CHAPTER-V
FINDINGS
FINDINGS
India is established as one of the top tier world destinations for FDI. In the Asia-Pacific
region, the country consolidated its second top position, besides China, after a lull in 2016
because of financial crisis. To augment, India’s inward investment rule went through a series
of changes since economic reforms were escorted in two decades back. The cumulative
amount of FDI inflows into India were US$2,80,414 million for the period April 2000 –
December 2019, including data of‘re-invested earnings’ & ‘other capital’ of equity inflows.
These are the estimates on an average basis, based upon data for the previous two years,
published by RBI in Monthly Bulletin. Mauritius, Singapore and UK are the top three
contributors of FDI into India while Services, Construction and Telecom sectors attracted the
major capital.
As per the recent survey done by the United National Conference on Trade and Development,
India will emerge as the third largest recipient of FDI for the three-year period ending 2019.
As per the study, the sectors which attract highest FDI were services, telecommunications,
construction activities, and computer software and hardware.
There has been a continuing and sustained effort to make the FDI policy more liberal and
investor-friendly. Significant rationalisation and simplification of the policy has, therefore,
been carried out in the recent past. DIPP, in its consultation paper titled ‘FDI Policy—rational
and relevance of caps’ has, as a landmark initiative, accepted that up to 49% foreign
investment is indirectly possible in all sectors. This effectively means that an Indian owned
and controlled company can make downstream investments even in prohibited sectors such as
multibrand retail trading etc. It is important here to note that foreign investment for this
purpose includes not only strategic foreign investment but also FII under portfolio investment
schemes, NRI, GDR, ADR etc.
SUGGESTIONS
It is important to consider whether the FDI that is attracted is beneficial to the economy.
There is already a substantial body of research into the effects of FDI generally and the factors
that can make FDI more or less beneficial.
FDI can make a positive contribution to economic growth, by providing additional capital
and facilitating technology transfers.
A further potential advantage of FDI is the possibility of technology spillovers, which can
potentially enable the recipient country to benefit from advanced technologies developed
overseas.
To pursue a growth of around 7 percent in the Gross Domestic Product of India, the net
capital flows should increase by at least 28 to 30 percent on the whole.
The savings of the country stood at 24 percent. The gap formed between intended
investment and the actual savings of the country was lifted up by portfolio investments by
Foreign Institutional Investors, loans by foreign banks and other places, and foreign direct
investments. Among these three forms of financial assistance, India prefers as well as
possesses the maximum amount of Foreign Direct Investments.
As largely debated FDI has both positive and negative factors. These factors should be
properly studied before allowing any FDI into a particular sector or the country.
CONCLUSION
Amidst today’s time of fierce competition and a quest to achieve and enhance a substantial
level of economic and social development; each and every nation is trying to liberalize its
economic policies in order to attract investments from not only, domestic players, but also
from magnates all across the globe. Consequently, people with generous reserves of funds, all
around the globe, are expanding their wings and seeking opportunities for investing in
different spheres of this lucrative market. India too is not oblivious to the rapid developments
taking place in the global market and has emerged as one of the prime destinations for the
investment of funds from an impressive number of foreign investors.
FDI is a superb conduit for the transfer of technology and know-how to developing countries.
This message has not been lost on India's policy makers. They have though until the decade of
the nineties attempted to regulate and control its spheres of activity and the contractual forms
of foreign enterprise participation in the economy. The framework of policies they put in place
was guided by the desire to limit foreign control of economic activity but at the same time take
advantage of the technology and know how provided by foreign capital. This attempt at riding
two horses in tandem, a complex feat, inevitably resulted in a complex and cumbersome
bureaucratically guided FDI regime and earned India the reputation for hostility towards FDI.
The GDP growth in India is anticipated to hover around 7% yearly and the number of people
in the Indian middle class is set to triple over the next 17 years, the domestic demand is
expected to grow exponentially. India’s young demographic profile also helps it in providing
an increasingly well-educated and cost-competitive labor force. These factors put India in a
good position to attract an increasing proportion of global FDI going forward.
BIBLIOGRAPHY
1. Khan, M Y and P K Jain, Financial Management, Tata McGraw-
HillPublishingCo., NewDelhi, 2007.
2. IMPandey,EssentialsofFinancialManagement,VikasPublishingHousePvtLt
d,NewDelhi, 2095.
3. Ramesh,SandAGupta,VentureCapitalandtheIndianFinancialSector,Oxfordu
niversity press,NewDelhi, 2095.
JOURNALS:
ManagementAccountingResearch,volume1issue32002.
Journaloffinancialand QuantitativeAnalysisvolume7,issue2March2072.
JournalofAccountingandEconomicsvolume30,issue3December2000.
JournaloftheOperationalResearchSocietyvolume54,issue1,2003.
JournalofAccountingEducationvolume18,issue4,2000.
NEWSPAPERS:
Business Today
Timesof India
TheHindu
MAGAZINES:
Theeconomictimes
TheEconomist
OutlookIndia
WEBSITES:
1. www.googlefinance.com
2. www.honda2wheelersindia.com
3. www.moneycontrol.com
4. www.bikewale.com
