PRESENTATION ON COMPARISON OF FDI TRENDS IN INDIA AND CHINA

Raman Manehani (MBA-II sem.) CT-IEMT Shahpur Jalandhar

Meaning of FDI
A form of long-term international capital movement, made for the purpose of productive activity and accompanied by the attention of managerial control or participation in the management of foreign firm.

Growth perspective of India and China

INDIA


CHIAN


 

The annual growth rate of GDP was 6% during 19802000. In 1996-97 GDP of India was 7.8% GDP of India in 2007 was US $800.8 billion and it was the 10th largest economy in the world. Per Capita GDP of India in 2007 was US $3,800 and it was ranked 115 in the world.

 

The annual growth rate of GDP was 10% during 19982000. In 1996-97 GDP of China goes down to 7-8%. GDP of China in 2007 was US $3.25 trillion and it was the 4th largest economy in the world. Per Capita GDP of China in 2007 was US $7,800 and it was ranked 90 in the world.

INDIA


CHINA


  

Based on Purchasing Power Parity (PPP) Indias GDP in 2010 was $4,198 and was ranked 4th in the world. In 2007, Indias exports were $13,140 million. Total imports were $22,504.41 million. Indias Foreign Exchange Reserve in 2007 was $199.2 billion.

 

Based on Purchasing Power Parity (PPP) Chinas GDP in 2010 was $10,084 and was ranked 2nd in the world. In 2007, Chinas exports were $1.22 trillion. Total imports were $955.8 billion. Chinas Foreign Exchange Reserve in 2007 was $1.53 trillion.

Growth Rate of India and China

Role of FDI in Economic Development of India and China

FDI in India
India has among the most liberal and transparent policies on FDI among the emerging economies. FDI up to 100% is allowed under the automatic route in all the sectors except the following: (i) Activities that require industrial license. (ii) Proposal in which the foreign collaborator has an existing financial/technical collaboration in India in the same field. (iii) All proposals falling outside notified sectoral policy in which FDI is not permitted.

FDI and Economic Development of India

 Increase in total

FDI: 46.8%.

 Rise in foreign equity: 36%.  Reinvested foreign earnings and other

capital: $3.2

billion.
 Total FDI earnings  Total FDI earnings

(inward) 2005-06: $5.7 billion. (outward) increase 2000-01:

$757 million.

Positive growth in Indian economy in terms of GDP growth:

 Govt. has removed

10% voting limit in banks.  Revisit foreign shareholding norms in telecom is welcome change.  Removal of unwarranted restrictions on hindrances to foreign investments has exceptionally increased FDI in India.  Govt. of India has already allowed FDI up to 51% with prior government approval in the retail trade of "single brand" products.

FDI in China

China began reforming its closed, centrally planned economy in 1978. China absorbed a total of $53.5 billion worth of FDI in 2003. The foreign investment in 2004 rose to $60 billion.

FDI and Economic Development of China

 Foreign

enterprises account for 28 per cent of China's industrial added value and one-fifth of taxation. export about 57 per cent of the country's total goods and services and account for 11 per cent of local employment. of China into World Trade Organization has made it favorite destination for global investment.

 They

 Entry

Comparative Inward FDI

Why India and China targeted for FDI

India was preferred destination for FDI because:

 

It is the 3rd largest economy in the world in PPP terms. India has strength in IT and other important areas such as auto components, apparels, chemicals, pharmaceuticals, and jewellery etc. India has a large pool of skilled managerial and technical expertise. The size of the middle-class population at 300 million exceeds the population of both the US and the EU, and represents a powerful consumer market. India has the cheapest labour.

China was targeted because:

y

China was very fast in adapting new technologies easily so everyone was interested to have trade relations with China to get latest technology from China. And this was also helpful to compete with other powerful nations.

THANK YOUu