Foreign direct investment in India has been growing significantly in recent years, with private external flows to India being the highest of major emerging economies from 2004-2010. Mauritius and Singapore are the top sources of FDI in India, with Mauritius contributing $2.54 billion during April-September 2009 alone. The electrical equipment, services, and telecom sectors have attracted the most FDI since 1991. While northern India has received about a quarter of FDI, states like Maharashtra, Delhi, and Mumbai remain top destinations for foreign investment.
Foreign direct investment in India has been growing significantly in recent years, with private external flows to India being the highest of major emerging economies from 2004-2010. Mauritius and Singapore are the top sources of FDI in India, with Mauritius contributing $2.54 billion during April-September 2009 alone. The electrical equipment, services, and telecom sectors have attracted the most FDI since 1991. While northern India has received about a quarter of FDI, states like Maharashtra, Delhi, and Mumbai remain top destinations for foreign investment.
Foreign direct investment in India has been growing significantly in recent years, with private external flows to India being the highest of major emerging economies from 2004-2010. Mauritius and Singapore are the top sources of FDI in India, with Mauritius contributing $2.54 billion during April-September 2009 alone. The electrical equipment, services, and telecom sectors have attracted the most FDI since 1991. While northern India has received about a quarter of FDI, states like Maharashtra, Delhi, and Mumbai remain top destinations for foreign investment.
Types of Foreign Investments Foreign Institutional Investors Foreign Direct Investors American Depository Receipts Global Depository Receipts FCCB 2 3 Introduction India is one of the fastest growing economies of the world and the entire world is watching our growth and development process. Despite the fact that India is growing at a very fast pace, China is still growing faster than India. Let us see some Statistics from the Industry Chamber ASSOCHAM. 4 India most attractive for Foreign Investors Private external inflows to India has been the highest in the last three to four years, compared to other emerging countries. The booming capital markets have greatly enhanced foreign investors interest in FCCBs, ADRs, and GDRs issued by Indian Companies. India with inflows of $19.3 billion in 2005 was third after China and South Korea. Forms of Finance Purchase of assets: why? why not? Quick entry, local market know-how, local financing may be possible, eliminate competitor, buying problems New investment: why? why not? No local entity is available for sale, local financial incentives, no inherited problems, long lead time to generation of sales International joint-venture Shared ownership with local and/or other non- local partner Shared risk
5 Alternative Modes of Market Entry FDI - 100% ownership FDI < 100% ownership, International Joint Venture Strategic Alliances (non-equity) Franchising Licensing Exports: Direct vs Indirect
6 7 India most attractive for Foreign Investors The average inflows for India through bonds, equities and loans during 2007-10 has risen by 158.4 percent as against 40.3 percent for other emerging markets. This is largely driven by Indian companies raising funds in global markets. This flow has increased after Indian banks have permitted to raise funds through issuance of innovative debt capital in foreign currency. 8 Dollar Flows Private external flows to Asian countries through new bonds, equities and loans. (in $ million) 2001 2004 2007 2009 2010 Growth % Asia 67483 67201 87968 123719 150388 14.3 China 5567 8892 13590 24368 35797 32.6 S Korea 17021 14694 17237 24424 34463 21.2 India 2382 1381 18149 13918 19316 88.1 Hong Kong 18307 12602 4094 13555 15307 -1.9 Taiwan 3794 10959 9056 15309 11701 34.4 9 Dollar Flows Growth Rate -10 0 10 20 30 40 50 60 70 80 90 China Hong Kong India S Korea Taiwan Growth % Average annual source:EIU (in $ m) 10 FDI inflows to India double in Apr-Sept 2009 to $ 4.4 billion The India story keeps getting bigger. Foreign Direct Investment (FDI) inflows during the first half of the financial year have doubled to $4.38 billion in 2009 as against $2.2 billion during April-September 2008 as per Government of India report released on November 20, 2009. 11 FDI Inflow 0 1 2 3 4 5 6 2003-04 2004-05 2005-06 India In $ b 2.19 3.21 5.52 12 Country wise FDI Inflow to India Singapore has moved up from the seventh position to the second position in terms of major sources of FDI to India and has in the process taken over US and UK. Mauritius with $2.54 billion FDI inflows during April September 2009 remained at the top of the list followed by Singapore $481.7 million. 13 Top Sources of FDI Inflow to India in $ million Country 2005 2006 Growth % Mauritius 891 2545 185 Singapore 118 481 305 U S 323 406 26 14 Top Sources of FDI Inflow to India in $ million 0 500 1000 1500 2000 2500 3000 Mauritius Singapore US 2005 2006 Growth % 15 Sector wise FDI Inflow to India Since 1991, when foreign investment norms were simplified, it is electrical equipment which includes computer hardware and services that has been the top drawer followed by services, telecom, transport and energy. Although, in April- September 2006 Services ($1.51 billion) attracted more FDI than electrical equipment ($777.9 million), while telecom remained at third position with $405.2 million. Transport ($258.7 million) and energy ($138.3 million) occupied the fourth and fifth places. 16 Preferred Destinations in India Since 1991, north India has accounted for nearly a quarter of the inflows, followed by Maharastra, Dadar & Nagar Haveli and Daman & Diu, which cornered around 22 percent of the FDI flows. While the southern part of India saw a steep growth in inflows, Delhi and Mumbai occupied the top two slots. 17 India v/s India Hence we can say that there are two Indias in this country looking to progress made by some regions and states despite all odds still not removed in terms delays and red tape. One India is straining at the leash, eager to spring forth and live up to all the adjectives that the world has been showering recently upon India. The other India is the leash. 18 India v/s India And one India a tiny little voice at the back of the head is looking down at the bottom of the ravine and hesitating. The other India is looking up at the sky and saying, its time to fly.