TREND AND PATERN

OF FDI IN INDIA

&

ROLE OF MNCs

PATERN OF FDI INFLOWS

3 PHASES

1. Phase of cautious and selective attitude to wards

FDI (1948-1967)

2. Phase of restrictive attitude towards FDI (1968-

1979)

3. Phase of semi liberalisation (1980-1990)

4. Phase of liberalisation (1991 onwards)

PHASE I TO IV

Source : RBI Bulletin (Various issues)

Source : UNCTAD, World investment report

FDI INFLOWS IN INDIA :1980-1990 (US$

MILLION)

COUNTRY WISE FDI INFLOWS

Source : RBI Bulletin (1948-1990)

(1980)

SECTOR WISE FDI INFLOWS

OBJECTIVE OF REFORMS

In 1991, the government announced a specified list of

high technology and high-investment priority industries

wherein automatic permission was granted for foreign

direct investment (FDI) up to 51 percent foreign equity.

The limit was raised to 74 percent and subsequently to

100 percent for many of these industries. Moreover,

many new industries have been added to the list over

the years.

Foreign Investment Promotion Board (FIPB) has been

set up to negotiate with international firms and approve

direct foreign investment in select areas.

Steps were also taken from time to time to promote

foreign institutional investment (FII) in India.

FDI : APPROVAL VS ACTUAL (1991-08)

S

:

R

B

I

,

S

I

A

FINANCIAL

YEAR

TOTAL

INFLOWS

% Growth over last

year

2009-10 37745 -08%

2010-11 34847 +34%

2011-12 46847 +34.4%

2012-13 34298 -0.3%

2013-14 36046 +5.1%

2014-15 45148 +25.25%

2015-16 55559 +23.06%

2016-17 60220 +8.40%

Source: RBI Bulletin 2017

S.

N

COUNTR

Y

199

3

1995 199

9

200

1

2005 2008 2011 2014

1 Mauritius NA 197 590 843 830 9518 5616 3695

2 U.S.A 22 203 453 320 469 950 1071 617

3 U.K 7 144 NA 61 84 508 538 111

4 Germany 21 35 114 113 84 486 163 650

5 Netherlan

d

21 45 53 76 196 601 1417 1157

6 Japan 26 95 235 156 122 457 1256 1795

7 France 9 14 NA 93 44 136 486 229

8 Others 174 139 555 248 444 5885 4392 7799

9 Total 280 827 200

0

298

8

2320 18541 14939 16053

COUNTRY WISE FDI INFLOWS (US$ Million)

Source : RBI Annual report (Various)

S.

NINDUSTRY 1991 2001 2005 2008 2010 2013 2016

1 SERVICE

2 CONSTRUCTIO

N

3 SOFTWARE

4 TELECOMMUNI

CATION

5 AUTOMOBILE

6 PHARMACEUTI

CALS

7 CHEMICALS

8 TRADING

9 POWER

SECTOR WISE INFLOWS

TOP MNCS OPERATING IN INDIA

ADVENTAGES OF MNCS

Higher level of investment

Reduction in technological gap

Optimum utalisation of natural resources

Boost basic economics structure – decrease foreign

exchange gap

Growth of middle class

Infrastructural balance

DISADVENTAGES

Competition to MSME

Pollution and environmental hazard

Improper diffusion of profits

Forex imbalances

Encouragement of inessential consumption

Child labour