FDI

Assessment component 2 (Business Research Methods component): Full research proposal (2500 words
maximum) to be submitted by the end of week 8 in Term 2 (75% of total marks for the Business
Research Methods component).
*963The full proposal to include:

An abstract (summary).
Statement of research question and issues to be investigated.
Theoretical context
The expected implications of the research project for organizations.
Preliminary literature review
Research design.
Data sources and the justification for the choice of data
Methodology to be employed. Briefly mention what kind of methodology you anticipate using for
this dissertation with regards to the Theme/Topic selected, and the nature of the research.
Details of any ethical considerations and steps taken to meet potential ethical concerns.

Article no. 3
FDI refers to an investment made to acquire lasting interest in enterprises operating
outside of the economy of the investor (Balance of Payment Manual 5)
As per the economic survey 2008-09
FDI is the most attractive type of capital flow for emerging economies as it is expected
to bring latest technology & enhance production capabilities of the economy.
National manufacturing competitiveness council specified that foreign investments
mean both foreign portfolio investment & FDI. FDI brings better technology & mgmt.,
access to marketing networks & offer competition, the latter helping Indian companies
improve quite apart from being good for consumers.
Evolution of Indian FDI
1. Frm 1969 1991 marked by the monopolies & restrictive trade practices
commission (MRTP) in 1969, imposed restriction on the size of operation, prizing
of products & services of foreign companies. FERA enacted in 1973 limited extent
of foreign equity to 40%. Licensing regime was instituted for technology transfer
& royalty payments & were subjected to export obligation.
2. Frm 1991 2000 witnessed liberalization of FDI policy as part of economic
reforms. As per statement on industrial policy FDI was allowed through
automatic route upto 51% in 35 high priority industry. Foreign technical
collaboration was also placed under automatic route under specified limits. In
1996 automatic route was expanded from 35 to 111 industries under 4 distinct
categories (Part A upto 50% B upto 51% C upto 74% D upto 100%). A
foreign investment promotion board (FIPB) was constituted to consider
investment under government route.
3. Frm 2000 till date expect for negative list all the remaining activities were placed
under automatic route.

Evolution of FDI policy towards more rationalization & liberalization has narrowed down
the instruments regulating FDI policy broadly to three.
Equity caps: restricting foreign ownership of equity capital
Entry route: requiring prior government oversight, including screening & approval
Conditionalities: operational restrictions/licensing conditions, minimum capitalization &
lock in period etc.
Ways of receiving FDI
Automatic route
Government route
Assessment of global FDI
As per UNCTADs world investment report 2011
1st time developing & transition economies together attracted more than half of global
FDI flows. Outwards FDI from these economies also see record high. FDI inflow to
developed countries declined.

FDI in Telecom Sector.

An industry where it is very clearly visible is in the area of telecommunication where a
revolution of sorts is taking place (Mani 2007). In these context, the purpose of the
present section is to understand the technological implication of the phenomenal
growth of this industry.
In July 2013 GOI approved 100% FDI in telecom sector increased FDI cap from 74% to
100% & upto 49% under automatic route & beyond that FIPB.
Idea behind increasing the FDI limit in the telecom was to help the industry get fresh
funds to lower financial burden. This move helps foreign partners in telecom companies
as they can have complete ownership, as they wont have to partner with Indian
investors on order to comply with regulatory requirements (PWC Indias for executive
Director, Tax & Regulatory Services). Industry analyst believe 100% FDI will attract
investments of USD 10 billion.
Contribution of telecom to growth performance of Indian economy.
Communication is the fastest growing sector within Indias economy. Average
compound rate of growth of the sector works out to 24.02% pa since the turn of
millennium. This sector accounts for 4% of GDP & therefore with this rather high rate of
growth contributes about 11% of the growth contributes about 11% of the overall GDP
growth of the country.
Dimension of the growth performance of telecommunication services.

In 1991 India had just 5 million telephone subscribers, and by end of July 2007 there
were 233 million subscribers showing an annual growth rate of over 27% pa. Initially
tele density was below 1 telephone per 100 person has now risen sharply to about 20.
1. Dominance of wireless technology, rather than wireline:
Indian telecom sector is heavily dominated by wireless technologies which
include cellular wireless & fixed wireless technologies. There has been a decrease
in the popularity of fixedline telephones.
2. Monthly addition to mobile subscribers & growing market for telecom handsets.