow, its importance, and promising avenues for further research. I. Introduction Barely thirty years ago, most would consider China a poor agricultural economy. In 2008 China is hosting the Olympics to signal its emergence as a major economic power. This phenomenal development appropriately draws international business scholars’ attention. One especially curious characteristic of China’s development path is a recent surge in its outward foreign direct investment (FDI). Successful and not-so-successful foreign acquisitions by companies...
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...Indian company is Foreign Direct Investment (FDI). The Government embarked upon major economic reforms since mid-1991 with a view to integrate with the world economy, and to emerge as a significant player in the globalization process. Reforms undertaken include decontrol of industries from the stringent regulatory process; simplification of investment procedures, promotion of foreign direct investment (FDI), liberalisation of exchange control, rationalization of taxes and public sector divestment. The FDI policy was liberalized progressively through review of the policy on an ongoing basis and allowing FDI in more industries under the automatic route. A number of studies in the recent past have highlighted on growing attractiveness of India as an investment destination. According to UNCTAD’s World Investment Report 2007, India is the second most attractive investment destination for FDI for 2007-09. India has one of the most liberal and transparent policies on FDI among the emerging economies. FDI up to 100 percent is allowed under automatic route in all activities and sectors except few sectors like manufacturing of cigar and cigarettes of tobacco, electronic aerospace and defense equipments, etc. FDI policy is reviewed on continuous basis and changes in sectoral polices / sectoral equity cap are notified through press notes by the Secretariat for Industrial Assistance (SIA) , Department of Industrial policy and promotion (DIIP). FDI policy is...
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...Foreign direct investment And Economic Growth in Bangladesh Internship program at Brac Bank Ltd. Internship Report On “Foreign direct investment And Economic Growth in Bangladesh and Internship program at Brac Bank Ltd.” The Internship report is submitted to the Department of Finance, University of Dhaka for the partial fulfillment of the requirement of BBA program. Submitted to: Department of Finance University of Dhaka Supervised by: Mohammad Jahangir Alam Chowdhury Professor Department of Finance University of Dhaka Submitted by: Zarin Tasnim ID: 17-009 Section: A Department of Finance University of Dhaka Signature of the Supervisor Date of Submission: 7th May, 2015 Letter of Transmittal 7th May, 2015 Mohammad Jahangir Alam Chowdhury Professor Department of Finance University of Dhaka Subject: Submission of Internship Report on Foreign direct investment and Economic Growth in Bangladesh. Dear Sir, It is an absolute pleasure for me to submit the Internship Report titled “Foreign direct investment and Economic Growth in Bangladesh” as a significant part of the BBA program. While making this report, I have experienced a fair knowledge about Foreign direct investment and economy of Bangladesh and its impact on the growth of Bangladesh. I have tried my best to follow your guidelines in every aspect of preparing this report. I have collected what I believed...
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...direct investment (FDI), joint ventures and strategic alliances, among other forms of internationalisation (Moore and Lewis, 1999). Several multinational corporations (MNEs) can also be identified in Europe in the middle ages and in the beginning of the modern era (Dunning, 1993a; Jones, 1996). The origins of modern international business activity however, are associated with the industrial revolution. Modern MNEs, in particular, have their roots in the massive international movement of factors that took place in the nineteenth century (Dunning, 1993a: p.99). Resource-seeking was the most common motivation of FDI in this period, even if by 1850 many firms had already crossed the Atlantic, in both directions, in what can be defined as market-seeking investment (Dunning, 1993a: p.100; Jones, 1996: p.5). 8 Despite the presence of FDI, most foreign investment in the nineteenth century - and indeed until the late 1940s – was portfolio capital. As a result, international business activity was largely ignored in economic theory until the late 1950s. On the one hand, the phenomenon did not have a major perceived economic impact. It was widely assumed that MNEs were a passing post-war phenomenon originating in the United States (Jones, 1996: p.3). On the other hand (and probably more importantly), the neo-classical theory, based upon perfect markets and the international immobility of factors, did not easily incorporate multinational activity. The growth of FDI (and of the MNEs themselves)...
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...IMPACTS OF FOREIGN DIRECT INVESTMENT (FDI) Resource Transfer a) Capital Inflow Multinational companies that are able to do FDI usually have big funds. This might be because big multinational companies have good reputation to get loan from bank, compared to the local companies. With the inflow of capital into the host country, it will help the state to build better infrastructure, develop competitiveness in the industry, and boost the economy. b) Technology Transfer In any nation, the importance of technology is very important as it transfers to the growth of economy. Whenever FDI takes place, technology is transferred from the home country to the host country. It may be in form of machine transfer or knowledge transfer. For example in Malaysia, Proton collaborates with Lotus, and the technology of manufacturing car is transferred although it is not 100%. The vehicle manufacturing technology also help other Malaysian industry like rubber industry in making tires. c) Managerial Skills Transfer Management know-how is required through FDI process gives important benefit to the host county. Local employees hired by MNC are exposed to latest management skills that will improve the efficiency of operations in the host country. When foreign managers leave the firm, the trained local personnel will help to build indigenous firms, causing a beneficial spin-off effect to the host country. Employment Effect FDI brings more beneficial employment prospects to the host country...
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...Advantage P.5 4.4 The Oligopolistic Reaction Theory P. 6 5.0 Conclusion P. 6 6.0 Bibliography P. 7-8 7.0 Appendices P. 9-11 1.0 Abstract Foreign Direct Investment has seen extensive growth globally in the past quarter century and numerous studies have attempted to address the question of why firms choose to enter foreign markets via this method. FDI is an important aspect of developing economies with China seeing some of the highest investment rates. The report takes the example of Volkswagen who were the first automobile company to engage in FDI in China and have seen excellent growth there over the years. It has found no one theory can be applied and many elements must be considered when looking at why an individual firm chooses to internationalize through FDI. 2.0 Introduction Foreign Direct Investment (FDI) has become an increasingly important area of study within International Business as rates of investment continue to grow significantly across the globe. FDI is an important aspect of economic growth for a country, in particular in the developing economies. China has been particularly attractive in the past 30 years...
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... AURANGABAD. 2011-2012 PROJECT REPORT on “FDI in indian retail sector” Submitted By Mr. Sagar P. Mahalkar Mr.Sachin Shinde Mr. Shrikant Gaikwad Mr.Akshay Shisode Guided By Prof. Ramesh Sardar DEPARTMENT OF MANAGEMENT SCIENCE, UNIVERSITY CAMPUS, AURANGABAD. 2011-2012 “CERTIFICATE” This is to certify that the project report entitled ”FDI IN INDIAN RETAIL SECTOR” is the confide work of the candidate satisfactorily completed during the academic year 2011-2012 as the partial fulfillment of requirement for the M.B.A.(F.Y.) in the Department of Management Science. Submitted by Mr. Sagar P. Mahalkar Mr. Shrikant Gaikwad Guided by DIRECTOR Prof. Ramesh Sardar Prof. Abhijeet Shelke Acknowledgement We would specially like to thank to the people who directed, encouraged, and advised us for the whole project. This is a real project we are getting something new information about various problems of FDI in retail sector in India. This project clarifying our views about FDI what we thought and problems of FDI in retail sector in India what actually is. We are very thankful to my guider that, he given us his valuable time and advised us time to time for this project. I am also very thankful to all the people...
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...FDI reforms – Challenge or Issue Dona Cherian C201276364 In the Indian economy, the contribution of retail and wholesale trade alone to the GDP growth is at a whopping 14 %. This figure in itself is indicative of the importance of this sector in the growth of India’s economy. It is double that of the next service sector contribution; construction at a7.3% growth rate. The retail sector is divided into organised (malls, hypermarkets etc.) and un-organised sectors (kiranas, convenience stores, pavement vendors) wherein the latter constitutes almost 98% of all retailing trade in the country. The coming of FDI would bring on a higher percentage of organised sector into the entire retailing industry which is where the question of good or bad arises. The people who talk against the FDI policy have many reasons that they put forward to justify their cause. One of the main reasons here is the fact that the drastic increase in the organised retail market would almost wipe out the domestic unorganised sector and the advantageous situations that it has in our country. As the aforesaid figures show us, this sector accounts for 98% of India’s entire retail industry, which makes this argument quite scary. The kirana stores in India are characterised by great neighbourhood locations and unbeatable access. With ever-increasing traffic congestion, this is a huge customer benefit. Our country lends itself to neighbourhood solutions better than countries that have wider open spaces and lower...
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