FDI IN INDIA

IN 1990

INTRODUCTION REFORMS IN

1990

FDI TRENDS AND COMPOSITION

INDIA VS CHINA
TECHNOLOGY SPILLOVERS AND BARGAINING POWER IN THIS MARKET BRAND NAMES

FDI POLICY

INTODUCTION

FDI
India followed restricted trade policy

Foreign investment is allowed only in designated industries

FERA stipulated foreign companies to hold equity up to

40%
Such policies are believed to retard domestic technical capability and loss of export opportunities

REFORMS IN

90S

Shift in strategy

FDI is seen as source of capital, technology and managerial skills Permitted foreign investments in almost all the sectors

 Fiscal and Administrative reforms Financial sector reforms International trade and investment reforms Industrial sector reforms Infrastructure reforms Agricultural reforms

Privatization reforms

TRENDS The inflows increased from 500 crores to 55000 crores in five years The top investing countries are USA, Mauritius, UK, South Korea, Japan etc Sectors are Power generation Tele communications Service sector Food processing Chemicals etc

Sector-wise FDI inflows in India from April 2000 Dec 2009 Amount of FDI inflows Rs. Millions Service Sector 1015269 Computer Software and Hardware 423529 Telecommunication 398094 Housing and Real Estate 352550 Construction Activities 327195 Power 200993 Automobile Industry 197634 Metallurgical Industry 131178 Pertoleum and Natural Gas 112617 Chemicals 108251 Electrical Equipments 94888 Trading 87001 Hotel and Tourism 80355 Information and Broadcasting 79569 Cement and Gypsum Products 74579 Drugs and Pharmaceuticals 72533 Agriculture 71231 Consultancy 68354 Ports 66675 Industrial Sectors in India % of total FDI inflows 21.63 9.02 8.48 7.51 6.97 4.28 4.21 2.79 2.40 2.31 2.02 1.85 1.71 1.70 1.59 1.55 1.52 1.46 0.93

Ranking of Sector-wise FDI Inflows in India since April 2000 Dec2009 Industrial Sectors in India Service Sector Computer Software and Software Telecommunication Housing and Real Estate Construction Activities Power Automobile Industry Metallurgical Industry Pertoleum and Natural Gas Chemicals Electrical Equipments Trading Hotel and Tourism Information and Broadcasting Cement and Gypsum Products Drugs and Pharmaceuticals Agriculture Consultancy Ports Ranks 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19

Ranks

Country

2007-08 (AprilMarch) 44,483 (11,096) 12,319 (3,073) 4,377 (1,089) 4,690 (1,176) 2,780 (695) 3,336 (815) 3,385 (834) 2,075 (514) 583 (145) 1,039 (258)

2008-09 (AprilMarch) 50,794 (11,208) 15,727 (3,454) 8,002 (1,802) 3,840 (864) 3,922 (883) 1,889 (405) 5,983 (1,287) 2,750 (629) 2,098 (467) 1,133 (257)

2009-10 (AprilMarch) 49,633 (10,376) 11,295 (2,379) 9,230 (1,943) 3,094 (657) 4,283 (899) 5,670 (1,183) 7,728 (1,623) 2,980 (626) 1,437 (303) 3,017 (629)

2010-11 (for April 10) 2,528 (568) 1,933 (434) 404 (91) 265 (59) 312 (70) 1,455 (327) 123 (28) 102 (23) 184 (41) 31 (7)

1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

MAURITIUS SINGAPORE U.S.A. U.K. NETHERLAN DS JAPAN CYPRUS GERMANY FRANCE U.A.E.

Cumulative Inflows (April 00 to April 10) 213,434 (47,808) 47,080 (10,625) 37,593 (8,369) 26,263 (5,944) 20,438 (4,557) 18,350 (4,041) 17,900 (3,927) 12,571 (2,822) 7,102 (1,571) 7,054 (1,556)

%age to total Inflows (in terms of US $) 43 % 9% 7% 5% 4% 4% 4% 3% 1% 1%

TOTAL FDI INFLOWS *

98,664 (24,581)

123,025 (27,331)

123,378 (25,888)

9,854 (2,214)

526,357 (117,943)

RBI BULLETIN

India Vs China

Even though our inflows are increased tremendously we are far behind of china It is due to failure of Indian reforms Reasons for our failure Reforms Infrastructure Technology Facilities Skilled labor etc

Technology spillovers FDI is considered as a source of technology

It may not be all the times It depends on extent of value addition in host economy FMCG leads to minimal externality Automobile industry can increase technical capability

Loss in bargaining power..

Many dominant international firms with their power in technology has weakened domestic players bargaining power Considering their finanancial and technical strengths many foreign firms took managerial control over domestic companies and increased their stake They found it as an inexpensive way to acquire new companies

Brand names..

It takes some time to create such intangible asset It acts as a competitive advantage Brand consciousness has started form 1990s Cola bought its competitors Pepsi bought Mangola, Dukes etc
These proved to be a costly mistake for India

FDI POLICIES

FDI is seen as integral part of National development

Foreign investment is freely permitted in all the sectors excluding some such as agriculture, retail trade, real estate etc % in power trading, processing, development of new airports, laying of natural gas pipelines, petroleum infrastructure and warehousing of coffee and rubber

100

 Limit for telecoms services firms have been raised from 49 per cent to 74 per cent. Retailing industry in India is allowing 51% FDI in single brand outlet Prohibited Sectors

i. Gambling and betting ii.Lottery Business iii.Atomic Energy iv. Retail Trading v.Agricultural or plantation activities of Agriculture

Questions:

Name any five top investing sectors in India?

What are the main reasons for not attracting fdi ?

What is the reason for sudden increase in fdi ?

What is our current rank in FDI investments ? Which countr did India overtake to reach that position?

How we can reach number one? What are our advantage