Foreign direct investment (FDI) plays an important role in India's economic development. FDI inflows to India have grown in the last 5 years due to government support and have helped provide financial stability and economic growth. Major sectors attracting FDI include services, telecommunications, and computer hardware and software. While FDI inflows grew substantially between 2001-2008, they witnessed a moderate decline in 2010-2011. FDI brings benefits like new technology, management expertise, and competition that helps improve Indian companies.

1. FDI INFLOWS
Submitted By: Submitted
To:
Prof. (Dr.) Priya Dwivedi Shelly
Rastogi
BUSINESS ENVIRONMENT

2. INTRODUCTION
• Foreign direct investment (FDI) is a
direct investment into production or
business in a country by a company in
another country, either by buying a
company in the target country or by
expanding operations of an existing
business in that country.
• Foreign direct investment plays an
important role in the economic
development of the country.

3. TYPES OF FDI’S
1. By Direction
 Outward FDI
 Inward FDI
 Vertical FDI
2. By Target
3. By Motive
 Resource Seeking
 Market Seeking
 Efficiency Seeking

4. FDI IN INDIA
• FDI have helped India to attain a
financial stability and economic growth
with the help of investments in
different sectors.
• Foreign direct investment in India has
grown immensely in the last 5 years due
to strong support from the Union
Government. This growth has in turn
helped with the progress of the
national economy.
• FDI inflows to India witnessed
significant moderation in 2010-11 while

5. CONTINUED…
• FDI brings better technology and
management, marketing networks
and offers competition, the latter
helping Indian companies improve,
quite apart from being good for
consumers.

6. VARIOUS ROUTES
OF FDI
1. Automatic Route: Automatic approval
is given by the Reserve Bank of India
to the proposals for foreign direct
investment in India. The Reserve Bank
of India gives approval within the time
period of two weeks. It gives approval
to the proposals for foreign direct
investment in India that involve FDI up
to 74% in the nine categories that are
included in List four, FDI up to 50% in
the three categories that are included
in List two, and FDI up to 51% in the

7. CONTINUED…
2. Government Route: FDI in activities
not covered under the automatic route
requires prior approval of the
Government which are considered by
the Foreign Investment Promotion Board
(FIPB), Department of Economic
Affairs, Ministry of Finance. FDI is
not permitted in the industrial sectors
such as-
• Arms and ammunition.
• Atomic Energy.

8. Trends in FDI
Inflows to India
• With the tripling of the FDI flows to
EMEs during the pre-crisis period of
the 2000s, India also received large
FDI inflows in line with its robust
domestic economic performance.
• The attractiveness of India as a
preferred investment destination could
be ascertained from the large increase
in FDI inflows to India, which rose
from around US$ 6 billion in 2001-02
to almost US$ 38 billion in 2008-09.

9. CONTINUED…
• During the recent global crisis, when
there was a significant deceleration in
global FDI flows during 2009-10, the
decline in FDI flows to India was
relatively moderate reflecting robust
equity flows on the back of strong
rebound in domestic growth ahead of
global recovery and steady reinvested
earnings (with a share of almost 25 per
cent) reflecting better profitability of
foreign companies in India.

10. • However, when there had been some
recovery in global FDI flows, especially
driven by flows to Asian EMEs, during
2010-11, gross FDI equity inflows to
India witnessed significant moderation.
• Gross equity FDI flows to India
moderated to US$ 20.3 billion during
2010-11 from US$ 27.1 billion in the
preceding year.
CONTINUED…

11. SECTORS ATTRACTING
HIGHEST FDI EQUITY
INFLOWS IN INDIA

12. • This shows the favourite and leading
sectors for FDI in India. According to
FDI report Service sector is the
favourite sector with highest FDI inflow
20%.
• After service sector Telecommunication
and Computer hardware & software is
the next favourite sector with 8% and
7%.
• There is a good future prospect for
investors in other sectors also like

13. FDI EQUITY
INFLOWS IN INDIA

14. • This graph shows that service sector
has the highest FDI inflow attracting
20% share.
• Other sectors have less FDI inflow in
India. Telecommunication, computer
software attracts only 7% FDI.