Professional Documents
Culture Documents
A term paper
By
Shamsher Singh
Submitted to
Satinder sir
(Faculty of MBA)
TABLE OF CONTENTS
1. Introduction 3-8
General introduction 3
Objectives of my study 3
Needs of FDI 4
3. Research Methodology 14
Research Design -
1. INTRODUCTION TO FDI
Foreign direct investment is that investment, which is made to serve the
business interests of the investor in a company, which is in a different nation
distinct from the investor's country of origin.
A parent business enterprise and its foreign affiliate are the two sides of the
FDI relationship. Together they comprise an MNC. The parent enterprise
through its foreign direct investment effort seeks to exercise substantial control
over the foreign affiliate company. FDI can fill the gap between the desired
investment and locally mobilised savings. It supplies a package of needed
resources. A foreign direct investment is not an unmixed blessing. The
government in the developing countries have to be careful while deciding on the
magnitude, pattern and conditions of a private foreign investment.
Objectives of my study
• To list out the various factors that encourages foreign direct investment.
Foreign investment can fill the gap between desired investment and
locally mobilized savings. It supplies a package of needed resources. It
helps a number of UDC’s to possess huge mineral resources.
• Upgradation of technology:
• Exploitation of resources:
India has been ranked at the third place in global foreign direct investments in
2009 and will continue to remain among the top five attractive destinations for
international investors during 2010-11, according to United Nations Conference
on Trade and Development (UNCTAD) in a report on world investment
prospects titled, 'World Investment Prospects Survey 2009-2011' released in
July 2009.
The 2009 survey of the Japan Bank for International Cooperation released in
November 2009, conducted among Japanese investors continues to rank India as
the second most promising country for overseas business operations, after
China. A report released in February 2010 by Leeds University Business
School, commissioned by UK Trade & Investment (UKTI), ranks India among
the top three countries where British companies can do better business during
2012-14.
India attracted FDI equity inflows of US$ 2,214 million in April 2010. The
cumulative amount of FDI equity inflows from August 1991 to April 2010 stood
at US$ 134,642 million, according to the data released by the Department of
Industrial Policy and Promotion (DIPP).
In April 2010, the telecommunication sector attracted the highest amount of FDI
worth US$ 430 million, followed by services sector at US$ 355 million and
computer hardware and software at US$ 172 million, according to data released
by DIPP. During the financial year 2009-10, Mauritius has led investors into
India with US$ 10.4 billion worth of FDI comprising 43 per cent of the total
FDI equity inflows into the country. The FDI equity inflows in Mauritius is
followed by Singapore at US$ 2.4 billion and the US with US$ 2 billion,
according to data released by DIPP.
During April 2010, Mauritius invested US$ 568 million in India, followed by
Singapore which invested US$ 434 million and Japan that invested US$ 327
million, according to latest data released by DIPP.
Investment Scenario
• Asia net’s proposal worth US$ 91.7 million to undertake the business of
broadcasting non-news and current affairs television channels.
• Global media magnate Rupert Murdoch-controlled Star India holdings'
investment of US$ 70 million to acquire shares of direct-to-home (DTH)
provider Tata Sky.
• AIP Power will set up power plants either directly or indirectly by
promotion of joint ventures at an investment of US$ 24.4 million.
Policy Initiatives
• Political stability:
The relevant rules and regulations of the host country that are governing
the FDI decide the quantum of the later. The rules and regulations and
administrative procedures of the host country regarding foreign
investment must be transparent.
• Size of market:
Price level and exchange rate of the host country determine the foreign
direct investment in a country. The instability in prices and exchange
rates affect the inflow of FDI.
The availability and access of basic inputs such as oil and gas, minerals,
skilled and unskilled labour force and so on determine the extent of
foreign direct investment in the country.
REVIEW 1
REVIEW 2
REVIEW 3
The seventh research is done by Bishwanath and Rashmi Banga. The
research is done to analyze the impact of trade liberalization on FDI in
Indian industries. They estimated an econometric model to explain inter
industrial and inter temporal variations in the extent of foreign investment
in manufacturing industries using panel data for the post reform period.
The result of the research indicated trade liberalization and globalization
(particularly lowering the tariff rates) had a favourable effect to foreign
direct investment in Indian industries. The results showed that trade
liberalization had a favourable effect on foreign direct investment flows.
REVIEW 4
BY: NADEEM YOUSUF Page 10
Analyze the rationale for encouraging FDI (Business Environment)
REVIEW 5
3. RESEARCH METHODOLOGY
• Research design
4. FINDINGS
The conclusion of the above research is that India is going well from the point
of view of the inflow of FDI and needs to increase the inflow of FDI to
overcome china that is presently the top most attractive country for foreign
direct investment. The research also shows that the main reason for the
increasing foreign direct investment inflow in India is because of its huge
domestic market, it’s cheap labour cost and high returns.
6. REFERENCES/ BIBLIOGRAPHY
Various references used for the research were in the form of websites and
books. Some of them are given below:
I. WEBSITES:
1. www.google.com
BY: NADEEM YOUSUF Page 13
Analyze the rationale for encouraging FDI (Business Environment)
2. www.proquest.com
3. www.scribd.com
4. www.docstoc.com
5. www.businessdictionary.com
6. www.ecohost.com