FDI in India during the Prime Minister Mr.

Narendra Modi
Government

Author

Ritu Gupta
Designation: Research Scholar
Affiliation: Faculty of Management
Swami Vivekananda University,
Sagar (M.P.) India
Contact details:
Mob. No: +918602287464
Email:ritugu2801@gmail.com

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ABSTRACT:
Foreign direct investment plays an important role of bridging the gap between the available
resources or funds and the required resources or funds. In India, FDI is considered as a
developmental tool, which helps in achieving self-reliance in various sectors and in overall
development of the economy. This paper is trying to identify the various determinants of FDI,
new FDI cap in deferent sector and also try to analysis the growth of FDI inflow after Prime
Minister Mr.Narendra Modi government. The present study is based on secondary data and
period of the study is from 2014 to 2017 and find out that India make top destination in whole
world for investment, India replaced China as leading recipient of capital investment in Asia-
Pacific with announced FDI of $63bn, as well as an 8% increase in project numbers to 697
Meanwhile where in 2014 FDI overseas declined by 19% to 226 projects. "For Indians FDI is a
responsibility, it means to First Develop India, for global investors FDI is an opportunity in the
form of Foreign Direct Investment”.

KEYWORDs: FDI 2014-20017, FII, Make in India, Indian economy, economic growth.

INTRODUCTION:
Foreign Direct Investment (FDI) is a type of investment in to an enterprises in a country by
another enterprises located in another country by buying a company in the target country or by
expanding operations of an existing business in that country. In the era of globalization FDI takes
vital part in the development of both developing and developed countries. FDI has been
associated with improved economic growth and development in the host countries which has led
to the emergence of global competition to attract FDI.

FDI offers number of benefits like overture of new technology, innovative products, and
extension of new markets, opportunities of employment and introduction of new skills etc.,
which reflect in the growth of income of any nation. Foreign direct investment is one of the
measures of growing economic globalization. Investment has always been an issue for the
developing economies such as India. The world has been globalizing and all the countries are
liberalizing their policies for welcoming investment from countries which are abundant in capital
resources. The countries which are developed are focusing on new markets where there is
availability of abundant labors, scope for products, and high profits are achieved. Therefore

Foreign Direct Investment (FDI) has become a battle ground in the emerging markets.Foreign
investment plays a significant role in development of any economy as like India. Many countries
provide many incentives for attracting the foreign direct investment (FDI). Need of FDI depends
on saving and investment rate in any country. Foreign Direct investment acts as a bridge to fulfill
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the gap between investment and saving. In the process of economic development foreign capital
helps to cover the domestic saving constraint and provide access to the superior technology that
promote efficiency and productivity of the existing production capacity and generate new
production opportunity.

India‟s recorded GDP growth throughout the last decade has lifted millions out of poverty &
made the country a favored destination for foreign direct investment. A recent UNCTAD survey
projected India as the second most important FDI destination after China for transnational
corporations during 2014-2017. Services, telecommunication, construction activities, computer
software & hardware and automobile are major sectors which attracted higher inflows of FDI in
India. Countries like Mauritius, Singapore, US & UK were among the leading sources of FDI in
India.

Prohibited Sectors under FDI:

a) Lottery Business including Government/private lottery, online lotteries, etc.

b) Gambling and betting including casinos etc.

c) Chit funds

d) Nidhi company

e) Trading in Transferable Development Rights (TDRs)

f) Real Estate Business or Construction of Farm Houses

„Real estate businesses shall not include development of townships, construction of residential
/commercial premises, roads or bridges and Real Estate Investment Trusts (REITs) registered
and regulated under the SEBI (REITs) Regulations 2014.

g) Manufacturing of cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco

substitutes

h) Activities/sectors not open to private sector investment e.g.(I) Atomic Energy and (II)
Railway operations.

FDI inflow routes:

An Indian Company may receive Foreign Direct Investment under the two routes as given under:
1. Automatic Route: FDI in sectors /activities to the extent permitted under the automatic
route does not require any prior approval either of the Government or the Reserve Bank of India.

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2. Government Route: FDI in activities not covered under the automatic route requires
prior approval of the Government which is considered by the Foreign Investment Promotion
Board (FIPB), Department of Economic Affairs, and Ministry of Finance.

Meaning of FDI:

International Monetary Fund (IMF) defines “FDI as a category of international investment that
reflects the objective of a resident in one economy (the direct investor) obtains a lasting interest
in an enterprise resident in another economy (the direct investment enterprise). The lasting
interest implies the existence of a long-term relationship between the direct investor and the
direct investment enterprise, and a significant degree of influence by the investor on the
management of the enterprise. A direct investment relationship is established when the direct
investor has acquired 10 percent or more of the ordinary shares or voting power of an enterprise
abroad.” A direct investment relationship in another economy may be established by
incorporating a wholly owned subsidiary or company; by acquiring shares in an associated
enterprise; through a merger or an acquisition of an unrelated enterprise; and by participating in
an equity joint venture with another investor or enterprise.

GROWTH OF FDI IN INDIA:

After the historical victory of NDA government in the 16th loksabha election in India in the year
of 2014 with more than 62% of vote share Mr.Narendra Modi take the Swearing as the 15th
prime minister of Indian nation, than Indian economy start growing just like it take wings. The
Government of India has amended FDI policy to increase FDI inflow. In 2014, the government
increased foreign investment upper limit from 26% to 49% in insurance sector. It also launched
Make in India initiative in September 2014 under which FDI policy for 25 sectors was
liberalized further. As of April 2015, FDI inflow in India increased by 48% since the launch of
"Make in India" initiative.

India was ranking 15th in the world in 2013 in terms of FDI inflow; it rose up to 9th position in
2014 while in 2015 India became top destination for foreign direct investment.

According to FDI report 2015, 2016 and 2017 India recorded historical growth after a long
period of trailing behind China, India was the highest ranked country by capital investment in
2015, with $63bn-worth of FDI projects announced, India replaced China as leading recipient of
capital investment in Asia-Pacific with announced FDI of $63bn, as well as an 8% increase in
project numbers to 697 Meanwhile where in 2014 FDI overseas declined by 19% to 226 projects.
India, unlike China, has experienced growth in both project numbers and capital investment for
the past two years. China managed nominal growth (2%) in 2013 but between 2011 and 2015
this was the only year it was achieved. In 2015, a 23% decline in capital investment has mirrored
the 16% decline in projects destined for the country. India, on the other hand, had a turbulent five
years but achieved growth in both 2014 and 2015 for capital investment and project numbers,
bolstering its position and allowing it to overtake China. Of the top 10 destination states for FDI
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in 2015, India claims five places, with the top place going to Gujarat, which attracted $12.4bn
and claimed 10% of all capital investment into both countries. In 2011, Gujarat was ranked the
14th most popular state for FDI within the two countries.

For the second year running, India was the highest ranked country by capital investment in Asia-
Pacific, with growth rate of 2% to $62.3bn-worth of FDI projects numbers also grew by 16% to
809 in 2016 according to FDI report 2017.

International rating agency MOODY‟s has said that net FDI inflow have hit an all-time high in
early 2016, highlights the success of Make in India initiative.

Foreign direct investment equity inflow in the past 21 month (from june2014 to februar2016) has
increased by approx.44% from $43.87billion to $63.16billion, over the preceding period of 21
month (sep.2012 to may2014). Substantial investment has begun to flow in to the electronic,
automotive, Food processing, textiles and garments, renewable energy and construction sectors.
The total FDI inflow during 2015-16 (up to feb2016) have been the highest ever total FDI for a
financial year, which have been achieved in just 11 months of 2016-16. The world‟s largest
democracy is well on its way to becoming the world‟s most powerful economy. We can see the
ultimate growth in FDI with help of this graph. (Table 1)

FDI Inflow in India

Series1

51.6
46.6 44.3
41.9
37.8
34.8 34.9 34.3 36.1

22.8

9.1
4 6.1 5 4.3 6.1

Fig.1 (Growth of FDI inflow in India from 2000-16)

MAKE IN INDIA CAMPAIGN:

Make in India is an initiative launched by the Government of India to encourage national, as well
as multi-national companies to manufacture their products in India. It was launched by Prime
Minister Mr. Narendra Modi on 25 September 2014. India emerged, after initiation of the
programme in 2015, as the top destination globally for foreign direct investment (FDI),
surpassing the United States of America as well as the People's Republic of China. In 2015, India
received US$63 billion in FDI.

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Mr. Modi‟s iconic „Make in India‟ campaign is structured to attract more FDI to India and make
the country a global manufacturing and industrial hub. This campaign has garnered global
attention as he has encouraged foreign investors to privatize key sectors such as the railways,
defence manufacturing and insurance, as well as the liberalization of medical devices. Ease of
doing business has always been a problem in India, and Mr. Modi‟s campaign has addressed this
by removing archaic laws. The controlled elevation of FDI caps and the elimination of
unnecessary red tape restrictions in decision making have gone a long way towards ensuring
India‟s exponential growth of inward FDI. The campaign and the resultant boost in FDI has
resulted in a whopping increase in FDI job creation from 116,000 new jobs in 2013 to 225,000 in
2015 – the highest number in the world.

Growth of FDI in Make in Indian campaign:

A record growth of 24% from $36billion to $45billion has been recorded with in the 12 month
period of launched Make in India campaign, under this campaign from October 2014-Macrh2015
growth of 38% from $18.13billion to $24.95billion, more than 50% of FDI was received from
October 2014-March2015, FDI equity inflow also increased from $11.7billion to $16.24billion,
recording an increase of 39%, government also include some new sectors in FDI that is :-
Railways with 100% FDI, Medical Devices with 100% FDI, Defence would be 100% FDI with
some conditions, Insurance & Pension with 49% FDI, construction and NRI investment also.

FDI under make in India

Series1

2.75%
construction 2.85%
3.84%
Misc.mechenical & engg. Industries 4.43%
4.93%
computer sofrware & hardware 7.11%
8.31%
trading 8.93%
9.36%
service 10.50%

Fig.2 (% of investment in FDI deferent sectors under Make in India campaign)

India is an attractive investment destination for Japanese companies:

 Japan is the 4th largest FDI contributor to India.

 India‟s FDI from Japan reached a level of US$ 2 billion during 2014-15 registering a
growth of 21.34 per cent. This is set to increase to US$ 11 billion, aggregating the
announcements made by Japanese Companies, over the last year.
 The Japan Bank for International Co-operation (JBIC) in its “Survey Report on Overseas
Business Operations by Japanese Manufacturing Companies, (Published in November,
2014), ranked India as the Prime Destination for Overseas Business Operations over the
Medium-term (next 3 yrs. or so).

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  In 2014, 1209 Japanese Companies were operating in India with 3961 Business
Establishments. The number of Japanese companies in India has doubled in last 5 years.

Fig:3.Growth of number of japanese companies in India YOY

REVIE OF LITERATURE:
Nunnenkamp,Peter; Mukim Megha:We assess the location choices of 6020 foreign investors at
the level of Indian districts. Employing conditional logit models, we find that clustering of
Foreign Direct Investment (FDI) is driven strongly by herding among investors from both, the
same and other countries of origin. However, the behaviour of Nonresident Indians (NRIs) and
German investors is strikingly different.

Medvedev,Denis: The paper investigates the effects of preferential trade agreements (PTAs) on
net FDI inflows of member countries using a comprehensive database of PTAs in a panel setting.
PTA membership is associated with a positive change in net FDI inflows and FDI gains increase
with the market size of PTA partners and their proximity to the host country. The estimated
relationship is driven by the developing countries in the sample and agreements signed in the late
1990s-early 2000s, a period when the majority of “deep integration” PTAs have been advanced.

Tadesse, Bedassa; Shukralla, Elias K.: Using data on stocks of Foreign Direct Investment (FDI)
from 131 countries spanning the years 1984 to 2004 and the number of products exported by
each country, we examine the effect of FDI on horizontal export diversification. To quantify the
effects, we utilize parametric (quantile) and semi-parametric econometric methods. Results from
both approaches indicate that, in general, an increase in the stock of FDI enhances the horizontal
diversification of exports. The actual magnitude of the effect however, varies greatly across
countries depending on the existing stock of FDI and stage of diversification, giving rise to an
almost inverted U-shaped relationship.

Singh Kr. Arun and Agarwal P.K., (2012) “Foreign direct investment: The big bang in Indian
retail”. In this article they have studied the relation of foreign investment and Indian retail
business. The study is based on different literatures, case studies and analysis of organized retail

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market. The author discusses the policy development for FDI in the two retail categories: single
brand and multi brand. The author concludes that FDI in multi brand retail should be considered,
better technology and employment. The paper also concludes that openness of FDI in India
would help India to integrate into worldwide market.

Dr. Mamata Jain and Mrs. Meenal Lodhana Sukhlecha, (2012), “FDI in multi brand retail: Is it
the need of the hour?” The paper studies the need of the retail community to invite FDI in
retailing. The study is under taken through analysis of positive and negative impacts of reforms.
The study shows various advantages of FDI, which suggests for foreign participation in retailing,
but the author also suggests that the ceiling should not exceed 51% even for single brands to
ensure check and control on business operations.

Rajalakshmi K. and Ramachandran F., (2011), “Impact of FDI in India‟s automobile sector with
reference to passenger car segment.” The author has studied the foreign investment flows
through the automobile sector with special reference to passenger cars. The research
methodology used for analysis includes the use of ARIMA, coefficient, linear and compound
model. The period of study is from 1991 to 2011. This paper is an empirical study of FDI flows
after post liberalisation period. The author has also examined the trend ad composition of FDI
flow and the effect of FDI on economic growth. The author has also identified the problems
faced by India in FDI growth of automobile sector through suggestions of policy implications.

OBJECTIVES:
1. To find out new FDI cap in deferent sectors in India from the year of june2014 to
july2017.
2. To identify the various determinants of FDI.
3. To find out the growth of FDI inflow in India during Prime Minister MR.NARENDRA
MODI government.

RESEARCH MATHODOLOGY:
DATA COLLECTION:

This research is a descriptive study in nature. The secondary data was collected from various
journals, magazines, and websites particularly from the Department of Industrial Policy &
Promotion, Ministry of Commerce and Industry, India stat etc. Simple percentages have been
used to defect the growth rate of India. Graphs and tables have also been used where ever
required to depict statistical data of FDI during the study period. The time period of the study
has been taken from the April 2014 to March 2017.

DATA ANALYSIS & INTERPRETATION:

Fact sheet on foreign direct investment (FDI)

Table No. 1

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 Total FDI Inflows
(From April, 2000 to March, 2017)

1. US$
CUMULATIVE AMOUNT OF FDI INFLOWS
(Equity inflows + ‘Re-invested earnings’ +‘Other - 484,351
capital’)
Million

CUMULATIVE AMOUNT OF FDI EQUITY

2. INFLOWS Rs. US$
(excluding, amount remitted through RBI‟s NRI Schemes) 1,787,022 331,991
Crore Million
Source: FDI Statistics, Department of Industrial Policy& Promotion, Ministry of Commerce & Industry,
Government of India, 2017.

Table 1 shows the amount of FDI inflows from April, 2000 to March, 2017. It shows the
cumulative amount of FDI Inflows both in terms of Crore and in US $ million.
Point 1 shows the sum of equity inflows, reinvested earnings and other capital. Cumulative
amount of inflows are 484,351 in US $ million. Other than this, cumulative FDI equity inflows
which excludes amount remitted through RBI‟s -NRI schemes are 1,787,022 in Crore and 33,991
in US $ million.
Table No. 2
FDI Inflows during Financial Year
2016-17 (JANUARY, 2017 TO MARCH, 2017)
1. TOTAL FDI INFLOWS INTO INDIA US$
(Equity inflows + ‘Re-invested earnings’ + ‘Other
capital’) - 12,194
(as per RBI‟s Monthly bulletin)s Million

2. Rs. US$
FDI EQUITY INFLOWS
51,311 7,634
Crore Million

Source: FDI Statistics, Department of Industrial Policy& Promotion, Ministry of Commerce &
Industry, Government of India, 2017.
Table 2 shows the amount of FDI inflows during the Financial Year, 2017(March). It shows the
total amount of FDI Inflows both in terms of Crore and in US $ million.
Point 1 shows the sum of equity inflows, reinvested earnings and other capital. Total amount of
inflows are 12,194 in US $ million. Point 2 shows the FDI equity inflows amounted 51,311 in
Crore and 7,634 in US $ million.
Table No. 3
FDI Equity Inflows (Month-wise) during the Financial Year 2016-17

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 Amount of FDI Equity
Financial Year 2016-17 inflows

( April-March ) (In Rs. Crore) (In US$ mn)

1. April, 2016 22,345 3,362

2. May, 2016 13,271 1,983

3. June, 2016 15,111 2,245

4. July, 2016 27,430 4,081

5. August, 2016 32,150 4,803

6. September, 2016 34,366 5,149

7. October, 2016 41,353 6,195

8. November, 2016 31,631 4,677

9. December, 2016 22,727 3,347

10 January, 2017 27,067 3,976

11 February, 2017 8,118 1,210

12 March, 2017 16,126 2,448

201 17 (form April, 2016 to March,
6- 2017) # 291,696 43,478
2015-16 (form April, 2015 to March, 2016)
# 262,322 40,001

%age growth over last year (+)11% (+)9%

Source: FDI Statistics, Department of Industrial Policy& Promotion, Ministry of Commerce &
Industry, Government of India, 2017.

The above Table 3 shows the amount of FDI inflows during Financial Year from April, 2016 to
March, 2017 (up to March, 2017). It shows the amount in Rs Crore and in US $ mn. The highest
FDI inflows in the country is in the month of October 2016 i.e. 41,353 in Rs Crore and 6,195 in
US $ mn. Followed by April, 2016 and March, 2017 with inflows 22,345 in Rs. Crore (3,362 in
US$ mn) and 16,126 in Rs. Crore (2,448 in US$ mn) respectively. It can also be observed that
there is 11% growth over last year.

Table No. 4
FDI Equity Inflows (Month-wise) during the Calendar Year 2015
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 Amount of FDI Equity
Calendar Year 2017 inflows

(Jan.-Dec.) (In Rs. Crore) (In US$ mn)

1. January, 2017 27,067 3,976

2. February, 2017 8,118 1,210

3. March, 2017 16,126 2,448

Year 2017 (up to March, 2017) # 51,311 7,634

Year 2016 (up to March, 2016) # 71,259 10,559

%age growth over last year (-)28% (-)28%

Source: FDI Statistics, Department of Industrial Policy& Promotion, Ministry of Commerce &
Industry, Government of India, 2017.

The above Table 4 shows the amount of FDI inflows during the Calendar Year January, 2017 to
March, 2017. It shows the amount in Rs Crore and in US $ mn. The highest FDI inflows in the
country is in the month January 2017 i.e. 27,067 in Rs Crore and 3,976 in US $ mn. Month like
January 2016 have 33,461 in Rs Crore and 4,975 in US $ mn. Comparing both we can observe
that there is a (-) 28% decline in FDI inflow.

Table No. 5
Share of Top Investing Countries FDI Equity Inflows (Financial Years):-

Amount Rupees in Crores (US$

in Million)
2014- Cumula
Ranks Country 15 2015-16 2016-17 tive %age to total
(Apri (Apri (Apri Inflo
l– l– l– ws Inflows
Marc Marc Marc (April,
h) h) h) 00 - (in terms
March, 17) of US $)

55,172 54,706 105,587 585,950

1. MAURITIUS (111,638 34%
(9,030) (8,355) (15,728) )

41,350 89,510 58,376 315,042

2. SINGAPORE 16 %
(6,742) (13,692) (8,711) (54,590)

3. JAPAN 12,752 17,275 31,588 142,260 8%

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 (2,084) (2,614) (4,709) (25,675)

8,769 5,938 9,953 125,545

4. U.K. 7%
(1,447) (898) (1,483) (24,591)

NETHERLAN 20,960 17,275 22,633 117,167

5. DS 6%
(3,436) (2,643) (3,367) (20,682)

11,150 27,695 15,957 110,532

6. U.S.A. 6%
(1,824) (4,192) (2,379) (20,323)

52,04
6,904 6,361 7,175 5
7. GERMANY (9,698 3%
(1,125) (986) (1,069) )

46,73
3,634 3,317 4,050 1
8. CYPRUS (9,156 3%
(598) (508) (604) )

30,63
3,881 3,937 4,112 7
9 FRANCE (5,725 2%
(635) (598) (614) )

26,18
2,251 6,528 4,539 7
10. UAE (4,705 1%
(367) (985) (675) )

TOTAL FDI 1,787,55

INFLOWS FROM 189,107 262,322 291,696 5
(332,112
ALL COUNTRIES * (30,931) (40,001) ) -
(43,478)

Source: FDI Statistics, Department of Industrial Policy& Promotion, Ministry of Commerce & Industry,
Government of India, 2017.

The above Table No.5 depicts the country having the highest FDI in India. The report shows that
the MAURITIUS country has the highest foreign investor in India with 34%. After Mauritius,
Singapore and japan invest the highest FDI in India with 16% and 8% respectively FDI in India.

Table No. 6
SECTORS ATTRACTING HIGHEST FDI EQUITY INFLOWS

Amount in Rs. Crores (US$ in Million)

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Rank 2014- 2015- 2016- Cumulat % age to total
s Sector 15 16 17 ive Inflows
(Apri (Apri (Apri Inflo
l- l– l– ws (In terms of US$)
Marc Marc Marc (April,
h) h) h) 00 -
March,
17)
27,36 45,41 58,21
1. SERVICES SECTOR ** 9 5 4 316,568
(8,68 18 %
(4,44 (6,88 4) (59,476)
3) 9)

COMPUTER 14,16 38,35 24,60

2. SOFTWARE & 2 1 5 136,789
(3,65 7%
HARDWARE (2,29 (5,90 2) (24,669)
6) 4)

CONSTRUCTION
3. DEVELOPMENT: 4,652 727 703 114,639
TOWNSHIPS, HOUSING,
BUILT-UP (769) (113) (105) (24,293) 7%
INFRASTRUCTURE
TELECOMMUNICATIO 17,37 37,43
4. NS 2 8,637 5 130,164
(5,56 7%
(radio paging, cellular (2,89 (1,32 4) (23,946)
mobile, basic 5) 4)
telephone services)
AUTOMOBILE 16,76 16,43 10,82
5. INDUSTRY 0 7 4 92,218
(1,60 5%
(2,72 (2,52 9)
6) 7) (16,674)

DRUGS &
6. PHARMACEUTICALS 9,052 4,975 5,723 75,820
(1,49 4%
8)
(754) (857) (14,707)

16,75 25,24 15,72

7. 5 4 1 84,557 4%
TRADING (2,33
(2,72 (3,84 8)
8) 5) (14,211)

CHEMICALS (OTHER
8. THAN 4,658 9,664 9,397 68,952
(1,47 (1,39 4%
FERTILIZERS) (763) 0) 3) (13,293)

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 9. POWER 4,296 5,662 7,473 60,087
(1,11 3%
(707) (869) 3) (11,589)

10 METALLURGICAL 2,196 2,982 9,647 53,074

INDUSTRIES (1,44 3%
(359) (456) 0) (10,331)

Source: FDI Statistics, Department of Industrial Policy& Promotion, Ministry of Commerce & Industry,
Government of India, 2017.

The above Table No.6 depicts the sector having the highest FDI equity inflow in India. The
report shows that Service sector has the highest FDI Equity inflow 18%, followed by
Construction development, Computer Software and Hardware, Telecommunication, Automobile
Industry sector having 7%, 7%, 7%, and 5% respectively. Other sectors like Drugs and
Pharmaceuticals carries 4% and Chemicals, Power, Trading Industries carries4% and 3%
respectively FDI inflow each, whereas the least is of Metallurgical industries – 3%.

Table No. 7
II.DIPP’s – Financial Year-wise FDI Equity Inflows

(As per DIPP’s FDI data base – equity capital components only)

S. Amount of FDI %age

Nos Financial Year Inflows growth
over
(April – March) previous
FINANC year (in terms
IAL YEARS 2000-01 to 2016-17 In US$ of
In Rs Crores Million
US $)
1. 2000-01 10,733 2,463 -
2. 2001-02 18,654 4,065 ( + ) 65 %
3. 2002-03 12,871 2,705 ( - ) 33 %
4. 2003-04 10,064 2,188 ( - ) 19 %
5. 2004-05 14,653 3,219 ( + ) 47 %
6. 2005-06 24,584 5,540 ( + ) 72 %
7. 2006-07 56,390 12,492 (+ )125 %
8. 2007-08 98,642 24,575 ( + ) 97 %
9. 2008-09 142,829 31,396 ( + ) 28 %
10. 2009-10 123,120 25,834 ( - ) 18 %
11. 2010-11 97,320 21,383 ( - ) 17 %
12. 2011-12 165,146 35,121 (+) 64 %
13. 2012-13 121,907 22,423 (-) 36 %
14. 2013-14 147,518 24,299 (+) 8%
15. 2014-15 189,107 30,931 (+) 27%
16. 2015-16 262,322 40,001 (+) 29%

17. 2016-17 291,696 43,478 (+) 9%

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CUMULA TOT
TIVE AL
Cumulative total (from
April,2000 to March,2017) 1,787,555 332,112

Source: RBI’s Bulletin March, 2017

Table No. 8
DIPP’s – Financial Year-wise FDI Equity
Inflows:

(As per DIPP‟s FDI data base – equity capital components only):
S. Amount of FDI %age
Nos Financial Year Inflows growth
over
(April – March) previous
FINANC year (in terms
IAL YEARS 2000-01 to 2016-17 In US$ of
In Rs Crores Million
US $)
1. 2000-01 10,733 2,463 -
2. 2001-02 18,654 4,065 ( + ) 65 %
3. 2002-03 12,871 2,705 ( - ) 33 %
4. 2003-04 10,064 2,188 ( - ) 19 %
5. 2004-05 14,653 3,219 ( + ) 47 %
6. 2005-06 24,584 5,540 ( + ) 72 %
7. 2006-07 56,390 12,492 (+ )125 %
8. 2007-08 98,642 24,575 ( + ) 97 %
9. 2008-09 142,829 31,396 ( + ) 28 %
10. 2009-10 123,120 25,834 ( - ) 18 %
11. 2010-11 97,320 21,383 ( - ) 17 %
12. 2011-12 ^ 165,146 35,121 (+) 64 %
13. 2012-13 121,907 22,423 (-) 36 %
14. 2013-14 147,518 24,299 (+) 8%
15. 2014-15 # 189,107 30,931 (+) 27%
16. 2015-16 # 262,322 40,001 (+) 29%

17. 291,696 43,478

2016-17# (+) 9%

CUMULA TOT (from April, 2000 to March,

TIVE AL 2017)
1,787,555 332,112

Sources: RBI bulletin March2017

15
 The above Table No. 8 shows the total amount of FDI inflows in India during the last 15 years
i.e. 2000 to 2017. The FDI inflow from 2000-2001 i.e. 10,733 Crore Rs. in 2001-02 it was
18,654 Crore rupees.
It shows the Good result in the FDI inflows in India. Little bit ups and downs in FDI inflows up
to 2005-06, but after that great hike in the year 2007-08 i.e. 98,642crore rupees as compare to
earlier years.
In 2008-2009 there was a huge investment in FDI in 142,829 Crore Rupees and so on. But again
there were some fluctuations in inflow of FDI in the years between 2010-2014,soon giving the
highest figures in last 15 years 1,89,107 Crore Rupees FDI in 2014-2015 So we can say that the
foreign investment have been on rise in India. Currently the inflow of FDI from April, 2016 to
March, 2017 figures 291,696.
Table No. 9
RBI’S REGIONAL OFFICES (WITH STATE COVERED)
RECEIVED FDI EQUITY INFLOWS

(From April, 2000 to March, 2017)

Amount Rupees in Crores (US$ in millions

RBI’s - Cumulat
S. Regional State covered 2014-15 2015-16 2016-17 ive %age to total
(Apri (April (April Inflo
No. Office2 l- – – ws Inflows
Marc Marc Marc (April,
h) h) h) 00 - (in terms
March,
17) of US$)
MAHARASH
1 MUMBAI TRA, 38,933 62,731 131,980 547,733 31
(102,283
DADRA & (6,361) (9,511) (19,654) )
NAGAR
HAVELI,
DAMAN &
DIU
DELHI,
2 NEW DELHI PART OF 42,252 83,288 39,482 371,794 20
UP AND (6,875) (12,743) (5,884) (68,037)
HARYANA
TAMIL
3 CHENNAI NADU, 23,361 29,781 14,830 133,378 7
PONDICHE
RRY (3,818) (4,528) (2,218) (23,760)
KARNATAK
4 BANGALORE A 21,255 26,791 14,300 123,212 7
(3,444) (4,121) (2,132) (22,374)
AHMEDABA
5 D GUJARAT 9,416 14,667 22,610 91,074 5
(1,531) (2,244) (3,367) (16,652)
HYDERABA
6 D ANDHRA 8,326 10,315 14,767 74,322 4
PRADESH (1,369) (1,556) (2,195) (13,766)
WEST
7 KOLKATA BENGAL, 1,464 6,220 332 21,179 1
SIKKIM, (239) (955) (50) (3,985)

16
 ANDAMAN
&
NICOBAR
ISLANDS
8. KOCHI KERALA, 1,418 589 3,050 9,789 1
LAKSHADW
EEP (230) (90) (454) (1,755)
RAJASTHA
9 JAIPUR N 3,237 332 1,111 8,237 0.4
(541) (50) (165) (1,480)
10. BHOPAL MADHYA 601 518 515 7,129 0.4
PRADESH, (100) (80) (76) (1,372)
CHATTISG
ARH
CHANDIGAR CHANDIGA
11 H RH, 234 177 39 6,576 0.4
PUNJAB, (39) (27) (6) (1,364)
HARYANA,
HIMACHAL
PRADESH
12 PANAJI GOA 211 117 555 4,539 0.3
(35) (18) (83) (924)
13 KANPUR UTTAR 679 524 50 3,018 0.2
PRADESH, (110) (80) (8) (570)
UTTRANCH
AL

BHUBANESH
14 WAR ORISSA 56 36 83 2,080 0.1
(9) (6) (12) (416)
15 PATNA BIHAR, 68 272 69 607 0.03
JHARKHAN
D (11) (43) (10) (103)
16 GUWAHATI ASSAM, 29 66 15 462 0.03
ARUNACHA
L (5) (10) (2) (96)
PRADESH,
MANIPUR,
MEGHALA
YA,
MIZORAM,
NAGALAND
,
TRIPURA
17 JAMMU JAMMU & 25 11 2 39 0.00
KASHMIR (4) (2) (0.2) (6)
18 REGION NOT INDICATED 37,544 25,886 47,909 381,854 22
(6,211) (3,936) (7,162) (73,048)
SU 1,787,02
B. TOTAL 189,107 262,322 291,696 2
(331,991
(30,931) (40,001) (43,478) )
19 RBI’S-NRI SCHEMES 0 0 0 533 -

17
 (from 2000 to
2002) (121)
1,787,55
GRAND TOTAL 189,107 262,322 291,696 5 -
(332,112
(30,931) (40,001) (43,478) )

Source: RBI’s Bulletin March, 2017

The above table represents region-wise FDI equity inflows from 2000-17 both in terms of `
Crore and US $ million. Table shows that Mumbai has registered largest FDI inflow (547,733
Crore) amounting to 31% of total inflow received in last 15 years. New Delhi is the second
preferred region for FDI inflow (371,794 Crore) with 20% of total inflows received in last 15
years. This is due to good quality infrastructure and better quality of life provided in these cities.

Other regions like Chennai (133,378 Crore), Bangalore (123,212 Crore), Ahmedabad
(91,074Crore), Hyderabad (74,322 Crore) have also recorded FDI with 7%, 7%, 5% and 4% of
total FDI in the country respectively.

Sectors like service, construction developments, telecommunications and computer software &
hardware have been registering highest FDI inflows in India. Therefore, Mumbai, New Delhi,
Bangalore and Chennai are the favorite destinations for FDI in India.

GRAPHICAL REPRESENTATION OF THE ABOVE TABLES:

1. Graph 1(table 3):

FDI equity inflow(month wise) during

the financial year2016-17
50,000

40,000

30,000

20,000

10,000

0
apr may june july aug sep oct novr dec jan feb mar

Series1

The above bar graph represents the amount of FDI inflows from April 2016 to March, 2017. It
shows the amount in Crore Rs. The highest FDI inflows in the country is in the month October
2016 i.e. 41,353 in Rs Crores and 6,195 in US $ mn. Other months shows the fluctuating trend.

2. Graph 2(table 5):

18
 % of total inflows from different
countries in India(in terms of US dollar)
2% 2%
3% 3% Mauritius
singapore
7%
japan
38%
8% U.K.

8% netherland
U.S.A.
9%
germany
20%
cyprus

The largest inflows of FDI‟s over the period of April 2014 to March 2017 have been received
from Mauritius, its share in these inflows have being as high as 38%. Singapore is second with a
share of 20%. The other major sources of foreign direct investment are from Japan, U.K,
Netherlands, U.S.A., Germany, Cyprus, France, UAE and their respective share of inflow of FDI
are 9%, 8%, 8%, 7%, 3%, 3%, 2%, and 2% respectively.

The inflows from U.S.A are routed through Mauritius due to tax advantage. The tax advantage
emanates from the double tax avoidance agreement that India has with that country USA. This
agreement means that any foreign investor has the option of paying tax either in India or in
Mauritius.

3. Graph 3 (table 6):

Sectoral composition of FDI:-
The Sectoral composition of FDI over the period of April 2016to March2017, we can find that
the largest recipient of such investment is service sector (Financial and non-financial services).
The share of this sector in cumulative FDI flows is 29 % of the inflow total foreign direct
investment.
The foreign investors are interested in mainly financial services due its profit generating
advantage. This sector gives scope for the foreign investor to takes back the profits to the home
country. As service sector the services are consumed in the host country and there by generating
outflow of funds from the host country.
The second recipient is Computer software and hardware, sector which shares 11% of total FDI.
Construction, telecommunication, Automobile industry, Drugs and pharmaceuticals, trading,
Chemical ( Other than Fertilizers),Power, Metallurgical industries, contribute
11%,11%,8%,7%,7%,6%,5%5% respectively.
The keys takeaways regarding global flows are – the increase in the relative share of developing
countries as both destination and sources and flow to the sector gaining over manufacturing.

19
There are Sectoral limits or caps designed by the RBI to limit the foreign direct investments.
100% investment has been allowed to the following sectors- private sector banking, NBFC‟S,
petroleum, housing and Real estate, Hotel and tourism, road and highways, ports and harbors,
advertising, films, mass raped transportation, power, drug and pharmaceuticals, pollutions
control and management and special economic zones. Other sectors such as airports are allowed
with 74% caps and telecommunication with 49% and insurance with 26%.

% of sectors attracting highest FDI

equity inflow
5%
SERVICES SECTOR
5%
6% computer software &
29%
7% hardware
construction
7%

telecommunication
8% 11%

11% 11% automobile

4. Graph 4(table 8):

Percentage growth analysis (year wise):

The above graph shows the total amount of FDI inflows in India during the last 15 years i.e.
2000 to 2017. The FDI inflow from 2000-2001 i.e. 10,733crore Rs. in 2001-02 it was 18,654

20
Crore rupees. It shows the Good result in the FDI inflows in India. Little bit ups and downs in
FDI inflows up to 2005-06, but after that great hike in the year 2007-08 i.e. 98,642crore rupees
as compare to earlier years. In 2008-2009 there was a huge investment in FDI in 142,829 Crore
Rupees.
But then there was a downfall in Inflow of FDI in two consecutive years 2009-2010 and 2010-
2011, with figures 123,120 and 97,320 respectively. We can analysis from the graph that in the
year 2011-2012 the inflow of FDI was second highest of last 15 years i.e. 165,146.Year 2012-13
and 2013-14 the FDI inflow fluctuated from 121,907 to 147,618 respectively. In last Financial
Year i.e. 2016-2017 the amount of FDI Inflow were 262,322 which is the highest FDI inflow in
last 15 years.
5. Graph 5(table9):

Top 5 FDI inflows regions in India

mumbai new delhi chennai bangalore ahmedabad

7%
10%

44%
10%

29%

The above Figure shows the top five regions in India attracting FDI. It shows that out of 331,991
of Cumulative FDI inflow in the financial year April, 2016 to March, 2017, 44% share of the
total investment is carried by Mumbai region; also it continues to attract maximum foreign
investments followed by 29% - New Delhi, 10% - Chennai, 7% - Bangalore and 7% -
Ahmedabad 5%.

RESULT:
1. New FDI equity cap /reforms in deferent sectors in India:

s.no. Sector activity % of equity Entry route

FDI cap
1. Agriculture & Animal Husbandry 100% Automatic
2. Plantation Sector 100% Automatic
3. Mining:
a) Mining and Exploration of metal and non- 100% Automatic

21
 metal ores
b) Coal & Lignite 100% Automatic
c) Mining and mineral separation of titanium 100% Government
bearing minerals and ores, its value addition
and integrated activities
4. Petroleum & Natural Gas:
a) Exploration activities of oil and natural gas 100% Automatic
b) Petroleum refining by the Public Sector 49% Automatic
Undertakings (PSU)
5. Defence 49% Automatic up to
49%
6. Broadcasting:
a) Broadcasting Carriage Services 100% Automatic up to
49%
Government route
beyond 49%
b) Broadcasting Content Services 49% Government
c) Up-linking of Non-„News & Current Affairs‟ 100% Automatic
TV Channels/ Down-linking of TV Channels
7. Print Media 26% Government
8. Civil Aviation
a) Airports

(a) Greenfield projects 100% Automatic

(b) Existing projects 100% Automatic up to

74%
Government route
beyond 74%
b) Air Transport Services
(1) (a) Scheduled Air Transport Service/ 49% FDI Automatic
Domestic Scheduled Passenger Airline (100% for
(b) Regional Air Transport Service NRIs)
(2)Non-Scheduled Air Transport Service 100% Automatic
(3)Helicopter services/seaplane services 100% Automatic
requiring DGCA approval
c) Other services under Civil Aviation sector
(1)Ground Handling Services subject to 100% Automatic
sectoral regulations and security clearance
(2)Maintenance and Repair organizations; 100% Automatic
flying training institutes; and technical training
institutions.
9. Construction Development: Townships, 100% Automatic
Housing, Built-up Infrastructure
10. Industrial Parks 100% Automatic
11. Satellites- establishment and operation 100% Government
12. Private Security Agencies 49% Government

22
 13. Telecom Services 100% Automatic up to
49%
Government route
beyond 49%
14. Trading :
a) Cash & Carry Wholesale Trading/Wholesale 100% Automatic
Trading (including sourcing from MSEs)
b) E-commerce activities 100% Automatic
c) Single Brand product retail trading 100% Automatic up to
49%
Government route
beyond 49%
d) Multi Brand Retail Trading 51% Government
e) Duty Free Shops 100% Automatic
15. Railway Infrastructure 100% Automatic
16. Asset Reconstruction Companies 100% Automatic
17. Banking- Private Sector 74% Automatic up to
49%
Government route
beyond 49% and
up to 74%.
18. Banking- Public Sector 20% Government
19. Credit Information Companies (CIC) 100% Automatic
20. Infrastructure Company in the Securities 49% Automatic
Market
21. Insurance 49% Automatic
22. Pension sector 49% Automatic
23. Power exchange 49% Automatic

24. White Label ATM Operations 100% Automatic

25. Non-Banking Finance Companies (NBFC) 100% Automatic

26. Pharmaceuticals:

a) Greenfield 100% Automatic

b) brownfield 100% Government
Table: 2 (sources: dipp report 2016)

2. The various determinants of FDI:

The determinant varies from one country to another due their unique characteristics and
opportunities for the potential investors. In specific the determinants of FDI in India are:

1) Stable policies: India stable economic and socio policies have attracted investors across
border. Investors prefer countries which stable economic policies. If the government

23
 makes changes in policies which will have effect on the business. The business requires a
lot of funds to be deployed and any change in policy against the investor will have a
negative effect.

2) Economic factors: Different economic factors encourage inward FDI. These include
interest loans, tax breaks, grants, subsidies and the removal of restrictions and limitation.
The government of India has given many tax exemption and subsidies to the foreign
investors who would help in developing the economy.

3) Cheap and labour: There is abundant labour available in India in terms of skilled and
unskilled human resources. Foreign investors will to take advantage of the difference in
the cost of labour as we have cheap and skilled labours. Example: Foreign firms have
invested in BPO‟s in India which require skilled labour and we have been providing the
same.

4) Basic infrastructure: India though is a developing country, it has developed special

economic zone where there have focused to build required infrastructure such as roads,
effective transportation and registered carrier departure worldwide, Information and
communication network/technology, powers, financial institutions, and legal system and
other basic amenities which are must for the success of the business. A sound legal
system and modern infrastructure supporting an efficient distribution of goods and
services in the host country.

5) Unexplored markets: In India there is large scope for the investors because there is a
large section of markets have not explored or unutilized. In India there is enormous
potential customer market with large middle class income group who would be target
group for new markets. Example: BPO was one sector where the investors had large
scope exploring the markets where the service was provided with just a call, with almost
customer satisfaction.
6) Availability of natural resources: As we that India has large volume of natural
resources such as coal, iron ore, Natural gas etc. If natural resources are available they
can be used in production process or for extraction of mines by the foreign investors.

3. Growth of FDI inflow in India during Prime Minister MR.NARENDRA MODI

government:
With the help of all these graphs we found that:
Graph1: That amount of FDI inflows from April 2016 to March, 2017. It shows the
amount in Crore Rs. The highest FDI inflows in the country is in the month October 2016
i.e. 41,353 in Rs Crores and 6,195 in US $ mn. Other months shows the fluctuating trend.

Graph2: That the largest inflows of FDI‟s over the period of April 2014 to March 2017
have been received from Mauritius, its share in these inflows have being as high as 38%.
Singapore is second with a share of 20%. The other major sources of foreign direct
investment are from Japan, U.K, Netherlands, U.S.A., Germany, Cyprus, France, UAE

24
 and their respective share of inflow of FDI are 9%, 8%, 8%, 7%, 3%, 3%, 2%, and 2%
respectively.

Graph3: The Sectoral composition of FDI over the period of April 2016to March2017,
we can find that the largest recipient of such investment is service sector (Financial and
non-financial services). The share of this sector in cumulative FDI flows is 29 % of the
inflow total foreign direct investment
The second recipient is Computer software and hardware, sector which shares 11% of
total FDI. Construction, telecommunication, Automobile industry, Drugs and
pharmaceuticals, trading, Chemical ( Other than Fertilizers),Power, Metallurgical
industries, contribute 11%,11%,8%,7%,7%,6%,5%5% respectively.

Graph4: The above graph shows the total amount of FDI inflows in India during the last
15 years i.e. 2000 to 2017. The FDI inflow from 2000-2001 i.e. 10,733crore Rs. in 2001-
02 it was 18,654 Crore rupees. It shows the Good result in the FDI inflows in India. Little
bit ups and downs in FDI inflows up to 2005-06, but after that great hike in the year
2007-08 i.e. 98,642crore rupees as compare to earlier years. In 2008-2009 there was a
huge investment in FDI in 142,829 Crore Rupees.

Graph5: That top five regions in India attracting FDI. It shows that out of 331,991 of
Cumulative FDI inflow in the financial year April, 2016 to March, 2017, 44% share of
the total investment is carried by Mumbai region; also it continues to attract maximum
foreign investments followed by 29% - New Delhi, 10% - Chennai, 7% - Bangalore and
7% - Ahmedabad 5%.

CONCLUSION:
FDI in India has a significant role in the economic growth and development of India. FDI in
India to various sectors can attain sustained economic growth and development through
creation of jobs, expansion of existing manufacturing industries. The inflow of FDI in service
sectors and construction and development sector, from April, 2014 to March, 2017 attained
substantial sustained economic growth and development through creation of jobs in India.

Computer, Software & Hardware and Drugs & Pharmaceuticals sector were the other sectors
to which attention was shown by Foreign Direct Investors (FDI). The other sectors in Indian
economy the Foreign Direct Investors interest was, in fact has been quite poor.

With the help of Make in India camping India received US$63 billion in FDI and just
because of Prime Minister Mr.Narendra Modi India has been make top destination country in
the world in FDI according to Fdi report 2017 with $63billion total investment in the year of
2016 and Japan is the 4th largest FDI contributor to India.

25
 REFERRNCE:
Ahluwalia, M. S. (2011), FDI in multi-brand retail is good, benefits farmers. The Times of India.

Babar N.S. Dr. (2012), Structure of Foreign Direct Investment in India during globalisation period.
Indian Streams Research Journal.

Basu Parantap & Chakraborty Chandana (2002), Foreign direct investment and growth in India: a co
integration approach. Applied Economics.

Division of International Trade and Finance of the Department of Economic and Policy Research,
Foreign Direct Investment flows to India. Reserve Bank of India publication.

Jain Mamta Dr. & Sukhlecha Lodhane Meenal, (2012). FDI in multi brand retail: Is the need of the
Hour? International Journal of Multidisciplinary Research. Vol.2.

Kumar Gulshan & Gupta Sanjeev (2010). Forecasting exports of industrial goods from Punjab – An
application of univariate ARIMA model. Annals of the University of Petrosani, Economics.

Park Jongsoo (2004). Korean Perspective on FDI in India: Hyundai motors Industrial cluster. Economic
and Political Weekly.

www.rbi.org
www.dipp.gov.in
www.fdireport.com
www.unctad.ord
www.imf.org
www.dundee.ac.in

26