FDI INFLOWS IN INDIA

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INTRODUCTION

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INTRODUCTION
The Multinational companies play a vital role in the changes of economic condition in a
country. The role, importance, impact and their investment strategies in foreign direct investment
in India (FDI) have played a vital role in the economic development of India. The foreign direct
investment in started in 1990s in India as it plays an important role in the development and
globalization process. The FDI has helped in the growth of economy by its investment strategies,
the investments made in the emerging markets like telecommunication, transportation, automobile
industry, manufacturing industries and other major industries have brought enormous changes in
the economy.
The investment strategies used by the investors not helped the growth in the economy but also
have an impact on the positive growth in the relative sectors and other sectors like the living
standards have increased and the increase in the living conditions have give a life blood for the
growth of saving which ultimately turned in to another form of invest source whereby we can find
the changes in the growth of the overall markets in all the sectors like food to manufacturing etc.
There is a cyclic development in the economy of India as the recent world wide recession has no
much effect on the economy in India. The emerging markets in India have provided the oxygen
for the existence of positive growth in the markets.
The investment strategies in India have a very interesting progress as the investment was on a
wide spread into different sectors and in to different industries and could gain a good amount of
attraction in each and every sector. The growth in textile industries, pharmacy industries
automobile industries communication industries and other industries has attracted the FDI at
positive level from its start. Apart from all these the role of government plays a vital role in
pooling the FDI and as India is the world’s largest democratic country with open markets and
with governing the markets in well structured rules it has placed a base platform for the investors
to find a safe place to invest without any much restrictions. The intellectual knowledge and well
known English language and the human resource and cost efficiency have shown a good result for
the FDI’s to find the best opportunity to invest and reach their expectations.

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Foreign companies can benefit from investing in India and avail unique advantages such as
reduced costs of labour, tax exemptions, etc., through automatic and government foreign
direct investment routes. This article explains the meaning of FDI and investment routes.
When it comes to growing your wealth through market investments, the opportunities are
innumerable. You can invest in stocks, mutual funds, government bonds and securities,
commodities, currencies are several other assets. However, you need to assess your risk
appetite before investing and ensure that you diversify your investments. You can invest in
companies in India and abroad. The same is possible for people living abroad and hoping to
invest in India. This article explains one such investment opportunity, i.e. foreign direct
investment in India, in detail.
Foreign direct investment – meaning and explanation
A foreign direct investment, often abbreviated as FDI, is simply an investment made by a
company or an individual in one country into a business or company located in a foreign
land. FDIs typically occur when either international business operations are established in
another country or when an international company acquires a business in an offshore
company.
When an FDI transaction takes place, the investing company mostly takes controlling
ownership in the offshore business or company in which the investment is made. The
investing company is directly involved in the day-to-day operations of the business in a
foreign company. FDI brings with it, money along with knowledge, skills and technology. It
is common in open economies having a skilled workforce as well as a growth prospect.

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FDI in India – The routes for investments
Having defined foreign direct investment, let’s understand its role and investment routes in
India.
FDI is considered as a significant source of investment that aids India’s economic
development. India started witnessing economic liberalisation in the wake of the economic
crisis of 1991, after which FDI increased steadily in the country.
Routes through which FDI occurs in India
There are two common routes through which India gets Foreign Direct Investments.
1. The automatic route
The automatic route is when an Indian company or Non-Resident does not need any prior
permission from the RBI or the Indian government for foreign investment in India. Several
sectors come under the 100 per cent automatic route category. The most common ones
include industries such as agriculture and animal husbandry, airports, air-transport services,
automobiles, construction companies, food processing, jewellery, health care, infrastructure,
electronic systems, hospitality, tourism, etc. There are also a few sectors in which 100 per
cent automatic route foreign investments are not permitted. These include insurance, medical
devices, pension, power exchanges, petroleum refining, and security market infrastructure
companies.
2. The government route
The second route through which FDIs occur in India is through the government route. If
FDI occurs through the government route, the company intending to invest in India must
seek prior government approval mandatorily. Such companies are required to fill and submit
an application form through the Foreign Investment Facilitation portal, which enables them
to obtain single-window clearance. The portal then forwards the foreign company’s
application to the respective ministry that holds the discretion to approve or reject the
application. The ministry consults the Department for Promotion of Industry and Internal

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Trade or DPIIT before accepting or rejecting the foreign investment application. Once
approved, the DPIIT issues the Standard Operating procedure as per the existing FDI policy,
paving the path for foreign direct investment in India.
Like the automatic route, the government route also permits up to 100 per cent FDI. Here is a
sector and per cent wise break-up as permitted under the government route
FDI Sector FDI Per Cent In India
Public Sector Banks 20 Per Cent
Broadcasting Content Services 49 Per Cent
Multi-Brand Retail Trading 51 Per Cent
Print Media 26 Per Cent
Apart from the sectors mentioned above, 100 per cent FDIs can also occur through
government sectors such as core investment companies, food products, retail trading, mining,
and satellite establishments and operations.
Sectors in which FDI is prohibited in India
While foreign direct investments are permitted through several sectors, as mentioned above,
there are specific sectors and industries wherein FDI is strictly prohibited, irrespective of the
automatic or government route. These include:
1. Atomic Energy Generation
2. Gambling, betting businesses and lotteries
3. Chit fund investments
4. Agricultural and plantation activities (excluding fisheries, horticulture and pisciculture, tea
plantations, and animal husbandry)
5. Real estate and housing (excluding townships and commercial projects)
6. TDR trading

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7. Products manufactured by the tobacco industry such as cigarettes and cigars
Final note:
Foreign direct investments prove beneficial to both, the foreign company investing in India
as well as to the country in which the investment is made. For the investing country, FDI
translates to reduced costs whereas the country enabling the FDI can develop human
resources, skills and technologies. Common FDI examples include mergers and acquisitions,
logistics, retail services and manufacturing. If you need information on foreign investment
opportunities in India, you can reach out to an Angel One Investment advisor.

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NEED OF THE STUDY
It is commonly known that capital flows in developing economies like India have risen sharply
and has, therefore become a self propelling and dynamic factor in the accelerated growth of
economies. The impassioned advocacy of increased FDI flows is based on the well worn
arguments that FDI is a rich source of technology and knowhow; it can stimulate the labor
oriented export industries of India, promote technological change in the industries and put India
on a higher growth path. The excitement of FDI needs to be based on analytical review of India’s
needs, requirements and potential to participate in huge investment flows.
The practical literature on the relationship between FDI and development is mixed. Despite a
number of studies and seeming contradictions, two consistent issues that repeatedly arise are:
What are the motivations for FDI flows into India?
What are the economic and social implications of FDI flows in India?
A detailed study of FDI in India requires an examination of the determinants and the impact of
FDI on Indian Economy. Studying FDI flows will help to assess the nature and the true extent to
which the Indian Economy has globalised.
The study takes a closer look at the structure of Foreign Direct Investments into India. It traces
the development of India’s economic policy regarding FDI and the resulting changes. The
expansion of FDI in India has been followed by a rapid economic growth and an increasing
openness to the rest of the world. It is equally important to understand why India has become one
of the important beneficiaries of FDI in the world and what drives the more recent progress of
India towards FDI.

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OBJECTIVES OF THE STUDY
Keeping in view the importance of FDI in the development of economies and the dynamic
nature of the topic, the present study focuses on the following objectives.
The primary objective of this study is to review why India has been a preferred destination for
FDI and study the impact of FDI on the Indian economy.
The sub objectives of the study are
 To review the major reasons for attracting FDI;s
 To analyze the investment strategies in selecting the right investment projects;
 To study if the FDI investments have contributed to the positive growth in the standard
of living;
 To study the impact of FDI investments on the culture of the country.
RESEARCH METHODOLOGY
Research Methodology is the procedure of collecting, analyzing and interpreting the data to
diagnose the problem and react to the opportunity in such a way where the costs can be
minimized and the desired level of accuracy can be achieved to arrive at a particular
conclusion.
Data is collected through secondary sources like research reports and websites. The required
data have been collected from various sources i.e. World Investment Reports, Asian
Development Bank’s Reports, various Bulletins of Reserve Bank of India, publications from
Ministry of Commerce, Govt. of India, Economic and Social Survey of Asia and the Pacific,
United Nations, Asian Development Outlook, Country Reports on Economic Policy and Trade
Practice- Bureau of Economic and Business Affairs, U.S. Department of State and from
websites of World Bank, IMF, WTO, RBI, UNCTAD, EXIM Bank etc. Primary data cannot be
taken because of limited resources and the study being carried out from UK..

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TOOLS AND TECHNIQUES:
1. Trend analysis
2. Ratio analysis
DATA-PERIOD OF THE STUDY:
Data for the period of 3 years has been taken for the study i.e starting from 2018 – 2021.
LIMITATIONS OF THE STUDY
 The study focuses on FDI in India only.
 There are many determinants which determine the FDI in India. All the aspects
may not be covered in detail in the limited time given.
 FDI policies are dynamic nature in nature and subject to change very often.
 The study is based on secondary research where the data may not be authentic in
all the cases.
Primary Research is not carried out during the project, which is a major drawback

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REVIEW OF LITERATURE

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Nayak D.N (2006) in his paper “Canadian Foreign Direct Investment in India:
Some Observations”, analyze the patterns and trends of Canadian FDI in India. He finds
out that India does not figure very much in the investment plans of Canadian firms. The
reasons for the same is the indifferent attitude of Canadians towards India and lack of
information of investment opportunities in India are the important contributing factor for
such an unhealthy trends in economic relation between India and Canada. He suggested
some measures such as publishing of regular documents like newsletter that would
highlight opportunities in India and a detailed focus on India’s area of strength so that
Canadian firms could come forward and discuss their areas of expertise would got long
way in enhancing Canadian FDI in India.
Naga Raj R (2005) in his article “Foreign Direct Investment in India in the 1990s:
Trends and Issues” discusses the trends in FDI in India in the 1990s and compare them
with China. The study raises some issues on the effects of the recent investments on the
domestic economy. Based on the analytical discussion and comparative experience, the
study concludes by suggesting a realistic foreign investment policy.
Morris Sebastian (1999) in his study “Foreign Direct Investment from India: 1964-
83” studied the features of Indian FDI and the nature and mode of control exercised by
Indians and firms abroad, the causal factors that underlie Indian FDI and their specific
strengths and weaknesses using data from government files. To this effect, 14 case studies
of firms in the textiles, paper, light machinery, consumer durables and oil industry in
Kenya and South East Asia are presented. This study concludes that the indigenous private
corporate sector is the major source of investments. The current regime of tariff and
narrow export policy are other reasons that have motivated market seeking FDI.
Resources seeking FDI has started to constitute a substantial portion of FDI from India.
Neither the “advantage concept” of Kindlebrger, nor the concept of large oligopolies
trying to retain their technological and monopoly power internationally of Hymer and

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Vaitsos are relevant in understanding Indian FDI, and hence are not truly general forces
that underlie FDI. The only truly general force is the inexorable push of capital to seek
markets, whether through exports or when conditions at home put a brake on accumulation
and condition abroad permit its continuation.
Kulwinder Singh38 (2007) in his study “Foreign Direct Investment in India: A
Critical analysis of FDI from 1991-2007” explores the uneven beginnings of FDI, in India
and examines the developments (economic and political) relating to the trends in two
sectors: industry and infrastructure. The study concludes that the impact of the reforms in
India on the policy environment for FDI presents a mixed picture. The industrial reforms
have gone far, though they need to be supplemented by more infrastructure reforms, which
are a critical missing link.
Nirupam Bajpai and Jeffrey D. Sachs (2008) in their paper “Foreign Direct
Investment in India: Issues and Problems”, attempted to identify the issues and
problems associated with India’s current FDI regimes, and more importantly the other
associated factors responsible for India’s unattractiveness as an investment location.
Despite India offering a large domestic market, rule of law, low labour costs, and a well
working democracy, her performance in attracting FDI flows have been far from
satisfactory. The conclusion of the study is that a restricted FDI regime, high import
tariffs, exit barriers for firms, stringent labor laws, poor quality infrastructure, centralized
decision making processes, and a very limited scale of export processing zones make India
an unattractive investment location.
Chandan Chakraborty, Peter Nunnenkamp (2006) in their study “Economic
Reforms, FDI and its Economic Effects in India” assess the growth implications of FDI
in India by subjecting industry – specific FDI and output data to Granger causality tests
within a panel co -integration framework. It turns out that the growth effects of FDI vary
widely across sectors. FDI stocks and output are mutually reinforcing in the manufacturing
sector. In sharp contrast, any causal relationship is absent in the primary sector. Most

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strikingly, the study finds only transitory effects of FDI on output in the service sector,
which attracted the bulk of FDI in the post – reform era. These differences in the FDI –
Growth relationship suggest that FDI is unlikely to work wonders in India if only
remaining regulations were relaxed and still more industries opened up o FDI.
To sum up, it can be said that large domestic market, cheap labour, human capital, are the
main determinants of FDI inflows to India, however, its stringent labour laws, poor quality
infrastructure, centralize decision making processes, and a vary limited numbers of SEZs
make India an unattractive investment location.
Bhattacharyya Jita, Bhattacharyya Mousumi (2012), “Impact of Foreign Direct
Investment and Merchandise and Services Trade of the Economic growth in India:
an Empirical study” The study revealed that there was a long term relationship between
FDI, merchandise, service trade and economic growth of India. Bi-directional causality is
observed between merchandise trade and economic growth, services trade and economic
growth. Unidirectional causality is observed from FDI to economic growth and FDI to
merchandise trade. A unidirectional causality is also observed from merchandise trade to
services trade.
Abdul A., Morris R. (2011), “Ease of doing business and FDI inflow to Sub-Saharan
Africa and Asian countries” The study found that two factors, “registering property”
and “trading across borders”, were found to be related to FDI over all six years of the
study (2000-2005) for the combined sample. Also, several factors were found to be related
to FDI received by SSA and Asian countries during various years.
Singh S., Singh M. (2011), “Trends and prospects of FDI in India” This study
investigates the trend of FDI inflow to India, during 1970–2007 using time series data.
This paper aims to study the reasons behind the fluctuations of the FDI inflow in India and
to search the cause that is responsible for the fluctuations of the trends of FDI.

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Singh Y., Bhatnagar A. (2011), “FDI in India and China; A comparative analysis”
The study found that both enjoys healthy rates of economic growth but FDI inflow in
china is higher than India.
Agarwal G., Khan M. A. (2011), “Impact of FDI on GDP: A Comparative Study of
China and India”, The study found that 1% increase in FDI would result in
0.07%increase in GDP of China and 0.02% increase in GDP of India. We also found that
China‟s growth is more affected by FDI, than India‟s growth.
Saini A., Law S. H., Ahmad A. H. (2010), “FDI and economic growth: New evidence
on the role of financial markets”, it was proved that the positive impact of FDI on growth
“kicks in” only after financial market development exceeds a threshold level. Until then,
the benefit of FDI is non-existent.
Gubbi S. R., Aulak P. S., Ray S., Sarkar M. B., Chittoor R. (2010), “Do international
acquisitions by emerging-economy firms create shareholder value? The case of Indian
firms” found that the international acquisitions facilitate internalization of tangible and
intangible resources that are both difficult to trade through market transactions and take
time to develop internally, thus constituting an important strategic lever of value creation
for emerging-economy firms. An event study of 425 cross-border acquisitions by Indian
firms during 2000–2007 supports our predictions.
Singh J. (2010), “Economic Reforms and Foreign Direct Investment in India: Policy,
Trends and Patterns”, in the context of increasing competition among nations and sub
national entities to attract Foreign Direct Investment (FDI), the present paper tries to
analyze the emerging trends and patterns of FDI inflows into India in response to various
policy measures announced by the Government of India since mid-1980 and later. The
empirical analysis tends to suggest that the FDI inflows, in general, show an increasing
trend during the post-reform period. Furthermore, country-wise comparison of FDI inflow

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also indicates that FDI inflow into India has increased considerably in comparison to other
developing economies in the recent years. Thus, the study indicates that the FDI inflows
into India responded positively to the liberalization measures introduced in the early
1990s.
Chee Y. L., Nair M. (2010), “The Impact of FDI and Financial Sector Development
on Economic Growth: Empirical Evidence from Asia and Oceania
The empirical analysis showed that financial sector development enhances the contribution
of FDI on economic growth in the region. It also showed that the complementary role of
FDI and financial sector development on economic growth is most important for least
developed economies in the region. Key strategies to enhance the role of FDI and financial
development on economic growth in developing and least developed Asia and Oceania
countries are also discussed in the paper.
Sarkar S., Lai Y. C. (2010), “Foreign Direct Investment, Spillovers and Output
Dispersion - The Case of India” Data suggest that foreign investment affects the firms‟
output positively and significantly and domestic firms are less productive in sectors with
more foreign investment compared to those firms in sectors with relatively small foreign
direct investment is present.
John W. (2010), “China's FDI and non-FDI economies and the sustainability of
future high Chinese growth” This study found that foreign Invested Enterprises (FIEs),
enterprises account for over 50% of China's exports and 60% of China's imports. Their
share in Chinese GDP has been over 20% in the last two years, but they employ only 3%
of the workforce, since their average labor productivity exceeds that of Non-FIEs by
around 9:1. Their production is more heavily for export rather than the domestic market
because FIEs provide access to both distribution systems abroad and product design for
export markets. China's FIEs may have contributed over 40% of China's economic growth
in 2003 and 2004, and without this inward FDI, China's overall GDP growth rate could
have been around 3.4 percentage points lower

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Kumar G. L., Karthika S. (2010) “Sect oral Performance Through Inflows of Foreign
Direct Investment (FDI)”, The study revealed that Foreign Direct Investment has a major
role to play in the economic development of the host country. Most of the countries have
been making use of foreign investment and foreign technology to accelerate the place of
their economic growth. Over the years, foreign direct investment has helped the economies
of the host countries to obtain a launching pad from where they can make further
improvements. Any forms of foreign direct investment pumps in a lot of capital
knowledge and technological resources into the economy of the country. This helps in
taking the particular host economy ahead. FDI ensures a huge amount of domestic capital,
production level and employment opportunities in the developing countries, which a major
step towards the economic growth of the country. Using a process framework this paper
examines Foreign Direct Investment inflow into to India and share of top ten investing
countries flow into India.
Singh, Shikha (2009), “Foreign Direct Investment (FDI) and Growth of States of
India”
This study stated that foreign direct investment (FDI) policies play a major role in the
economic growth of developing countries around the world. Attracting FDI inflows with
conductive policies has therefore become a key battleground in the emerging markets. The
prospect of new growth opportunities and outsized profits encourages large capital inflows
across a range of industry and opportunity types. And this has led to competition among
the states in formulating flexible policies and providing incentives to woo private investors
to invest more and more. In the light of the above the paper highlights the trend of FDI in
India after the economic reforms, sector-wise and country-wise share of FDI, the manner
in which FDI has effected the growth of Indian states. Various factors which play a
significant role in attracting FDI into a particular state are also examined. Efforts made by
the state governments in order to attract maximum FDI are also studied.

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Banga, Rashmi (2009), “Impact of Government Policies and Investment Agreements
on FDI Inflows” Revealed that the impact of fiscal incentives offered, removal of
restrictions and signing of bilateral and regional investment agreements with developed
and developing countries on FDI inflows. Fiscal incentives do not have any significant
impact on aggregate FDI, but removal of restrictions attracts aggregate FDI. However,
FDI from developed and developing countries are attracted to different selective policies.
Acharyya J. (2009), “FDI, GROWTH AND THE ENVIRONMENT: EVIDENCE
FROM INDIA ON CO2 EMISSION DURING THE LAST TWO DECADES” Shown
that long run positive, but marginal, impact of FDI inflow on GDP growth in India during
1980-2003. On the other hand, the long run growth impact of FDI inflow on CO2
emissions is quite large. The actual impact on the environment, however, may be larger
because CO2 emission is one of the many pollutants generated by economic activities.
Syed Zia A. R., (2009), “The Impact of Foreign Direct Investment on Employment
Opportunities: Panel Data Analysis: Empirical Evidence from Pakistan, India and
China” It was found that there is along term relationship between FDI and employment
opportunities.
Keshava, Dr. S.R. Rathnamma (2008), The Effect of FDI on India and Chinese
Economy: A Comparative Analysis:
Stated that India and China are the two emerging economic giants of the developing
world, both situated in Asia with 37% of world population (Asian Development
Outlook2005) and with more than 9% growth in their respective GDP of their economies
(World Development Report 2006). China got independence in 1949, after 2 years of
India's political Independence (1947), but today, China has surged far ahead of India in
socio-economic development indicators. The FDI in India is just 3.4% of FDI flows as a
percentage of Gross Fixed Capital Formation in India by 2004 and 5.9% of FDI stocks as a
percentage of GDP by 2004, whereas in China it was 8.2% of FDI flows as a percentage of
Gross Fixed Capital Formation and 34.9% of FDI stocks as a percentage of GDP during

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the same year. In order to estimate the effect of FDI on economic growth the model
formed is Y = A X1 a X2 b X3 y X4 x. The 't' ratio for the constant (a), GDI(x1), HC (x3),
LF (x4) all are greater than two implying the strong significance of these variables on the
GDP, but FDI is showing positive, but not relatively significant effect on GDP. The R2 for
the model as a whole is 0.93, the F value is significantly high revealing the significance of
the fitness of the model. The D-W Statistics for the model is 1.825 revealing, the problem
of auto-correlation has been fairly solved. The model shows that 1 percent increase in GDI
leads to increase in GDP by all most 0.5 percent. The 1% increase in FDI brings about an
increase in GDP by 0.12 percent. The coefficient for human capital is 0.34 percent and that
of the labour force is 0.7 percent. Thus GDI and HC significantly affect the GDP.
However the coefficient of FDI though not significant as other variables in the study, is
positive.
Kumar N. (2007), “Emerging TNCs: trends, patterns and determinants of outward
FDI by Indian enterprises”
Investigated that the sharp rise in OFDI since 1991 has been accompanied by a shift in the
geographical and sectoral focus of Indian investments. Enterprises that are already
engaged in exporting are more likely to be outward investors. Finally, policy liberalization
of the 1990s has encouraged Indian enterprises to venture abroad.
Banga R. (2006), “The export-diversifying impact of Japanese and US foreign direct
investments in the Indian manufacturing sector”
The paper highlighted the export-diversifying impact of foreign direct investment (FDI) in
a developing country. FDI may lead to export diversification in the host country if it
positively affects the export intensity of industries that have a low share in world exports.
Indirectly, FDI may encourage export diversification through spillover effects: that is, the
presence of FDI in an industry may increase the export intensity of domestic firms. The
empirical results for the Indian economy in the post-liberalisation period show that FDI
from the US has led to diversification of India's exports, both directly and indirectly.

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However, Japanese FDI has had no significant impact on India's exports.
Kamalakanthan, Abby and Laurenceson, James (2005) How Important is Foreign
Capital to Income Growth in China and India?
The picture often painted is that foreign capital inflows in China and India are
prominently linked to rapid growth at the national level, and contribute to widening
income disparities at the provincial/state level. In this paper we revisit Krugman's (1993)
contention that foreign capital can hardly be considered an important income growth
driver, when in most developing countries it only accounts for a fractional share of gross
capital formation. In the case of contemporary China and India, the data suggests that
Krugman's critique holds largely true, even in the coastal regions that are considered
magnets for foreign investment. Thus, domestic factors, rather than the driving forces of
globalization, appear to be the more important determinants of income growth in both
countries.
Pradhan, Prakash J., Abraham, Vinoj and Sahoo, Kumar M. (2004), “Foreign Direct
Investment and Labour:
The Case of Indian Manufacturing” shown that This paper makes an attempt to evaluate
the employment and wage effects of FDI in Indian manufacturing. The findings suggest
that foreign firms do not have any adverse effects on the manufacturing employment in
India as compared to their domestic counterparts while they significantly pay relatively
higher to their workers. Therefore this study tends to imply that labour in fact had
benefited from foreign investment in India.
Srivastava S. (2004), “Competing for Global FDI: Opportunities and Challenges for
the Indian Economy”
Investigated that impact on FDI inflows to India as a result of increasing competition from
another major emerging market economy, i.e., China, in the wake of its accession to the

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WTO Blomstorm M., Koko A. (2003), “The Economics of Foreign Direct Investment
Incentives”
stated that the use of investment incentives focusing exclusively on foreign firms,
although motivated in some cases from a theoretical point of view, is generally not an
efficient way to raise national welfare. The main reason is that the strongest theoretical
motive for financial subsidies to inward FDI spillovers of foreign technology and skills to
local industry is not an automatic consequence of foreign investment. Blomstorm M.,
Koko A. (2003), “Human Capital and Inward FDI”
The study was conducted to examine the nature of skills provided by FDI, and ways in
which training institutions, business schools, for example, can complement in-service
training by firms in FDI host countries.
Bhaumik S. K. (2003), “Survey of FDI in India”,
This research project explores the relation between institutions in emerging markets and
the entry strategies chosen by foreign direct investors. The merits of alternative strategies
from investors‟ perspective as well as the impact on the host economy are investigated.
For this purpose, FDI strategies are investigated and compared in four important emerging
markets India, Egypt, South Africa and Vietnam.
Kathuria V. (2002), “Liberalisation, FDI
And productivity spillovers—an analysis of Indian manufacturing firms” The results
shown that after liberalisation, the productivity of Indian industry, especially the foreign
owned firms, has improved. The econometric results suggested that only „scientific‟
non‐FDI firms have benefited from the liberalisation. For the „non‐scientific‟ firms, the
impact is found to be productivity depressing. With respect to spillovers, only those
domestic firms, which invested in R&D to decode the spilled knowledge, could benefit.

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Chakraborty C. (2002), “Foreign direct investment and growth in India: a
cointegration approach”
VECM model revealed three important features: (a) GDP in India is not Granger caused
by FDI; the causality runs more from GDP to FDI; (b) trade liberalization policy of the
Indian government had some positive short run impact on the FDI flow; and (c) FDI tends
to lower the unit labour cost suggesting that FDI in India is labour displacing.
M.M. Metwally, (2004) "Impact of EU FDI on economic growth in Middle Eastern
countries",
Developed the simultaneous equations model which suggested that higher rates of
economic growth result in a greater inflow of foreign capital. The regression results also
suggest that interest rate differentials exert a much stronger effect than economic growth
on the attraction of foreign capital in the case of Egypt. However, this variable does not
seem to play a significant role in the case of Oman. Moreover, the simultaneous equations
model results suggest that there is a feedback effect in the relationship between economic
growth and capital inflow in all sample countries. A greater inflow of foreign capital leads
to growth in the exports of good and services. The expansion in exports leads to growth in
gross national product that, in turn, encourages the attraction of more foreign capital.
Pradhan J. P. (2004), “The determinants of outward foreign direct investment: a
firm‐level analysis of Indian manufacturing”,
found that several firm‐specific characteristics such as age, size, R&D intensity, skill
intensity and export orientation are observed to be important explanatory factors in the
outward foreign direct investment (O‐FDI) activity of Indian firms. The impact of age and
size on O‐FDI has been observed to be non‐linear. The product differentiation activities
and the productivity of firms are other useful factors in overseas production expansion in
certain industries. The study reveals that the performance of these firm‐specific variables
is subject to sectoral dynamics. Internationalization of production activities of Indian firms
has been observed to be partly fuelled by policy liberalization during the 1990s.

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Pradhan, Prakash J. (2003), “Rise of service sector outward foreign direct investment
from Indian economy: trends, patterns, and determinants” reviewed the recent trends and
patterns and tries to identify determinants of such investment. As compared to the eighties,
the character of service sector OFDI flows has gone through several transformations. In
the seventies it is largely a phenomenon led by firms from hotels & restaurants, finance
and marketing segments and is being directed at developing regions in overwhelming
cases and is mostly minority owned. In contrast, during nineties it is predominantly led by
the software segment of the service sector, locationally developed country oriented and is
largely majority-owned ventures.
Chipalkatti N., Rishi M. (2001), “External Debt and Capital Flight in the Indian
Economy” This paper estimates Indian capital flight at US $88 billion (in 1997 dollars)
over the 1971‐97 period, a sum that is roughly 20% of the US $448 billion real external
debt disbursed to the country over the same time period. There is also evidence of a strong
year-to-year correlation between debt inflows and flight-capital outflowsSharma K.
(2000), “EXPORT GROWTH IN INDIA: HAS FDI PLAYED A ROLE?” Export supply
is positively related to the domestic relative price of exports and higher domestic demand
reduces export supply. Foreign investment appears to have statistically no significant
impact on export performance although the coefficient of FDI has a positive sign. Frank
B., John B. (1997), “FDI AND TRADE: THE IRISH HOST-COUNTRY
EXPERIENCE”, this study was conducted in Irish manufacturing, the foreign sector
accounts for about one half of employment and some 60% of gross output. The Irish
experience therefore provides us with a textbook case study of the effects on an EU host
economy of export-oriented FDI. We explore in this paper the structural changes induced
by FDI and the effects of FDI on the determinants of growth in Ireland. We also consider
some possible adverse effects that may be associated with such strong reliance on
multinational investment.

23. 23
Ganesh S. (1997), “Who Is Afraid of Foreign Firms? Current Trends in FDI in
India” examined that paper examines whether foreign direct investment (FDI) is assuming
a dimension which can threaten Indian industry. Data on FDI approvals in the post
liberalisation period have been compared with data on capital formation by local industry
during the same period. From an analysis of the current level of dominance by foreign
firms, the likely impact of fresh FDI has been analysed and assessed at the sectoral level.
The findings are likely to have relevance at least over the next five years. While the thrust
of the paper is on whether there is a basis for the fear that foreign firms will gradually
wipe out indigenous industry, some other issues related to FDI are also examined. These
include trends in technical collaboration approvals (compared with FDI), sectoral levels of
exports and trade balance and dividend outgo (compared with know-how and royalty
payments).
Chen C. (1997), “The Location Determinants of Foreign Direct Investment in
Developing Countries”The study shows that countries with larger market size, faster
economic growth, higher per capita income, a higher level of FDI stock and more
liberalised trade policies represented by a higher degree of openness attracted relatively
more FDI inflows, while higher efficiency wages and greater remoteness from the rest of
the world deterred FDI inflows. The study also found that China's relative performance in
attracting FDI inflow was only at a level moderately above average both among the
developing countries and among the East and South-East Asian countries.
Nanad J., Delios A. (1996), “Competing globally: How Japanese MNCs have matched
goals and strategies in India and China” stated that Japanese MNCs have established
strong investment positions in the US, Europe and Asia. China has been a major recipient
of Japanese foreign direct investment (FDI), while investment in India has grown much
more slowly.
Kumar N. (1995), “Changing Character of Foreign Direct Investment From
Developing Countries: Case Studies from Asia” highlighted another aspect of growing
internationalisation of the world economy in the recent period viz., an increasing resort by

24. 24
developing country enterprises to direct investments abroad as a strategic tool for
strengthening their competitiveness. The threat of losing markets in industrialised
countries because of rising protectionism in the wake of formation of regional trading
blocks has been responded to by making trade supporting and strategic asset seeking
investments in major markets. The trend of shifting labour intensive production by newly
industrialising economies to low wage developing countries helps the developing host
countries to expand their manufactured exports.
Research Gap:-
The majority of the research conducted in these area are covering a period prior to 2007
and as we are all aware that FDI has received importance only in the recent past & hence
calls for research for the current period i.e: 2000 -2010. FDI effect could not be gauzed in
the past as the flows were limited but in the recent period they have shown a great
increase.
Further Saini A., Law S. H., Ahmad A. H. (2010), “FDI and economic growth:
New evidence on the role of financial markets”, it was proved that the positive impact
of FDI on growth “kicks in” only after financial market development exceeds a threshold
level. Until then, the benefit of FDI is non-existent. There have been studies in the past on
sectoral inflows but they do not conduct study on impact on sectors share in GDP & hence
called for research on the same. Further the role of government has always been changing
new suggestions have always emerged to increase the FDI flows in India and hence calls
for research. The researcher has undertaken a comparative study of BRICS nations as a
group with each nation which is not done so far.

25. 25
COMPANY PROFILE

26. 26
ANGEL BROKING LTD
Angel Booking’s tryst with excellence in customer relations began more than 20 years
ago. Angel Group has emerged as one of the top 10 retail broking houses in India and
incorporated in 1987. Today, Angel has emerged as a premium Indian stock-broking and
wealth management house, with an absolute focus on retail business and a commitment to
provide "Real Value for Money" to all its clients.
It has memberships on BSE, NSE and the leading commodity exchanges in India NCDEX
& MCX. Angel is also registered as a depository participant with CDSL.
ANGEL GROUP COMPANIES
Angel Broking Ltd.
Member on the BSE and Depository Participant
with CDSL
Angel Capital & Debt Market
Ltd.
Membership on the NSE Cash and Futures &
Options Segment
Angel Commodities Broking
Ltd.
Member on the NCDEX & MCX
Angel Securities Ltd. Member on the BSE
 Incorporated :1987
 BSE Membership :1997
 NSE membership :1998
 Member of NCDEX and MCX
 Depository Participants with CDSL

27. 27
ANGEL’S PRESENCE
 Nation- wide network of 21 regional hubs
 Presence 124 cities
 6800 + sub brokers & business associates
 5.9 lakh +clients
MANAGEMENT
S.No Name Designation & Department
1. Mr. Dinesh Thakkar Founder Chairman & Managing Director
2. Mr. Lalit Thakkar Managing Director - Institutional broking
3. Mr. Amit Majumdar Chief Strategy Officer
4. Mr. Sachinn Joshi Executive Director & CFO
5. Mr. Vinay Agrawal Executive Director – Equity Broking
6. Mr. Nikhil Daxini Executive Director - Sales and Marketing
7 Mr. Santanu Syam Executive Director – Operations
8. Mr. Ketan Shah
Associate Director – Information Technology
and B2B Business
9. Mr. Naveen Mathur Associate Director – Commodities & Currencies

28. 28
MILESTONES
 October, 2020 Angel Broking bagged the Dun & Bradstreet Equity Broking
Awards 2020 for 'Best Retail Broking House' and 'Fastest Growing Equity Broking
House' (Large Firms) at Dun & Bradstreet Equity Broking Awards 2020.
 March, 2019 Angel Broking was awarded with 'Best in Contribution Investor
Education & Category Enhancement of the year' and 'Best Commodity Research of the
year'.
 November, 2018 Angel Broking bags the coveted ‘Major Volume Driver’
Award by BSE for 2018-19
 October, 2017 Angel Broking bags the coveted ‘Major Volume Driver’ Award by
BSE for 2017-18
 May, 2016 Angel Broking wins two prestigious awards for 'Broking House
with Largest Distribution Network' and 'Best Retail Broking House' at Dun &
Bradstreet Equity Broking Awards
 August, 2012 Crossed 500000 trading accounts
● November, 2011 ‘Major Volume Driver’ for 2009
● December, 2010 Created 2500 business associates
● October, 2008 ‘Major Volume Driver’ award for 2008
● September, 2008 Launched Mutual Fund and IPO business
● July, 2008 Launched the PMS function
● October, 2007 ‘Major Volume Driver’ award for 2007
● September, 2006 Launched Online Trading Platform
● April, 2006 Initiated Commodities Broking division
● April, 2005 First published research report
● November, 2004 Angel’s first investor seminar
● March, 2004 Developed web-enabled back office software
● November, 1998 Angel Capital and Debt Market Ltd. Incorporated
● December, 1997 Angel Broking Ltd. Incorporated

29. 29
VISION OF THE COMPANY
To provide best value for money to investors through innovative products, trading /
investment strategies, state-of-the-art technology and personalized service
PHILOSOPHY OF THE COMPANY
Ethical practices & transparency in all our dealings customer interest above our own
always deliver what we promise effective cost management.
Quality Assurance Policy
We are committed to being the leader in providing World Class Product & Services
which exceed the expectations of our customers Achieved by teamwork and a process of
continuous improvement
CRM POLICY
A Customer is the most important visitor on our premises. He is not dependent on us but
we are dependent on him. He is not interruption in our work, but is the Purpose of it. We
are not doing him a favour by serving. He is doing us a favour by giving us an opportunity
to do so

30. 30
OUR ORGANIZATIONAL STRUCTURE
LOGO OF THE COMPANY
CSO (Central
Support
Office)
Regional Office
Branches &
Franchise Branches
Angel Clients
Branches &
Franchise Branches
Business Associates
Angel Clients
Branches &
Franchise Branches
Regional Office Regional Office

31. 31
PRODUCTS OF ANGEL BROKING
● Online Trading
● Commodities
● DP Services
● PMS (Portfolio Management Services)
● Insurance
● IPO Advisory
● Mutual Fund
● Personal loans
● Quality Assurance
E-BROKING
Angle has different products and voila trading on BSC, NSC, F&O, MCX & NCDEX. It
provides four software’s to customers for online trading.
ANGLE INVESTORE
 User-friendly browser for investors
 Easy online trading platform
 Works in proxy and firewall system set up
 Integrated Back office: Access account information – anytime, anywhere
 Streaming quotes
 Refresh static rates when required
 Multiple exchanges on single screen
 Online fund transfer facility

32. 32
ANGEL TRADE
 Browser based for investor
 No installation required
 Advantage of mobility
 Trading as simple as internet surfing
 BSC, NSC, F&O, MCX & NCDEX
ANGEL DIET
 Application based ideal for traders.
 Multiple exchanges on single screen
 Online fund transfer facility
 User friendly & simple navigation
 BSC, NSC, F&O, MCX & NCDEX
ANGEL ANY WHERE
 Application-based platform for day traders
 Intra-day/historical charts with various indicators
 Online fund transfer facility
 BSC, NSC, Cash & Derivatives
INVESTMENT ADVISORY SERVICES
To derive optimum returns from equity as an asset class requires professional guidance
and advice. Professional assistance will always be beneficial in wealth creation.
Investment decisions without expert advice would be like treating ailment without the help
of a doctor.

33. 33
● Expert Advice: Their expert investment advisors are based at various branches across
India to provide assistance in designing and monitoring portfolios.
● Timely Entry & Exit: Their advisors will regularly monitor customers’ investments
and guide customers to book timely profits. They will also guide them in adopting
switching techniques from one stock to another during various market conditions.
● De-Risking Portfolio: A diversified portfolio of stocks is always better than
concentration in a single stock. Based on their research, They diversify the portfolio in
growth oriented sectors and stocks to minimize the risk and optimize the returns.
COMMODITIES
A commodity is a basic good representing a monetary value. Commodities are most often
used as inputs in the production of other goods or services. With the advent of new online
exchange, commodities can now be traded in futures markets. When they are traded on an
exchange, Commodities must also meet specified minimum standards known as basic
grade.
Types of Commodities
● Precious Metals : Gold and Silver
● Base Metals : Copper, Zinc , Steel and Aluminum
● Energy : Crude Oil, Brent Crude and Natural Gas
● Pulses : Chana , Urad and Tur
● Spices : Black Pepper, Jeera, Turmeric , Red Chili
● Others : Guar Complex, Soy Complex, Wheat and Sugar

34. 34
BENEFITS AT ANGEL
● Three different online products tailored for traders & investors.
● Single Screen customized market-watch for MCX / NCDEX with BSE / NSE.
● Streaming Quotes and real time Rates. Intra-day trading calls.
● Research on 25 Agro Commodities, Precious and Base Metals, Energy products
and Polymers.
● An array of daily, weekly and special research reports.
● Active relationship management desk.
● Seminars, workshops and investment camps for investors
DEPOSITARY PARTICIPANT SERVICES
Angel Broking Ltd. is a DP services provider though CDSL. We offer depository services
to create a seamless transaction platform to execute trades through Angel group of
companies and settle these transactions through Angel Depository services.
● Wide branch coverage
● Personalized/attentive services of trained a dedicated staff
● Centralized billing & accounting
● Acceptance & execution of instruction on fax
● Daily statement of transaction & holdings statement on e-mail
● No charges for extra transaction statement & holdings statement
PORTFOLIO MANAGEMENT SERVICES
Successful investing in Capital Markets demands ever more time and expertise.
Investment Management is an art and a science in itself. Portfolio Management Services
(PMS) is one such service that is fast gaining eminence as an investment avenue of choice
for High Net worth Investors (HNI). PMS is a sophisticated investment vehicle that offers
a range of specialized investment strategies to capitalize on opportunities in the market.
The Portfolio Management Service combined with competent fund management,
dedicated research and technology, ensures a rewarding experience for its clients.

35. 35
MUTUAL FUND
To enable clients to diversify their investment in the right direction. Angel Broking has
added another product in its range with mutual funds.
● Access to in-depth research & proper selection from diversified funds based on
your preferred criteria
● Rating and rankings of all mutual funds from our in house expert analysts
● News and alert for your Mutual fund Portfolio and performance tracking with
watch lists
● Current and historical performance of different funds enabling comparisons
BENIFITS
● No risk of loss, wrong transfer, mutilation or theft of share certificates.
● Hassle free automated pay-in of your sell obligations by your clearing members
● Reduced paper work.
● Speedier settlement process. Because of faster transfer and registration of securities
in your account, increased liquidity of your securities.
● Instant disbursement of non-cash benefits like bonus and rights into your account.
● Efficient pledge mechanism.
FUNDAMENTAL SERVICES
The Sunday Weekly Report
This weekly report is ace of all the reports. It offers a comprehensive market overview and
likely trends in the week ahead. It also presents top picks based on an in-depth analysis of
technical and fundamental factors. It gives short term and long-term outlook on these
scripts, their price targets and advice trading strategies. Another unique feature of this
report is that it provides an updated view of about 70 prominent stocks on an ongoing
basis.

36. 36
Stock Analysis
Angel’s stock research has performed very well over the past few years and angel model
portfolio has consistently outperformed the benchmark indices. The fundamentals of select
scripts are thoroughly analyzed and actionable advice is provided along with investment
rationale for each scrip.
Flash News
Key developments and significant news announcement that are likely to have an impact on
market / scripts are flashed live on trading terminals. Flash news keeps the market men
updated on an online basis and helps them to reshuffle their holdings
TECHNICAL SERVICES
Intra-Day Calls
For day trader’s angel provides intraday calls with entry, exit and stop loss levels during
the market hours and our calls are flashed on our terminals. Our analysts continuously
track the calls and provide the recommendations according to the market movements. Past
performance of these calls in terms of profit/loss is also available to our associates to
enable them to judge the success rate.
Posting Trading Calls
Angels “Position Trading Calls” are based on a thorough analysis of the price movements
in selected scripts and provides calls for taking positions with a 10 - 15 days time span
with stop losses and targets. These calls are also flashed on our terminals during market
hours.

37. 37
Derivative Strategies
Our analyst take a view on the NIFTY and selected scripts based on derivatives and
technical tools and devise suitable “Derivative Strategies” , which are flashed on our
terminals and published in our derivative reports.
FUTURE CALLS
A customized product for HNIs to help them trade with leveraged positions wherein
clients are advised on stocks with entry, exit and stop loss levels for short-term benefits.
Over and above this, financial status of the calls is mentioned at all times.

38. 38
INDIA – THE MOST PREFERRED DESTINATION FOR FDI - REVIEW
India is established as one of the top tier world destinations for FDI. In the Asia-Pacific
region, the country consolidated its second top position, besides China, after a lull in 2011
because of financial crisis. To augment, India’s inward investment rule went through a series of
changes since economic reforms were escorted in two decades back. The expectation of the
policy-makers was that an “investor friendly” command will help India establish itself as a
preferred destination of foreign investors. These expectations remained largely unfulfilled
despite the consistent attempts by the policy makers to increase the attractiveness of India by
further changes in policies that included opening up of individual sectors, raising the hitherto
existing caps on foreign holding and improving investment procedures. But after 2007 - 2008,
official statistics started reporting steep increases in FDI inflows. Portfolio investors and round-
tripping investments are the important contributors to India’s reported FDI inflows.
Inward FDIs in the county have been constantly rising since the sharp drop witnessed in 2011,
following the global financial crisis. Foreign investors see huge long-term growth potential in
the country. As much as 75% of global businesses already present in the country are looking to
considerably expand their operations going forward according to the Indian attractive survey by
Ernst & Young. This also confirms that India is undergoing a changeover, both in terms of
investor perception of its market potential, and in reality.
The cumulative amount of FDI inflows into India were US$2, 80,412 million for the period
April 2000 – December 2014, including data of ‘re-invested earnings’ & ‘other capital’ of
equity inflows. These are the estimates on an average basis, based upon data for the previous
two years, published by RBI in Monthly Bulletin. The cumulative amount of Indian FDI
inflows, excluding, amount remitted through RBI’s-NRI Schemes, were US$1, 87,804 million
for the period April 2000 – April 2013.

39. 39
The resource requirement in a developing economy for investment usually exceeds the
availability of resources that could be domestically generated. In India, the Gross Domestic
Investment has historically been short of the Gross Domestic Savings by around 1.2 to 1.3 per
cent of GDP on an annual basis. Countries, therefore, encourage the inflow of capital from
abroad to supplement the domestic savings for a higher investment and a larger increase in
production capacities. Foreign Direct Investment is considered as the most preferred route of
supplementing the domestic savings as it brings along with the investment new management
practices and technologies. Besides enlarging the productive capacity they also contribute to
enhancement of export potential/earning of the country.
The economic liberalization, which was initiated in 1991, therefore, attempted to significantly
liberalize the FDI policy regime. Over the years, India has emerged as a preferred destination
for foreign investment. Besides the sustained GDP growth of economy, which has expanded
market in India, the enabling environment and a transparent open policy regime has
significantly contributed to the emergence of India as a preferred location. India FDI policy
regime operates in a dynamic setting and has been undergoing a process of continuous review
in line with requirement and investors’ perception. As a part of this process, the FDI policy is
being liberalized progressively on an ongoing basis in order to allow FDI in more industries
under the automatic route. In the year 2000, the Government allowed FDI up to 100 per cent
under automatic route for most of the activities and a small negative list was notified where
either the automatic route was not available or there were limits on FDI. Since then, the policy
has been gradually simplified and rationalized and more sectors have been opened up for
foreign investment.
India has been declared one of the most preferred destinations for the FDI inflows. Investment
opportunities in India are plentiful. It becomes evident with the numerous MNC’s not only
trailing their products and services into the Indian markets but also coming forward to set up
their manufacturing units in India. This form of investment strategy is mainly to curb the
expenses and to harness the potentials of the large consumer base and the boosting middle class
income. It provides greater scope for various business investments.

40. 40
With the West business and industry giants, foraying into India with customized products for
the Indian consumer in order to tap the investment opportunities in India. The Government of
India is trying to accommodate and utilize the conducive investment climate of the country by
relaxing and even introducing new policies. The changes in the Indian Government are to
strategies and attract foreign investments into the country especially from the perspective of the
overseas Indians or the non resident Indians (NRI). Various banks are working on providing
investment strategies and investment guidance to the prospective overseas Indians/ investors to
make the most fruitful deals.
With the global market trend on a rise, on back of developing countries robust economic
growth, investing in India has emerged as a trendsetter phenomenon. Business in India is
booming with the high demand – supply curve on a rise. The investment advisors globally are
projecting the potentials of investing in India.
It is important for investors to have some trend analysis of investment scope before they plan
to start or set up a business in India, thus the role of investment advisors to prepare extensive
investment guides to help and direct the trade investments and the scope of foraying into a
particular business in India becomes crucial.
India is today rated as one of the most attractive investment destinations across the globe. The
UNCTAD World Investment Report (WIR) 2012, in its analysis of the global trends and
sustained growth of Foreign Direct Investment (FDI) inflows, has reported India to be the
second most attractive location for FDI for 2012-2014. According to the WIR 2012 report, the
top five most attractive locations for FDI for 2011-11 are China, India, Brazil, United States
and the Russian Federation. For India, to maintain its momentum of GDP growth, it is vital to
ensure that the robustness of its FDI inflow is also maintained.
To add, according to the '9th Annual European Attractiveness Survey conducted by Ernst &
Young, India will rank fifth among the most attractive destinations for European firms within
the next three years, mainly on account of India's perceived specialization as a hub for low cost
outsourcing business. The report said, "Foreign investors are not deterred by current regulatory
issues to invest in India. India's perceived specialization as a low-cost business process
outsourcing hub continues to appeal the investors across the globe."

41. 41
Foreign players are looking forward to expand their footprints in India’s secure business
environment, especially in manufacturing and R&D. In fact, the American company 3M is
aiming to come up with an R&D centre with about 200 scientists in Bangalore. French tire
baron, Michelin is setting up a manufacturing facility in Tamil Nadu. The project is estimated
to be worth US$2.26 billion and the Foreign Investment Promotion Board (FIPB) has already
given approval for it.
The highly attractive sectors for the private equity (PE) investors are the infrastructure
development, education and sustainable development sectors among others. It is evident from
the huge number of projects being taken in the infrastructure sector through the public private
partnership (PPP) mode. It would not be an exaggeration to conclude that the successful
implementation of the numerous infrastructure related projects form a backbone for the various
parts of the country to develop. Thus, substantiating the importance and relevance of detailed
yet crisp investment strategies and guide for the Overseas Indians. Private Equity (PE) and
venture capital (VC) investors are keen on cashing by investing in various sectors in India.
Some of the most preferred sectors for PE/VCs are:
1. Healthcare:
A survey of over 60 PE and VC firms carried by research firm Venture Intelligence has
announced that companies have invested more than US$2 billion in the Indian healthcare and
life sciences sector in the last five years. Diagnostic services, monster beat headphones,
medical devices/equipment, Vibram Five Fingers Classic blue new, hospital chains and
wellness products and services are some of the key areas the investors seem to be quite
interested in.
2. Education:
The investors consider two fundamental things before investing: considerable government
support and increasing privatization of the education sector, according to Private Equity Group,
an advisory firm for PE investment in India. As per a Chennai based deal tracer, Venture
Intelligence, LeBron James 7 Basketball Shoes Think Pink Limited Edition, nearly 30 such
investments worth around US$ 300 million was invested in education-related companies since
2007.

42. 42
3. Beverages:
Ahmet C Bozer, President (Eurasia and Africa), who’s spearheading the Coca-Cola operations
in over 90 countries, seems pretty optimist about India’s growth potential and considers India
as one of the fastest growing markets for Coca-Cola. According Bozer, India’s Beverage
industry will outgrow the world average. In the years to come, the opportunities will be huge
and growth will be in double digits. Coca Cola India is also working in the same direction by
partnering different bottling partners; few of them are local Indian companies. Investments are
also happening, in the areas of Technology, Infrastructure, consumer marketing and
manufacturing capacity. The company is working in coordination with its bottling partners to
harness the growth potential of this country.
Thus the country's higher economic growth rate and acute market potential are seen as major
factors of its perpetual progress and development, and investors are ready to infuse capital in
such economy where higher return is always ensured.
RECENT CHENGES IN FDI POLICY
Significant changes have been made in the FDI policy regime in the recent time to ensure that
India remains increasingly attractive and investor-friendly. In an attempt to simplify the rules
and regulations pertaining to the foreign direct investment policy, the Department of Industrial
Policy and Promotion (DIPP) had issued a consolidated FDI policy on March 31, 2012. The
Circular which became effective from April 1, 2012 consolidated all prior press notes / press
releases / clarifications issued and reflected in a coherent manner the current policy framework
on FDI. To the surprise of many, it was not to be a onetime affair the Government this time had
bigger plans to update the FDI policy bi-annually, by issuing a new circular which would
supersede all prior press notes and circulars. Keeping intact the promise, in this chain the
government of India has recently released the third edition of the Consolidated FDI Policy
Circular on 31 March 2013 which has become effective from April 1, 2013. It is further crucial
to note that it is necessary to comply with any changes notified by the Reserve Bank of India
after the issuance of this Circular. The Indian government has made scores of changes to the
FDI policy to attract more foreign direct investment amidst 25% decline in FDI FY2012-2013.

43. 43
MAIN FEATURES OF THE NEW CONSOLIDATE FDI POLICY CIRCULAR
1. Removal of the condition of prior approval in case of existing joint ventures/ technical
collaborations in the “same field”:
This has been done through deletion of Clause 4.2.2 of the earlier Circular, which
provided that FDI would be subject to the “Existing Venture/ tie-up conditions” as
stated in sub-clauses of Clause 4.2.2 (basically stating that where a non-resident
investor has an existing joint venture/ technology transfer/ trademark agreement, as on
January 12, 2007, new proposals in the same field for investment/technology
transfer/technology collaboration/trademark agreement would have to be under the
Government approval route through FIPB/ Project Approval Board). A discussion
paper had been released by DIPP last year on the need for review of this condition.
Based on stakeholder comments received by the DIPP on its discussion paper, the
Government while releasing the FDI Circular 1 of 2013 has in its press release stated
that it has decided to abolish this condition. The press release further states that “It is
expected that this measure will promote the competitiveness of India as an investment
destination and be instrumental in attracting higher levels of FDI and technology
inflows into the country”.
2. Pricing of convertible instrument – greater flexibility introduced:
This has been done through amendment made in Clause 3.2.1 of the Circular which
earlier provided that “The pricing of the capital instruments should be
decided/determined upfront at the time of issue of the instruments” Now it has been
added that “price / conversion formula” be determined upfront so in effect instead of
having to specify the price of convertible instruments upfront, companies will now
also have the option of prescribing a conversion formula, subject to the condition that
price at the time of conversion should not in any case be lower than the fair value
worked out, at the time of issuance of such instruments, in accordance with the
prevailing valuation norms. This would help the recipient companies in obtaining a
better valuation based upon their performance.

44. 44
3. Liberalization of policy for non-cash capital contributions:
This amendment has been brought about through additions in Clause 3.4.6 of the
Circular. The existing policy FDI provided for conversion of only ECB/lump-sum
fee/Royalty into equity. The Government has now decided to permit issue of equity,
with prior approval from FIPB, in the following cases, subject to stipulated conditions:
(a) Import of capital goods/ machinery/ equipment (including second-hand
machinery)
(b) Pre-operative/ pre-incorporation expenses (including payments of rent etc.)
This measure, which liberalizes conditions for conversion of non-cash items into
equity, is expected to significantly ease the conduct of business.
4. Foreign Institutional Investor Investment:
Clause 3.1.4 (i) of the earlier Circular 2 of 2012 provided as under: “An FII may invest
in the capital of an Indian company either under the FDI Scheme/Policy or the
Portfolio Investment Scheme. 10% individual limit and 24% aggregate limit for FII
investment would still be applicable even when FIIs invest under the FDI
scheme/policy.” It has now been clarified in Clause 3.1.4 (i) that aggregate FII limit of
24% can be increased to sectoral cap/ statutory ceiling by Board of Directors
resolution followed by special resolution in shareholders meeting. While this has
always been clear under the FEMA provisions, the earlier FDI Circulars did not
specifically mention this and now with this amendment the provisions relating to FII
investments are aligned with the FEMA provisions.
5. Hundred% FDI in some area of Farm Sector:
The new FDI Policy allow 100 per cent FDI in development and production of seeds
and planting material, floriculture, horticulture, and cultivation of vegetables and
mushrooms under controlled conditions. Besides, animal husbandry (including of
breeding of dogs), pisci-culture, aquaculture under controlled conditions and services
related to agro and allied sectors have been brought under the 100 per cent FDI norm.
Similarly, the tea sector has also been brought under the 100 per cent FDI norm.

45. 45
The DIPP has imposed certain conditions for companies dealing with development of
transgenic seeds and vegetables wanting to take the 100 per cent FDI route. Under the
100 per cent FDI in tea sector, it demands compulsory divestment of 26 per cent equity
of the company in favor of an Indian partner/Indian public within a period of five years
prior to approval of the State Government concerned in case of any future land use
change.
The new policy will lead to increasing dependency on foreign companies and shut down of
small domestic firms not in a position to sustain competition from established foreign players.
The revised FDI policy does carry the process of liberalization further and would assist in
augmenting FDI into the Country. However, the revised FDI policy has kept at bay
significantly expected changes such as permitting FDI in Limited Liability Partnership, Multi-
Brand Retail Trading and several other subjects on which draft discussion papers were released
earlier for public comments. It is important that these areas are also taken up the Government
for liberalization towards making India one of the most favorable FDI destinations in the
world.

46. 46
IMPACT OF FDI ON INDIAN ECONOMY
The contemporary world has been witnessing an incessant form of economic growth
characterized by the flow of private capital from developed world to the developing countries
in the form of foreign direct investment (FDI). More than ever, in 1990’s, foreign direct
investment (FDI) became the single largest source of external finance for developing nations
and Indian economy too has shown a similar trend in receiving such investment. The
investment scenario of India is one of the exhilarating points for discussion for scholars
interested to capture the events that signify the outcomes of reforms of 1991 in India. India has
had some amount of success in exerting a pull on FDI since the beginning of the post 1991
reform. By 1990 foreign direct investment has become inevitably a key component of national
development strategies for almost all the countries over the Globe and FDI was considered to
be an essential too for jump-starting economic growth through its bolstering of domestic
capital, productivity and employment.
After more than a decade, the first and second-generation reforms have created favorable and
encouraging environment for foreign investment in India. Half of FDI inflows to the
developing world, propelled largely by an increase in registered Greenfield projects, are
accounted by India and China. With the liberalization of the Indian economy, the large Indian
market is being opened to foreign investors and several companies are setting up or have
already set up operations in India and the country’s market oriented policies are boosting this
economic activity for its all round development. Though the economists and market analysts
continued to remain apprehensive about government’s snail pace progress towards opening up
sectors for FDI up to 100%, some of the success stories already achieved and the overseas
investors seeing the potential for attractive returns from investments in India, turns as a caveat
that drives the government to extend certain liberal policy frameworks for FDI and foreign
technology transfer. Foreign direct investment (FDI) plays an extraordinary and growing role
in global business. It can provide a firm with new markets and marketing channels, cheaper
production facilities, access to new technology, products, skills and financing. For a host
country or the foreign firm which receives the investment, it can provide a source of new
guarantees or the willingness of governments to bailout the banking system.

47. 47
More than half of the FDI companies believe that the business climate has improved to a large
extent in India. Almost similar is the perception about the improvement in labour laws,
economic reforms and attitude the view that India’s image in the eyes of foreign companies has
shown sign of improvement to a large extent. However, some of the people don’t consider that
India’s image has improved in the world. Interestingly despite alliance of many political
parties, the political stability has improved to a large extent.
FDI IMPACT IN INDIA
International capital flows have significant potential benefits for economies around the world.
Countries with sound macroeconomic policies and well-functioning institutions are in the best
position to reap the benefits of capital flows and minimize the risks. Countries that permit free
capital flows must choose between the stability provided by fixed exchange rates and the
flexibility afforded by an independent monetary policy. Much of the increase in capital flows is
due to trade in equity and debt markets, with the result that the international pattern of asset
ownership. The integration of debt and equity markets should have been accompanied by a
short period of large capital flows as investors re-allocated their portfolios towards foreign debt
and equity. After this adjustment period is over, there seems little reason to suspect that
international portfolio flows will be either large or volatile. The prolonged increase in the size
and volatility of capital flows observed that the adjustment to greater financial integration is
taking a very long time, or that integration has little to do with the recent behavior of capital
flows. The nature, volatility and impact of international capital flows are still a debatable issue.
The present paper tries to make a preliminary attempt to test whether international capital flows
has the positive impact on financial market and economic growth with the help of
macroeconomic variables in the economy? Hence, the financial sector reforms to revive the
capital markets help to attract the capital flows due to comparative returns. The international
capital flow has positive contribution for the economic growth of developing countries
explicitly.

48. 48
Some of the major impacts on Indian economy include:
1. FDI leads to Generation of Employment Opportunities:
The effect of FDI on Employment generation is an indirect phenomenon. Owing to large
amount of FDI inflow leads to high capital formation at cheaper rates. This in turn leads to
establishment of new business units or expansion of existing ones. Technological
transformations and human resource mobility leads to emergence of many business
undertakings. This leads to employment opportunities. In India the employment generation is
growing at positive trend.
2. FDI growth in India leads to increasing the trends of gross capital formation:
The capital is the life and blood of every business or every production activity. Whether it is
production of goods or service capital is must. The gross capital formation comprises of
generation of capital by different production sectors. It comprises capital generated by both
public and private sectors. In the private sector the lot of capital generated in the form of fixed
asset would consists of Foreign Direct Investments. Therefore the growth of inflow of FDI
would lead to positive growth of Gross capital formation. The Gross Capital formation in India
is having increasing trend in India owing to increasing trends in FDI growth.
EFFECT OF FDI ON INDIA’S GDP
The gross domestic product is the major indicator of economic growth. It is developing at an
increasing rate in India. The gross domestic product (GDP) is one the primary indicators used
to gauge the health of a country’s economy. It represents the total money value of all goods and
services produced over a specific time period. The fact that the service sector now accounts for
more than half the GDP is a milestone in India’s economic history and takes it closer to the
fundamentals of a developed economy. At the time of independence agriculture occupied the
major share of GDP while the contribution of services was relatively very less. Since
liberalization policy in India the GDP is growing at an increasing rate. The growth of Indian
GDP is largely influenced by FDI.

49. 49
The Impact of FDI on Various Macros Economic Variables:
In this section an attempt has been to assess the impact of FDI separately on various macro
economic variables. As we all by now known, FDI involves the transfer managerial resources
to the host country. There have been disagreements about the costs borne and the benefits enjoy
by host and recipient country between pro-liberalization and anti-liberalization/anti-market
views. One country losses need not necessarily be another country gains. Kindelberger argues
that the relationship arising from the FDI process is not a zero sum game. Ex-ante, both
countries must believe that the expected benefits to them must be greater than the costs to be
borne by them, because an agreement would not otherwise be reached and the under lying
project would not be initiated. However, believing in something ex-ante is not guarantee that it
materializes ex-post. The impact of FDI on host country can be classified into economic,
political, and social effects. The main intention at heart of every MNC is profitability and
hence they invest where the returns are high, buy raw materials including cheap labour where it
is relatively cheap. MNCs succeed because of market imperfections and cast doubts on it as
claim on welfare of host country. The conventional wisdom that FDI is always improving is no
longer a conventional wisdom. The economic effect of FDI can be classified into micro and
macro effects.
Micro Effects: The micro effects of FDI reflect on structural changes in the economic and
industrial organization. An important issue is whether FDI is conducive to the creations of
competitive environment in the host country. Markusen and Venables put forward two simple
analysis channels to find the micro effect of FDI. They are
1. Product Market Competition.
2. Linkage Effect

50. 50
Product Market Competition (PMC)
Through PMC the MNCs will be substituting the products of domestic firms in host country.
Linkage Effect
MNCs may work as complimentary firms to domestic firms in host country where it is possible
for FDI to act as a catalyst leading to the development of local industry.DI may have benefits,
but it will not come without costs. The decade of liberalization and the impact of the FDI on
macro economic factors in India have to be found in this study. To assess the impact of FDI on
various relevant macro-economic variables namely exports, private final consumption
expenditure, Forex, Gross Domestic Investment, gross domestic savings, trade balance, balance
of payments.

51. 51
DATA ANALYSIS & INTERPRETATION

52. 52
Table-1:Year Wise FDI Inflows in India through FIPB Route/ RBI’s Automatic
Route/ Acquisition Route
Financial Year
(April – March)
Capital Inflow (US$
Million)
%age Growth Over
Previous Year
2018– 2019 34,847 -8%
2019 – 2020 46,553 +34%
2020 – 2021 27,197 -
Figure:1: Year Wise FDI Inflows in India through FIPB Route/ RBI’s Automatic
Route/ Acquisition Route
INTERPRETATION
For the financial year (FY) 2019-2020, India's FDI inflow amounted to US$46.55 billion, up
by 34% from US$34.8 billion of the FY2018-2019. The inflow for the first nine months of
FY2020-2021 is US$27.19 billion. Over the last decade, Mauritius is the largest contributor to
this mainly because most of the investors want to take advantage of the double taxation
avoidance agreement between Mauritius and India, and Mauritius-based investors do not have
to pay capital gains tax in India. Singapore is the second largest contributor of FDI, after
Mauritius, while UK comes third. During the period, the services sector attracted the highest
FDI inflow, followed by construction sector and telecom sectors.
-10,000
0
10,000
20,000
30,000
40,000
50,000
2018-19 2019-2020 2020– 2021
Capital Inflow (US$ Million)
%age Growth Over Previous
Year

53. 53
Table-2: Share of Top Investing Countries - FDI Equity Inflows In India
Financial Year
Rank Country 2018-19
(April-
March)
2019-20
(April-
March)
2020-21
(for April
Dec)
Cumulative
Inflows
(April ’18 –
Dec ‘21)
%age to total
Inflows (in
terms of US
$)
1 Mauritius 31,855 46,710 40,586 330,057 38%
2 Singapore 7,3390 24,712 8,967 86,555 10%
3 U.K. 12,235 36,428 3,309 77,970 9%
4 Japan 7,063 14,089 8,945 66,796 7%
5 U.S.A 5,353 5,347 2,226 50,115 6%
6 The Netherlands 5,501 6,698 7,253 39,577 5%
7 Cyprus 4,171 7,722 2,171 31,842 4%
8 Germany 908 7,452 2,744 23,572 3%
9 France 3,349 3,110 2,541 15,919 2%
10 U.A.E. 1,569 1,728 655 10,976 1%

54. 54
Figure-2
INTERPRETATION
During the same period, 2018 – 2021, Singapore stood second with US$86.55 billion,
denoting 10%; followed by Japan with US$77.97 billion, representing 9%. Investments
from U.S.A. witnessed a declining trend, as the county is facing the credit crunch from the
past few years.
For the FY2019-2020, India's FDI inflow was primarily from Mauritius with
US$46.71 billion compared to US$31.85 billion in FY2018-2019. For the first 9 months of
2020 – 2021, the FD inflows from Mauritius are US$40.586 billion. Mauritius has been
the single largest source of FDI into the country in the first 12 years of the new
millennium. As much as $330 billion worth of money has been invested in India after
being routed through Mauritius. This is 38% of the total FDI in the country in the past
decade.
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
Cumulative Inflows (April ’18 – Dec ‘21)

55. 55
Table-3 Sectors Attracting Highest FDI Equity Inflows – India
Financial Year
Rank Sector 2018-19
(April-
March)
2019-20
(April-
March)
2020-
21(for
April –
Dec )
Cumulative
Inflows
(April - Dec )
%age to total
Inflows (in
terms of US
$)
1 Services 3,296 5,216 4,046 36,449 19 %
2
Construction
Activities
1,655 3,141 1,087 21,834 12 %
3 Telecommunications 1,665 1,997 71 12,623 7 %
4
Computer Software
& Hardware
780 796 413 11,618 6 %
5 Drugs & Pharma 209 3,232 589 9,783 5 %
6. Chemicals 2,354 4,041 170 8,759 5 %
7. Power 1,272 1,652 525 7,824 4 %
8. Automobile 1,299 923 803 7,561 4 %
9. Metallurgical 1,098 1,786 1,301 7,342 4 %
10 Hotel & Tourism 308 993 3,155 6,527 3 %

56. 56
Figure-3 Sectors Attracting Highest FDI Equity Inflows - India
INTERPRETATION
India's economic policies are designed in such a way that it attracts significant capital inflows
into the country on a sustained basis, thereby encouraging technology collaboration between
Indian and foreign firms. Almost all sectors are opened to foreign investment with varying
percentage of foreign ownership allowed, except for atomic energy, lottery business, gambling
and betting, and some forms of retail trading.
The services sector in India, which includes financial and non-financial services, attracted the
majority of the FDIs from investors during the financial period April 2018 - December 2021.
The sector attracted US$36.44 billion representing 19% of total inflows into the country. As
India imposes substantial FDI caps in the financial services sector particularly in the insurance
sector, the sector attracted fewer investments in the FY2019-2020. The country can add about
1.5% to the country's economic growth, if the FDI policy in the services sector is liberalized,
which in turn leads to an increase in FDIs in services sector. In second place, Construction
sector attracted US$12.623 billion, followed by Telecom sector with US$12.623 billion during
the period April 2018 – December 2021.
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
Cumulative Inflows (April ’18 - Dec ‘21)

57. 57
FINDINGS
SUGGESTIONS
CONCLUSION

58. 58
FINDINGS
 India is established as one of the top tier world destinations for FDI. In the Asia-Pacific
region, the country consolidated its second top position, besides China, after a lull in
2018 because of financial crisis.
 To augment, India’s inward investment rule went through a series of changes since
economic reforms were escorted in two decades back.
 The cumulative amount of FDI inflows into India were US$2,80,412 million for the
period April 2018 – December 2021, including data of‘re-invested earnings’ & ‘other
capital’ of equity inflows.
 These are the estimates on an average basis, based upon data for the previous two years,
published by RBI in Monthly Bulletin. Mauritius, Singapore and UK are the top three
contributors of FDI into India while Services, Construction and Telecom sectors
attracted the major capital.
 As per the recent survey done by the United National Conference on Trade and
Development, India will emerge as the third largest recipient of FDI for the three-year
period ending 2018.
 As per the study, the sectors which attract highest FDI were services,
telecommunications, construction activities, and computer software and hardware.
 There has been a continuing and sustained effort to make the FDI policy more liberal
and investor-friendly. Significant rationalisation and simplification of the policy has,
therefore, been carried out in the recent past. DIPP, in its consultation paper titled ‘FDI
Policy—rational and relevance of caps’ has, as a landmark initiative, accepted that up
to 49% foreign investment is indirectly possible in all sectors.
 This effectively means that an Indian owned and controlled company can make
downstream investments even in prohibited sectors such as multibrand retail trading
etc. It is important here to note that foreign investment for this purpose includes not
only strategic foreign investment but also FII under portfolio investment schemes, NRI,
GDR, ADR etc.

59. 59
SUGGESTIONS
 It is important to consider whether the FDI that is attracted is beneficial to the
economy. There is already a substantial body of research into the effects of FDI
generally and the factors that can make FDI more or less beneficial.
 FDI can make a positive contribution to economic growth, by providing additional
capital and facilitating technology transfers.
 A further potential advantage of FDI is the possibility of technology spillovers, which
can potentially enable the recipient country to benefit from advanced technologies
developed overseas.
 To pursue a growth of around 7 percent in the Gross Domestic Product of India, the net
capital flows should increase by at least 28 to 30 percent on the whole.
 The savings of the country stood at 24 percent. The gap formed between intended
investment and the actual savings of the country was lifted up by portfolio investments
by Foreign Institutional Investors, loans by foreign banks and other places, and foreign
direct investments. Among these three forms of financial assistance, India prefers as
well as possesses the maximum amount of Foreign Direct Investments.
 As largely debated FDI has both positive and negative factors. These factors should be
properly studied before allowing any FDI into a particular sector or the country.

60. 60
CONCLUSION
 Amidst today’s time of fierce competition and a quest to achieve and enhance a substantial
level of economic and social development; each and every nation is trying to liberalize its
economic policies in order to attract investments from not only, domestic players, but also
from magnates all across the globe. Consequently, people with generous reserves of funds, all
around the globe, are expanding their wings and seeking opportunities for investing in
different spheres of this lucrative market. India too is not oblivious to the rapid developments
taking place in the global market and has emerged as one of the prime destinations for the
investment of funds from an impressive number of foreign investors.
 FDI is a superb conduit for the transfer of technology and know-how to developing
countries. This message has not been lost on India's policy makers. They have though until the
decade of the nineties attempted to regulate and control its spheres of activity and the
contractual forms of foreign enterprise participation in the economy. The framework of
policies they put in place was guided by the desire to limit foreign control of economic
activity but at the same time take advantage of the technology and know how provided by
foreign capital. This attempt at riding two horses in tandem, a complex feat, inevitably
resulted in a complex and cumbersome bureaucratically guided FDI regime and earned India
the reputation for hostility towards FDI.
 The GDP growth in India is anticipated to hover around 7% yearly and the number of
people in the Indian middle class is set to triple over the next 15 years, the domestic demand is
expected to grow exponentially. India’s young demographic profile also helps it in providing
an increasingly well-educated and cost-competitive labor force. These factors put India in a
good position to attract an increasing proportion of global FDI going forward.

61. 61
BIBLIOGRAPHY
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2. M.Y. KHAN & PK JAIN(2006), “Financial management”, tatamcgraw hill
publishing company limited, new delhi.
3.V.K BHALLA (2007), “financial management” and policy, anamol publishing
private limited,new delhi,6th
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4.KOTHARI. R (2008) “research methodology”, new age international publishers, new
delhi.
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WEB SITES:
www.fdi.com
www.wekifedia.com
www.google.com