To identify the challenges

and opportunities faced by

startups in India
2. To identify various
government initiatives for
the development of
startups
3. To analyze the growth
and opportunities of
startups
To identify the challenges
and opportunities faced by
startups in India
2. To identify various
government initiatives for
the development of
startups
3. To analyze the growth
and opportunities of
startups
To identify the challenges
and opportunities faced by
startups in India
2. To identify various
government initiatives for
the development of
startups
3. To analyze the growth
and opportunities of
startups
To identify the challenges
and opportunities faced by
startups in India
2. To identify various
government initiatives for
the development of
startups
3. To analyze the growth
and opportunities of
startups
To identify the challenges
and opportunities faced by
startups in India
2. To identify various
government initiatives for
the development of
startups
3. To analyze the growth
and opportunities of
startups
To identify the challenges
and opportunities faced by
startups in India
2. To identify various
government initiatives for
the development of
startups
3. To analyze the growth
and opportunities of
startups
To identify the challenges
and opportunities faced by
startups in India
2. To identify various
government initiatives for
the development of
startups
3. To analyze the growth
and opportunities of
startups
To identify the challenges
and opportunities faced by
startups in India
2. To identify various
government initiatives for
the development of
startups
3. To analyze the growth
and opportunities of
startups
To identify the challenges
and opportunities faced by
startups in India
2. To identify various
government initiatives for
the development of
startups
3. To analyze the growth
and opportunities of
startups
CHAPTER – 1
INTRODUCTION TO STUDY

1.1 Introduction
The investment plays a vital role in the economic development of the country. It was
introduced in the fiscal year 1991 under the guidance of Foreign Management Act (FEMA)
implemented by the Finance Minister Dr. Manmohan Singh. FDI is the consolidation of
equity capital, reinvestment earnings and other capital.
The investment can be defined as cross border investment linked with a resident in one
economy which have a significant control and degree of influence on management of an
enterprise that is resident in another economy. The Foreign Direct Investment is classified as
Green Field Investment which is investment made by enterprise and the company is owned in
a foreign country and the other is Portfolio Investment in which shares of a foreign company
is purchased or ownership acquired in a foreign company.

In India FDI investments approval is undertaken in two channels either from automatic route
or the Reserve Bank of India route and Government route which is also known as Foreign
Investment Promotion Board (FIPB) route. The FDI policy is monitored by Ministry of
Commerce and Industry, Government of India on a continuous basis. The policy is notified
through Press Notes by the Secretariat for Industrial Assistance (SIA), Department of
Industrial Policy and Promotion (DIPP).

The Foreign Direct Investment has a significant impact on improving the foreign exchange
position of the country, generating employment through increase in production, increase in
capital formation, growth in exports and thus increase the tax revenues. According to DIPP, in
India during the year 2019-2020 the FDI inflows was approximately $ 13,208 million.
Foreign Direct Investment (FDI) has a vital role in India to meet out the requirements of
various sectors.

The government has permitted 100 percent inflows of FDI in service, information technology,
manufacturing sector. It is observed that in fiscal year 2021-2022 the information technology
sector has gained highest foreign direct investment with the amount of INR. 1.82 trillion.
Further the service sector which has highest FDI inflows had lost its leading position.

The downfall in service sector is due to financial crisis met by service sector due to pandemic
Covid-19. Out of 56 percent foreign registered companies most of the were operated in the
state of Maharashtra and Delhi which indicates a poor business situation. Foreign Direct
Investment is the direct investment equity flows done in a country.

The top share of FDI was from Mauritius to about $ 142710 million. The top sector attracting
highest FDI equity inflows was service sector which was $7,854 million. On this background
the paper focus on impact of FDI in Indian economy and tries to analyse the growth of FDI
flows in top five sectors in India.
1.2 OBJECTIVES OF THE STUDY

 To analyze the trend and pattern of growth of Foreign Direct Investment in India from
2011-2012 to 2020-2021.
 To examine the impact of FDI in India’s GDP.
 To assess the impact of FDI in Various Sectors in India.

1.3 RESEARCH METHODOLOGY

1.3.1 Research Type:

The aim of the study is to analyze the impact of FDI in India and its major effect on Gross
Domestic Product and its blow on major three sectors in Indian Economy. Foreign Investment
comprises of two types, such as Direct Investment and Portfolio Investment. The study
concentrates on Direct Investment in India. The study is based on descriptive analysis and the
data includes secondary data which collected from various sources such as Handbook of RBI,
World bank websites, Ministry commerce and industry, Department for Promotion of
Industry and Internal Trade.

1.3.2 Data Collection

Secondary Data: The data is collected by using following means –

Wikipedia.com

Investopedia.com

1.4 SCOPE OF THE STUDY

The research is restricted to Foreign Direct Investment in India from 2011-2012 to 2020-
2021. Foreign Direct Investment is the summation of equity capital, reinvested earnings and
other capital such as long- term and short-term capital. Further Gross Domestic Product is the
market value of all final goods and services of a country. Hence, the study concentrates on
trend and growth of FDI equity inflows, foreign direct investment in top three Sector-wise
and impact of FDI flows in India’s (GDP). The following table shows the sector wise FDI
Equity Inflows from 2000-2021.
Table no. 1.4

Sectors Amount of FDI (In % Of Total Inflows

INR. Crores)
Service sector 509272.19 16.44
Computer Hardware and 470297.53 13.42
Software
Telecommunications 222072.91 7.11
Trading 195353.23 5.7
Construction 127080.58 4.92
Automobile 155856.62 4.88
Infrastructure 166622.44 4.67
Chemicals 104854.55 3.49
Drugs & Pharmaceuticals 98829.61 3.4
Hotel & Tourism 94539.55 2.96
Source: Department for Promotion of Industry and Internal Trade

1.5 IMPORTANCE OF STUDY