FDI INFLOWS INTO INDIA:

Chart : FDI Inflows for the financial year 2010-11

Amount of FDI Inflows(Rs.Crore) 2010-11

18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 Amount of FDI Inflows(Rs.Crore) 2009-10

Source: www.dipp.gov.in. Percentage Growth over last year (+) 04 %. Amount of FDI Inflows during 2010-11(from April 2010 to January 2011) Rs. 109925 crore

Chart : FDI Inflows for the year 2011

Amount of FDI Inflows (Rs. Crore) 2011

18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 May-11 Apr-11 Oct-11 Mar-11 Aug-11 Nov-11 Dec-11 Jan-11 Feb-11 Jun-11 Amount of FDI Inflows (Rs. Crore) 2009

Jul-11

Source: www.dipp.gov.in. Percentage Growth over last year (+) 02 %. Amount of FDI Inflows during 2011 (from January 2011 to December 2011) Rs. 131237 crore.

Sep-11

Chart : From April 2003 to January 2012

FDI Inflows(Amount US $ Million)

35000 30000 25000 20000 15000 10000 5000 0 FDI Inflows(Amount US $ Million)

Chart : YOY Growth from April 2004 to 2012

YOY Growth In FDI Inflows

160% 140% 120% 100% Axis Title 80% 60% 40% 20% 0% 200405 52% 200506 18% 200607 14% 200708 40% 200809 48% 200910 146% 201011 53% 201112 42%

YOY Growth In FDI Inflows

Chart : From April 2002 to January 2012

20,000 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0

19,280 16,582 10,918 8,686 9,926 1,8471,505 3.5 377 14,611

Investment by FII's (US $ million)

Interpretation:
If we analyze the FDI investment pattern in 2012, they invested heavily into the Indian equities in the first four months (till April). But as soon as it became clear that the reform oriented NDA government has been voted out, they beat a hasty retreat in May 2004. To the current government's credit, they managed to infuse confidence in India as an investment destination by continuing on the path to reform.

Chart : Share of top Investing countries FDI equity inflows

% age to total inflows (April11 to Jan. 12) (in terms of rupees)

MAURITIUS SINGAPORE U.S.A. U.K. NETHERLANDS CYPRUS JAPAN GERMANY U.A.E. FRANCE

Note: Total FDI Inflows Rs 503,051 crores

Interpretation:
As from the chart it can be seen that among countries, Mauritius has been the largest direct investor in India. Firms based in Mauritius invested over 53% out of total FDI inflows of Rs. 503,051. Mauritius has low rates of taxation and an agreement with India on double tax avoidance regime. To take advantage of that situation, many companies have set up dummy companies in Mauritius before investing to India. Also, a major part of the investments from Mauritius to India are actually round-tripping by Indian

firms, not unlike that between Mainland China and Hong Kong. India continues to attract investors in the high value added services industry sectors, particularly financial services & information technology. Multinationals seek economies of scale & productivity gains in their IT & business process outsourcing (BPO) functions in established cities such as Bangalore, Mumbai & Delhi. They are also diversifying to lower-cost cities such as Pune & Kolkata amid attrition & wage inflation pressures in the first-tier cities. In addition, companies are locating more sophisticated functions such as equity research & high-end analytics in India, tapping into its vast pool of educated & increasingly experienced talent.

The United States (US) is the third largest investor in India. The total capital flows from the US was around 10% of the FDI inflows between April 00 to Jan.10. Most of the US investments were directed to the fuels, telecom, electrical equipment, food processing, and services sectors. The United Kingdom (UK) and the Netherlands are Indias fourth & fifth largest FDI inflows. The investments from these countries to India are primarily concentrated in the power/energy, telecom, and transportation sectors. Japan was the seventh largest source of cumulative FDI inflows in India between April00 to Jan.10, but inflows from Japan to India have decreased during this time period. It is hard to explain the recent decline of Japanese FDI to India and it might as well be a temporary anomaly. India, however, continues to be one of the biggest recipients of Japanese Official Development Assistance (ODA). Most of the assistance was in building infrastructure, including electricity generation, transportation, and water supply. It is plausible that Japanese government assistance has crowded out some private sector investment from Japan.

Chart : From April 2011 to January 2012

TOP 10 SECTORS ATTRACTING FDI

FDI Inflow( US $ million)

25,000.00 20,000.00 15,000.00 10,000.00 5,000.00 0.00

FDI Inflow( US $ million)

Interpretation
Services sector have attracted the highest FDI of around US $ 23,125.14 million in recent years. This is mainly because of the high rate of return and liberal policies. Telecom sector stands at the third position in attracting FDI with a total of US $ 8,838.07 millions. This can be basically credited to the hike in the FDI cap and also recent changes in various policies.

Chart: Percentage of the Cumulative Inflows (April 11 Jan. 12)

%age to Total FDI Inflows

25.00 20.00 Axis Title 15.00 10.00 5.00 %age to Total FDI Inflows 0.00

Interpretation:
As it is evident from the chart, service sector contributes around 21.52% of total FDI inflows to India, which makes it the top sector attracting FDI. Computer software & hardware has a share of 8.92% in total FDI inflow with Telecom getting around 8.41% of foreign investments. In Telecommunications & Utilities sector India surpasses China for being the preferred destination of investment.

Chart : FDI INFLOW IN TELECOM US $

FDI Inflow In Telecom(US $ in million)

3500 3000 2500 2000 1500 1000 500 0 FDI Inflow In Telecom(US $ in million)

Interpretation:
The increase in foreign direct investment limit to 74% up from the previous cap of 49% in the sector coupled with the simplification of the long distance license condition resulted in the significant increase in foreign investments wherein the share of telecom in Indias FDI rose from 3-4% to 8.41% in the year 2010. In the field of telecommunications various investment opportunities can be in terms of setting up of manufacturing facilities, supply of handsets &equipments, telecom & value added service.

Chart : FDI Inflows from April 2003 to May 2012 Telecom sector Total FDI Inflow from April 2003 to May 2012 is US $ 7,369 million

FDI ( US $ in millions)
3000 2500 2000 1500 1000 500 0

FDI ( US $ in millions)

Interpretation
The increased FDI in telecom sector is the result of the recent changes in the policies that is investor friendly, credible and has predictable regulations that would facilitate greater foreign capital inflows and send a positive signal in the present economic scenario. It is also due to the modifications in the guidelines for calculation of foreign investment and the

transfer of ownership or control of Indian companies to non-resident entities.

The fiscal ended March 31, 2012 has been the high revenue growth period for the telecom sector. The telecom services industry registered a growth of 20.7 percent clocking revenues of Rs.1,57,542 crore in 2011-12 compared to Rs.1,30,561 crore in the previous year. During the year 2009-10, government had raised the FDI limit in telecom sector from 49 percent to 74 percent, which has contributed to the robust growth of FDI in the sector.

The telecom sector registered a growth of 103 percent during fiscal 2010-11 as compared to previous fiscal according to the latest Annual FDI Report by ASSOCH AM. The greater chunk of foreign investments has flown into states that are doing well industrially and commercially and which have an investor-friendly business environment.

Listed telecom operators like Bharti Airtel, Reliance Communication, Idea Cellular and Tata Communication which have emerged as favorites among foreign institutional investors on Dalal Street.

In a similar move last year, Japanese mobile operator NTT Docomo acquired a 26 percent stake in Tata Teleservices (TTL). Other strides in the sector during the year included policy initiatives pertaining to the allocation of spectrum for the 3G and broadband wireless access (BWA) services and mobile number portability. This has led several players to take advantage and get ahead of their pack

Chart : Sector wise FDI inflows:

From April 2000 to June 2009

Total FDI Inflows in US $ Millions =7050.88