PROJECT REPORT ON FOREIGN DIRECT INVESTMENT IN INDIA

UNIVERSITY OF MUMBAI

BACHELOR OF COMMERCE (FINANCIAL MARKETS) SEMESTER V 2011-12

SUBMITTED BY PRATIK JAIN

PROJECT GUIDE PROF. SAIRA BANOO SHAIKH

K.P.B HINDUJA COLLEGE OF COMMERCE 315, NEW CHARNI ROAD, MUMBAI-400 004 B.Com (Financial Markets)
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SEMESTER V

FOREIGN DIRECT INVESTMENT IN INDIA

SUBMITTED BY PRATIK JAIN ROLL NO: 49

CERTIFICATE
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This is to certify that Mr. PRATIK JAIN of B.Com Financial Markets Semester- V [2011-12] has successfully completed the Project on FOREIGN DIRECT INVESTMENT IN INDIA under the guidance of Prof. SAIRA BANOO SHAIKH

Project Guide

________________

Course Coordinator

________________

Internal Examiner

________________

External Examiner

________________

Principal

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DECLARATION

I Mr. PRATIK JAIN student of B.Com-Financial Markets, semester- V (2011-2012), hereby declare that I have completed the project on FOREIGN DIRECT INVESTMENT IN INDIA

The information submitted is true and original copy to the best of my knowledge.

PRATIK JAIN

(Signature)

ACKNOWLEDGEMENTS

I feel the pleasure to have an opportunity to express my deep and sincere feelings of gratitude towards all the personalities who have helped me to convert my dreams into the reality.

Sincere thanks to my Project Mentor Prof. Saira Banoo Shaikh for her guidance and support at every step while completing this project and providing me the accurate and detailed information to complete this report as part of my curriculum. Without her continuous help and enthusiasm the project would not have been materialized in the present form.

I also extent my sincere thanks to our Course Co-ordinator, Prof. Khyati Vora, for her much required coordination and encouragement which helped me in coming up with successful completion of this project.

I pay my sincere regards to my parents and friends who always encouraged and helped me in the preparation of this project.

INDEX

SR .NO 1 2 3 4

CHAPTER Introduction Entry mode FDI in India FDI:Indian scenario

PAGE NUMBER 7-15 16-17 18-26 27-37

Foreign investment through GDRs

38-39

6 7

Analysis Low income countries in global FDI race

40-49 50-52

8 9 10

Conclusion annexure Bibliography

53-55 56 57

CHAPTER 1.
INTRODUCTION
FDI stand for foreign direct investment. The simplest explanation of FDI would be a direct investment by a corporation in a commercial venture in another country. A key to separating this action from involvement in other ventures in a foreign country is that the business enterprise operates completely outside the economy of the corporations home country. The investing corporation must control 10 percent or more of the voting power of the new venture. FDI stands for Foreign Direct Investment, a component of a country's national financial accounts. Foreign direct investment is investment of foreign assets into domestic structures, equipment, and organizations. It does not include foreign investment into the stock markets. Foreign direct investment is thought to be more useful to a country than investments in the equity of its companies because equity investments are potentially "hot money" which can leave at the first sign of trouble, whereas FDI is durable and generally useful whether things go well or badly One key to understanding FDI is to get a mental picture of the global scale of corporations able to make such investment. A carefully planned FDI can provide a huge new market for the company, perhaps introducing products and services to an area where they have never been available. Not only that, but such an investment may also be more profitable if construction costs and labor costs are less in the host country. The definition of FDI originally meant that the investing corporation gained a significant number of shares (10 percent or more) of the new venture. In recent
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years, however, companies have been able to make a foreign direct investment that is actually long-term management control as opposed to direct investment in buildings and equipment. FDI growth has been a key factor in the international nature of business that many are familiar with in the 21st century. This growth has been facilitated by changes in regulations both in the originating country and in the country where the new installation is to be built. Corporations from some of the countries that lead the worlds economy have found fertile soil for FDI in nations where commercial development was limited, if it existed at all. The dollars invested in such developing-country projects increased 40 times over in less than 30 years. The financial strength of the investing corporations has sometimes meant failure for smaller competitors in the target country. One of the reasons is that foreign direct investment in buildings and equipment still accounts for a vast majority of FDI activity. Corporations from the originating country gain a significant financial foothold in the host country. Even with this factor, host countries may welcome FDI because of the positive impact it has on the smaller economy. It usually involves participation in management, joint-venture, transfer of technology and expertise. There are two types of FDI: inward foreign direct investment and outward foreign direct investment, resulting in a net FDI inflow (positive or negative) .Foreign direct investment reflects the objective of obtaining a lasting interest by a resident entity in one economy (direct investor) in an entity resident in an economy other than that of the investor (direct investment enterprise).The lasting interest implies the

existence of a long-term relationship between the direct investor and the enterprise and a significant degree of influence on the management of the enterprise. Direct investment involves both the initial transaction between the two entities and all subsequent capital transactions between them and among affiliated enterprises, both incorporated and unincorporated.
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 Foreign Direct Investment when a firm invests directly in production or other facilities, over which it has effective control, in a foreign country. Manufacturing FDI requires the establishment of production facilities. Service FDI requires building service facilities or an investment foothold via capital contributions or building office facilities. Host country the country in which a foreign subsidiary operates. Flow of FDI the amount of FDI undertaken over a given time. Stock of FDI total accumulated value of foreign-owned assets. Outflows/Inflows of FDI the flow of FDI out of or into a country. Stocks, bonds, other forms of debt. Differs from FDI, which is the investment in physical assets.

1.1 Definition
Foreign direct investment is that investment, which is made to serve the business interests of the investor in a company, which is in a different nation distinct from the investor's country of origin. A parent business enterprise and its foreign affiliate are the two sides of the FDI relationship. Together they comprise an MNC. The parent enterprise through its foreign direct investment effort seeks to exercise substantial control over the foreign affiliate company. 'Control' as defined by the UN, is ownership of greater than or equal to 10per cent of ordinary shares or access to voting rights in an incorporated firm. For an unincorporated firm one needs to consider an equivalent criterion. Ownership share amounting to less than that stated above is termed as portfolio investment and is not categorized as FDI.
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. FDI or Foreign Direct Investment is any form of investment that earns interest in enterprises which function outside of the domestic territory of the investor. FDIs require a business relationship between a parent company and its foreign subsidiary. Foreign direct business relationships give rise to multinational corporations. For an investment to be regarded as an FDI, the parent firm needs to have at least 10per cent of the ordinary shares of its foreign affiliates. The investing firm may also qualify for an FDI if it owns voting power in a business enterprise operating in a foreign country.

1.2 History
In the years after the Second World War global FDI was dominated by the United States, as much of the world recovered from the destruction brought by the conflict. The US accounted for around three-quarters of new FDI (including reinvested profits) between 1945 and 1960. Since that time FDI has spread to become a truly global phenomenon, no longer the exclusive preserve of OECD countries. FDI has grown in importance in the global economy with FDI stocks now constituting over 20 percent of global GDP. Foreign direct investment (FDI) is a measure of foreign ownership of productive assets, such as factories, mines and land. Increasing foreign investment can be used as one measure of growing economic globalization. Figure below shows net inflows of foreign direct investment as a percentage of gross domestic product (GDP). The largest flows of foreign investment occur between the industrialized countries (North America, Western Europe and Japan). But flows to non-industrialized countries are increasing sharply.

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1.3 Foreign Direct investor

A foreign direct investor is an individual, an incorporated or unincorporated public or private enterprise, a government, a group of related individuals, or a group of related incorporated and/or unincorporated enterprises which has a direct investment enterprise that is, a subsidiary, associate or branch operating in a country other than the country or countries of residence of the foreign direct investor or investors.

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1.4 Types of FDI

1.4.1 BY DIRECTION: Outward FDIs Inward FDIs

Outward

FDI: An outward-bound FDI is backed by the government against

all types of associated risks. This form of FDI is subject to tax incentives as well as disincentives of various forms. Risk coverage provided to the domestic industries and subsidies granted to the local firms stand in the way of outward FDIs, which are also known as 'direct investments abroad.' Inward FDIs: Different economic factors encourage inward FDIs. These include interest loans, tax breaks, grants, subsidies, and the removal of restrictions and limitations. Factors detrimental to the growth of FDIs include
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necessities of differential performance and limitations related with ownership patterns. 1.4.2 Other categorizations of FDI Other categorizations of FDI exist as well. Vertical Foreign Direct Investment takes place when a multinational corporation owns some shares of a foreign enterprise, which supplies input for it or uses the output produced by the MNC. Horizontal foreign direct investments happen when a multinational company carries out a similar business operation in different nations. Horizontal FDI the MNE enters a foreign country to produce the same products product at home. Conglomerate FDI the MNE produces products not manufactured at home. Vertical FDI the MNE produces intermediate goods either forward or backward in the supply stream. Liability of foreignness the costs of doing business abroad resulting in a competitive disadvantage.

1.5 Methods of Foreign Direct Investments

The foreign direct investor may acquire 10per cent or more of the voting power of an enterprise in an economy through any of the following methods:

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 participating in an equity joint venture with another investor or enterprise

Foreign direct investment incentives may take the following forms:

Low corporate tax and income tax rates

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tax holidays other types of tax concessions preferential tariffs special economic zones investment financial subsidies soft loan or loan guarantees free land or land subsidies relocation & expatriation subsidies job training & employment subsidies infrastructure subsidies R&D support derogation from regulations (usually for very large projects)

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CHAPTER 2 ENTRY MODE FOR FDI

The manner in which a firm chooses to enter a foreign market through FDI. International franchising Branches Contractual alliances Equity joint ventures Wholly foreign-owned subsidiaries Investment approaches: Greenfield investment (building a new facility) Cross-border mergers Cross-border acquisitions Sharing existing facilities

2.1 FDI important for any consideration of going global

The simple answer is that making a direct foreign investment allows companies to accomplish several tasks: 1 . Avoiding foreign government pressure for local production. 2. Circumventing trade barriers, hidden and otherwise. 3. Making the move from domestic export sales to a locally-based national
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sales office. 4. Capability to increase total production capacity. 5. Opportunities for co-production, joint ventures with local partners, joint marketing arrangements, licensing, etc;

A more complete response might address the issue of global business partnering in very general terms. While it is nice that many business writers like the expression, think globally, act locally, this often used clich does not really mean very much to the average business executive in a small and medium sized company. The phrase does have significant connotations for multinational corporations. But for executives in SMEs, it is still just another buzzword. The simple explanation for this is the difference in perspective between executives of multinational corporations and small and medium sized companies. Multinational corporations are almost always concerned with worldwide manufacturing capacity and proximity to major markets. Small and medium sized companies tend to be more concerned with selling their products in overseas markets. The advent of the Internet has ushered in a new and very different mindset that tends to focus more on access issues. SMEs in particular are now focusing on access to markets, access to expertise and most of all access to technology.

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CHAPTER 3 ROLE OF FDI IN INDIAN ECONOMY

The economy of India is the third largest in the world as measured by purchasing power parity (PPP), with a gross domestic product (GDP) of US $3.611 trillion. When measured in USD exchange-rate terms, it is the tenth largest in the world, with a GDP of US $800.8 billion (2006). is the second fastest growing major economy in the world, with a GDP growth rate of 8.9per cent at the end of the first quarter of 2006-2007. However, India's huge population results in a per capita income of $3,300 at PPP and $714 at nominal. The economy is diverse and encompasses agriculture, handicrafts, textile, manufacturing, and a multitude of services. Although two-thirds of the Indian workforces still earn their livelihood directly or indirectly through agriculture, services are a growing sector and are playing an increasingly important role of India's economy. The advent of the digital age, and the large number of young and educated populace fluent in English, is gradually transforming India as an important 'back office' destination for global companies for the outsourcing of their customer services and technical support. India is a major exporter of highly-skilled workers in software and financial services, and software engineering. India followed a socialist-inspired approach for most of its independent history, with strict government control over private sector participation, foreign trade, and foreign direct investment. However, since the early 1990s, India has gradually opened up its markets through economic reforms by reducing government controls on foreign trade and investment. The privatization of publicly owned industries and the opening up of certain sectors to private and foreign interests has proceeded slowly amid
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political debate. India faces a burgeoning population and the challenge of reducing economic and social inequality. Poverty remains a serious problem, although it has declined significantly since independence, mainly due to the green revolution and economic reforms. FDI up to 100per cent is allowed under the automatic route in all activities/sectors except the following which will require approval of the Government: Activities/items that require an Industrial License; Proposals in which the foreign collaborator has a previous/existing venture/tie up in India FDI in India includes FDI inflows as well as FDI outflow from India. Also FDI foreign direct investment and FII foreign institutional investors are a separate case study while preparing a report on FDI and economic growth in India. FDI and FII in India have registered growth in terms of both FDI flows in India and outflow from India. The FDI statistics and data are evident of the emergence of India as both a potential investment market and investing country. FDI has helped the Indian economy grow, and the government continues to encourage more investments of this sort - but with $5.3 billion in FDI . India gets less than 10per cent of the FDI of China. Foreign direct investment (FDI) in India has played an important role in the development of the Indian economy. FDI in India has - in a lot of ways - enabled India to achieve a certain degree of financial stability, growth and development. This money has allowed India to focus on the areas that may have needed economic attention, and address the various problems that continue to challenge the country. India has continually sought to attract FDI from the worlds major investors. In 1998 and 1999, the Indian national government announced a number of reforms designed to encourage FDI and present a favorable scenario for investors. FDI investments are permitted through financial collaborations, through private equity or preferential allotments, by way of capital markets through Euro issues, and in joint ventures. FDI is not permitted in the arms,
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nuclear, railway, coal & lignite or mining industries. A number of projects have been announced in areas such as electricity generation, distribution and transmission, as well as the development of roads and highways, with opportunities for foreign investors. The Indian national government also provided permission to FDIs to provide up to 100per cent of the financing required for the construction of bridges and tunnels, but with a limit on foreign equity of INR 1,500 crores, approximately $352.5m. Currently, FDI is allowed in financial services, including the growing credit card business. These services include the non-banking financial services sector. Foreign investors can buy up to 40per cent of the equity in private banks, although there is condition that stipulates that these banks must be multilateral financial organizations. Up to 45per cent of the shares of companies in the global mobile personal communication by satellite services (GMPCSS) sector can also be purchased. By 2004, India received $5.3 billion in FDI, big growth compared to previous years, but less than 10per cent of the $60.6 billion that flowed into China. Why does India, with a stable democracy and a smoother approval process, lag so far behind China in FDI amounts? Although the Chinese Approval process is complex; it includes both national and regional approval in the same process. Federal democracy is perversely an impediment for India. Local authorities are not part of the approvals process and have their own rights, and this often leads to projects getting bogged to projects getting bogged down in red tape and bureaucracy. India actually receives less than half the FDI that the federal government approves.

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3.1 INVESTMENT RISKS IN INDIA

3.1.1Sovereign Risk
India is an effervescent parliamentary democracy since its political freedom from British rule more than 50 years ago. The country does not face any real threat of a serious revolutionary movement which might lead to a collapse of state machinery. Sovereign risk in India is hence nil for both "foreign direct investment" and "foreign portfolio investment." Many Industrial and Business houses have restrained themselves from investing in the North-Eastern part of the country due to unstable conditions. Nonetheless investing in these parts is lucrative due to the rich mineral reserves here and high level of literacy. Kashmir on the northern tip is a militancy affected area and hence investment in the state of Kashmir are restricted by law

3.1.2Political Risk
India has enjoyed successive years of elected representative government at the Union as well as federal level. India suffered political instability for a few years in the sense there was no single party which won clear majority and hence it led to the formation of coalition governments. However, political stability has firmly returned since the general elections in 1999, with strong and healthy coalition governments emerging. Nonetheless, political instability did not change India's bright economic course though it delayed certain decisions relating to the economy. Economic liberalization which mostly interested foreign investors has been accepted as essential by all political parties including the Communist Party of India Though there are bleak chances of political instability in the future, even if such a situation arises the economic policy of India would hardly be affected.. Being a strong democratic nation the chances

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of an army coup or foreign dictatorship are minimal. Hence, political risk in India is practically absent.

3.1.3Commercial Risk
Commercial risk exists in any business ventures of a country. Not each and every product or service is profitably accepted in the market. Hence it is advisable to study the demand / supply condition for a particular product or service before making any major investment. In India one can avail the facilities of a large number of market research firms in exchange for a professional t involves some kind of gamble and hence involves commercial risk

3.1.4 Risk Due To Terrorism

In the recent past, India has witnessed several terrorist attacks on its soil which could have a negative impact on investor confidence. Not only business environment and return on investment, but also the overall security conditions in a nation have an effect on FDI's. They believe the negative impact of terrorist attacks would be a short term phenomenon. In the long run, it is the micro and macro economic conditions of the Indian economy that would decide the flow of foreign investment and in this regard India would continue to be a favorable investment destination.

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3.2 FDI Policy in India 3.2.1 Foreign Direct Investment Policy

FDI policy is reviewed on an ongoing basis and measures for its further liberalization are taken. Change in sectoral policy/sectoral equity cap is notified from time to time through Press Notes by the Secretariat for Industrial Assistance (SIA) in the Department of Industrial Policy announcement by SIA are subsequently notified by RBI under FEMA. All Press Notes are available at the website of Department of Industrial Policy & Promotion. FDI Policy permits FDI up to 100 per cent from foreign/NRI investor without prior approval in most of the sectors including the services sector under automatic route. The investors are required to notify the Regional office concerned of RBI of receipt of inward remittances within 30 days of such receipt and will have to file the required documents with that office within 30 days after issue of shares to foreign investors. The FDI policy of India has imposed certain foreign direct investment regulations as per the FDI theory of the Government of India. These include FDI limits in India for example: Foreign direct investment in India in infrastructure development projects excluding arms and ammunitions, atomic energy sector, railways system , extraction of coal and lignite and mining industry is allowed upto 100per cent equity participation with the capping amount as Rs. 1500 crores. FDI figures in equity contribution in the finance sector cannot exceed more than 40per cent in banking services including credit card operations and in insurance sector only in joint ventures with local insurance companies.
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 FDI limit of maximum 49per cent in telecom industry especially in the GSM services

3.2.2 Government Approvals for Foreign Companies Doing Business in India

Government Approvals for Foreign Companies Doing Business in India or Investment Routes for Investing in India, Entry Strategies for Foreign Investors India's foreign trade policy has been formulated with a view to invite and encourage FDI in India. The Reserve Bank of India has prescribed the administrative and compliance aspects of FDI. A foreign company planning to set up business operations in India has the following options: Investment under automatic route Investment through prior approval of Government 3.2.3Procedure under automatic route FDI in sectors/activities to the extent permitted under automatic route does not require any prior approval either by the Government or RBI. The investors are only required to notify the Regional office concerned of RBI within 30 days of receipt of inward remittances and file the required documents with that office within 30 days of issue of shares to foreign investors. List of activities or items for which automatic route for foreign investment is not available, include the following:

Banking NBFC's Activities in Financial Services Sector Petroleum Including Exploration/Refinery/Marketing Housing & Real Estate Development Sector for Investment Venture Capital Fund and Venture Capital Company
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Investing Companies in Infrastructure & Service Sector Agriculture (Including Plantation) Print Media Broadcasting Postal Services

3.2.4 Procedure Under Government Approval

FDI in activities not covered under the automatic route, requires prior Government approval and are considered by the Foreign Investment Promotion Board (FIPB). Approvals technical of composite proposals are also involving granted foreign on the

investment/foreign

collaboration

recommendations of the FIPB. Application for all FDI cases, except NonResident Indian (NRI) investments and 100per cent Export Oriented Units (EOUs), should be submitted to the FIPB Unit, Department of Economic Affairs (DEA), Ministry of Finance. Application for NRI and 100per cent EOU cases should be presented to SIA in Department of Industrial Policy & Promotion. 3.2.5 Investment By Way Of Share Acquisition A foreign investing company is entitled to acquire the shares of an Indian company without obtaining any prior permission of the FIPB subject to prescribed parameters/ guidelines. If the acquisition of shares directly or indirectly results in the acquisition of a company listed on the stock exchange, it would require the approval of the Security Exchange Board of India. 3.2.6 New Investment By An Existing Collaborator In India A foreign investor with an existing venture or collaboration (technical and financial) with an Indian partner in particular field proposes to invest in another area, such type of additional investment is subject to a prior approval from the
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FIPB, wherein both the parties are required to participate to demonstrate that the new venture does not prejudice the old one.

3.2.7 General Permission Of RBI Under FEMA Indian companies having foreign investment approval through FIPB route do not require any further clearance from RBI for receiving inward remittance and issue of shares to the foreign investors. The companies are required to notify the concerned Regional office of the RBI of receipt of inward remittances within 30 days of such receipt and within 30 days of issue of shares to the foreign investors or NRIs. Participation by International Financial Institutions Equity participation by international financial institutions such as ADB, IFC, CDC, DEG, etc., in domestic companies is permitted through automatic route, subject to SEBI/RBI regulations and sector specific cap on FDI. 3.2.8 FDI In Small Scale Sector (SSI) Units A small-scale unit cannot have more than 24 per cent equity in its paid up capital from any industrial undertaking, either foreign or domestic. If the equity from another company (including foreign equity) exceeds 24 per cent, even if the investment in plant and machinery in the unit does not exceed Rs 10 million, the unit loses its small-scale status and shall require an industrial license to manufacture items reserved for small-scale sector. See also FDI in Small Scale Sector in India Further Liberalized

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CHAPTER 4
FOREIGN DIRECT INVESTMENT: INDIA SCENARIO
4.1 FDI Is Permitted As Under The Following Forms Of Investments Through financial collaborations. Through joint ventures and technical collaborations. Through capital markets via Euro issues. Through private placements or preferential allotments.

4.2 Sector Specific Foreign Direct Investment in India 4.2.1 Hotel & Tourism: FDI in Hotel & Tourism sector in India 100per cent FDI is permissible in the sector on the automatic route, The term hotels include restaurants, beach resorts, and other tourist complexes providing accommodation and/or catering and food facilities to tourists. Tourism related industry include travel agencies, tour operating agencies and tourist transport operating agencies, units providing facilities for cultural, adventure and wild life experience to tourists, surface, air and water transport facilities to tourists, leisure, entertainment, amusement, sports, and health units for tourists and Convention/Seminar units and organizations. For foreign technology agreements, automatic approval is granted if i. up to 3per cent of the capital cost of the project is proposed to be paid for technical and consultancy services including fees for architects, design, supervision, etc.

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ii.

up to 3per cent of net turnover is payable for franchising and marketing/publicity support fee, and up to 10per cent of gross operating profit is payable for management fee, including incentive fee.

4.2.2 Private Sector Banking: Non-Banking Financial Companies (Nbfc) 49per cent FDI is allowed from all sources on the automatic route subject to guidelines issued from RBI from time to time. a. FDI/NRI/OCB investments allowed in the following 19 NBFC activities shall be as per levels indicated below: i. ii. iii. iv. v. vi. vii. viii. ix. x. xi. xii. xiii. xiv. xv. xvi. xvii. Merchant banking Underwriting Portfolio Management Services Investment Advisory Services Financial Consultancy Stock Broking Asset Management Venture Capital Custodial Services Factoring Credit Reference Agencies Credit rating Agencies Leasing & Finance Housing Finance Foreign Exchange Brokering Credit card business Money changing Business
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xviii. xix.

Micro Credit Rural Credit

b. Minimum Capitalization Norms for fund based NBFCs: i) For FDI up to 51per cent - US$ 0.5 million to be brought upfront ii) For FDI above 51per cent and up to 75per cent - US $ 5 million to be brought upfront iii) For FDI above 75per cent and up to 100per cent - US $ 50 million out of which US $ 7.5 million to be brought up front and the balance in 24 months c. Minimum capitalization norms for non-fund based activities: Minimum capitalization norm of US $ 0.5 million is applicable in respect of all permitted non-fund based NBFCs with foreign investment. d. Foreign investors can set up 100per cent operating subsidiaries without the condition to disinvest a minimum of 25per cent of its equity to Indian entities, e. Joint Venture operating NBFC's that have 75per cent or less than 75per cent foreign investment will also be allowed to set up subsidiaries for undertaking other NBFC activities, subject to the subsidiaries also complying with the applicable minimum capital inflow i.e. (b)(i) and (b)(ii) above. f. FDI in the NBFC sector is put on automatic route subject to compliance with guidelines of the Reserve Bank of India. RBI would issue appropriate guidelines in this regard.

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4.2.3 Insurance Sector: FDI In Insurance Sector In India

FDI up to 26per cent in the Insurance sector is allowed on the automatic route subject to obtaining license from Insurance Regulatory & Development Authority (IRDA)

4.2.4 Telecommunication:
FDI in Telecommunication sector i. In basic, cellular, value added services and global mobile personal communications by satellite, FDI is limited to 49per cent subject to licensing and security requirements and adherence by the

companies (who are investing and the companies in which investment is being made) to the license conditions for foreign equity cap and lock- in period for transfer and addition of equity and other license provisions. ii. ISPs with gateways, radio-paging and end-to-end bandwidth, FDI is permitted up to 74per cent with FDI, beyond 49per cent requiring Government approval. These services would be subject to licensing and security requirements. iii. iv. No equity cap is applicable to manufacturing activities. FDI up to 100per cent is allowed for the following activities in the telecom sector : a. ISPs not providing gateways (both for satellite and submarine cables); b. c. d. Infrastructure Providers providing dark fiber (IP Category 1); Electronic Mail; and Voice Mail The above would be subject to the following conditions:

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e.

FDI up to 100per cent is allowed subject to the condition that such companies would divest 26per cent of their equity in favor of Indian public in 5 years, if these companies are listed in other parts of the world.

f.

The above services would be subject to licensing and security requirements, wherever required.

Proposals for FDI beyond 49per cent shall be considered by FIPB on case to case basis. 4.2.5 Trading: FDI in Trading Companies in India Trading is permitted under automatic route with FDI up to 51per cent provided it is primarily export activities, and the undertaking is an export house/trading house/super trading house/star trading house. However, under the FIPB route:i. 100per cent FDI is permitted in case of trading companies for the following activities:

exports; bulk imports with ex-port/ex-bonded warehouse sales; cash and carry wholesale trading; other import of goods or services provided at least 75per cent is for procurement and sale of goods and services among the companies of the same group and not for third party use or onward

transfer/distribution/sales.

ii. The following kinds of trading are also permitted, subject to provisions of EXIM Policy:
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a. Companies for providing after sales services (that is not trading per se) b. Domestic trading of products of JVs is permitted at the wholesale level for such trading companies who wish to market manufactured products on behalf of their joint ventures in which they have equity participation in India. c. Trading of hi-tech items/items requiring specialized after sales service d. Trading of items for social sector e. Trading of hi-tech, medical and diagnostic items. f. Trading of items sourced from the small scale sector under which, based on technology provided and laid down quality specifications, a company can market that item under its brand name. g. Domestic sourcing of products for exports. h. Test marketing of such items for which a company has approval for manufacture provided such test marketing facility will be for a period of two years, and investment in setting up manufacturing facilities commences simultaneously with test marketing FDI up to 100per cent permitted for e-commerce activities subject to the condition that such companies would divest 26per cent of their equity in favor of the Indian public in five years, if these companies are listed in other parts of the world. Such companies would engage only in business to business (B2B) ecommerce and not in retail trading. 4.2.6 Power: FDI In Power Sector in India Up to 100per cent FDI allowed in respect of projects relating to electricity generation, transmission and distribution, other than atomic reactor power plants. There is no limit on the project cost and quantum of foreign direct investment.
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4.2.7 Drugs & Pharmaceuticals FDI up to 100per cent is permitted on the automatic route for manufacture of drugs and pharmaceutical, provided the activity does not attract compulsory licensing or involve use of recombinant DNA technology, and specific cell / tissue targeted formulations. FDI proposals for the manufacture of licensable drugs and pharmaceuticals and bulk drugs produced by recombinant DNA technology, and specific cell / tissue targeted formulations will require prior Government approval. 4.2.8 Roads, Highways, Ports and Harbors FDI up to 100per cent under automatic route is permitted in projects for construction and maintenance of roads, highways, vehicular bridges, toll roads, vehicular tunnels, ports and harbors. 4.2.9 Pollution Control and Management FDI up to 100per cent in both manufacture of pollution control equipment and consultancy for integration of pollution control systems is permitted on the automatic route.

4.3 Special Facilities and Rules for NRI's and OCB's NRI's and OCB's are allowed the following special facilities: 1. Direct investment in industry, trade, infrastructure etc. 2. Up to 100per cent equity with full repatriation facility for capital and dividends in the following sectors i. 34 High Priority Industry Groups
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ii. iii. iv. v. vi. vii. viii. ix. x. xi. xii.

Export Trading Companies Hotels and Tourism-related Projects Hospitals, Diagnostic Centers Shipping Deep Sea Fishing Oil Exploration Power Housing and Real Estate Development Highways, Bridges and Ports Sick Industrial Units Industries Requiring Compulsory Licensing

3. Up to 40per cent Equity with full repatriation: New Issues of Existing Companies raising Capital through Public Issue up to 40per cent of the new Capital Issues.On non-repatriation basis: Up to 100per cent Equity in any Proprietary or Partnership engaged in Industrial, Commercial or Trading Activity. 4. Portfolio Investment on repatriation basis: Up to 1per cent of the Paid up Value of the equity Capital or Convertible Debentures of the Company by each NRI. Investment in Government Securities, Units of UTI, National Plan/Saving Certificates. 5. On Non-Repatriation Basis: Acquisition of shares of an Indian Company, through a General Body Resolution, up to 24per cent of the Paid Up Value of the Company. 6. Other Facilities: Income Tax is at a Flat Rate of 20per cent on Income arising from Shares or Debentures of an Indian

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4.4 India Further Opens Up Key Sectors For Foreign Investment India has liberalized foreign investment regulations in key sectors, opening up commodity exchanges, credit information services and aircraft maintenance operations. The foreign investment limit in Public Sector Units (PSU) refineries has been raised from 26per cent to 49per cent. An additional sweetener is that the mandatory disinvestment clause within five years has been done away with. FDI in Civil aviation up to 74per cent will now be allowed through the automatic route for non-scheduled and cargo airlines, as also for ground handling activities. 100per cent FDI in aircraft maintenance and repair operations has also been allowed. But the big one, allowing foreign airlines to pick up a stake in domestic carriers has been given a miss again. India has decided to allow 26per cent FDI and 23per cent FII investments in commodity exchanges, subject to the proviso that no single entity will hold more than 5per cent of the stake. Sectors like credit information companies, industrial parks and construction and development projects have also been opened up to more foreign investment. Also keeping India's civilian nuclear ambitions in mind, India has also allowed 100per cent FDI in mining of titanium, a mineral which is abundant in India. Sources say the government wants to send out a signal that it is not done with reforms yet. At the same time, critics say contentious issues like FDI and multibrand retail are out of the policy radar because of political compulsions.

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Sector-wise FDI Inflows ( From April 2000 to January 2010) AMOUNT OF FDI INFLOWS In Rs Million Services Sector Computer Software & hardware Construction Activities Automobile Housing & Real estate Power Chemicals (Other than Fertilizers) Ports Metallurgical industries Electrical Equipments Cement & Gypsum Products 787420.81 391109.74 In US$ Million 18118.40 8876.43 6215.55 5029.01 3310.23 5118.85 3129.66 1964.06 1551.88 2612.85 1324.92 1621.03 2244.17 1480.94 1112.92 1217.50 760.32
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SECTOR

PERCENT OF TOTAL FDI INFLOWS (In terms of Rs)

22.39 11.12 7.83 6.07 4.17 6.20 3.90 2.47 1.80 3.11 1.63 2.01 2.68 1.77 1.38 1.49 0.98

Telecommunications 275441.38 213595.12 146799.41 217936.02 137089.37 87008.07 63290.50 109563.20 57379.63 70781.19

Petroleum & Natural 94417.17 Gas Trading Consultancy Services Hotel and Tourism Food Processing Industries 62416.85 48647.43 52500.05 34362.49

Electronics

33914.75

748.57 648.86

0.96 0.80

Misc. Mechanical & Engineering 28310.13 industries Information & Broadcasting (Incl. Print media) Misc. industries 52115.90 180561.54

1194.20 4162.55 81010.63 3391.07 1962.82 121.33 86395.85

1.48 5.19 100.00 -

Total Investment in 3517310.79 all Sector Stock Swapped 145466.35 (from 2002 to 2008) Advance of Inflows 89622.22 (from 2000 to 2004) RBI's NRI Schemes Grand Total 5330.60 3757729.96

Sector wise FDI inflows SOURCE: DIPP, Federal Ministry of Commerce and Industry, Government of India

4.5 Forbidden Territories:

Arms and ammunition Atomic Energy Coal and lignite Rail Transport Mining of metals like iron, manganese, chrome, gypsum, sulfur, gold, diamonds, copper, zinc.
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CHAPTER 5. FOREIGN INVESTMENT THROUGH GDRS (EURO ISSUES)

Indian companies are allowed to raise equity capital in the international market through the issue of Global Depository Receipt (GDRs). GDR investments are treated as FDI and are designated in dollars and are not subject to any ceilings on investment. An applicant company seeking Government's approval in this regard should have consistent track record for good performance (financial or otherwise) for a minimum period of 3 years. This condition would be relaxed for infrastructure projects such as power generation, telecommunication, petroleum exploration and refining, ports, airports and roads. 5.1 Clearance From FIPB There is no restriction on the number of Euro-issue to be floated by a company or a group of companies in the financial year. A company engaged in the manufacture of items covered under Annex-III of the New Industrial Policy whose direct foreign investment after a proposed Euro issue is likely to exceed 51per cent or which is implementing a project not contained in Annex-III, would need to obtain prior FIPB clearance before seeking final approval from Ministry of Finance. 5.2 Use of GDRs The proceeds of the GDRs can be used for financing capital goods imports, capital expenditure including domestic purchase/installation of plant, equipment and building and investment in software development, prepayment or scheduled repayment of earlier external borrowings, and equity investment in JV/WOSs in India.
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5.3. Foreign direct investments in India are approved through two routes 5.3.1 Automatic approval by RBI The Reserve Bank of India accords automatic approval within a period of two weeks (subject to compliance of norms) to all proposals and permits foreign equity up to 24per cent; 50per cent; 51per cent; 74per cent and 100per cent is allowed depending on the category of industries and the sectoral caps applicable. The lists are comprehensive and cover most industries of interest to foreign companies. Investments in high priority industries or for trading companies primarily engaged in exporting are given almost automatic approval by the RBI. 5.3.2 The FIPB Route Processing of non-automatic approval cases FIPB stands for Foreign Investment Promotion Board which approves all other cases where the parameters of automatic approval are not met. Normal processing time is 4 to 6 weeks. Its approach is liberal for all sectors and all types of proposals, and rejections are few. It is not necessary for foreign investors to have a local partner, even when the foreign investor wishes to hold less than the entire equity of the company. The portion of the equity not proposed to be held by the foreign investor can be offered to the public.

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CHAPTER 6 ANALYSIS
6.1Analysis of sector specific policy for FDI Sr. No. 1. 2. 3. 4. Sector/Activity Hotel & Tourism NBFC Insurance Telecommunication: cellular, services ISPs with gateways, radio- 74per cent paging Electronic Mail & Voice Mail 5. Trading companies: primarily export activities bulk imports, cash and carry wholesale trading 6. Power(other than atomic 100per cent 100per cent Automatic Automatic Automatic 100per cent Automatic 51per cent Automatic 100per cent value added 49per cent Above 49per cent need Govt. licence FDI cap/Equity 100per cent 49per cent 26per cent Entry/Route Automatic Automatic Automatic Automatic

reactor power plants) 7. 8. Drugs & Pharmaceuticals

Roads, Highways, Ports and 100per cent Harbors

9.

Pollution Management

Control

and 100per cent

Automatic

10 11.

Call Centers BPO

100per cent 100per cent

Automatic Automatic

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6.2 Analysis of FDI inflow in India

From April 2000 to August 2010 (Amount US$ in Millions) S.No Financial Year Total Inflows 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 4,029 6,130 5,035 4,322 6,051 8,961 22,826 34,362 35,168 16,232 FDI percent Growth Over

Previous Year ---(+) 52 (-) 18 (-) 14 (+) 40 (+) 48 (+) 146 (+) 51 (+) 02 ----

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TOTAL FDI INFLOWS IN INDIA

40,000 35,000 30,000 25,000 22,826 20,000 15,000 10,000 5,000 0 6,130 4,029 6,051 16,232 TOTAL FDI INFLOWS 35,168

34,362

8,961 5,035 4,322

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6.3 Analysis of share of top ten investing countries FDI equity in flows From April 2000 to January 2010 (Amount in Millions) Sr. No Country Amount of FDI Inflows per cent As To Total

FDI Inflow 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Mauritius Singapore U.S.A. U.K. Netherlands Japan Cyprus Germany France U.A.E. 19,18,633.61 3,80,142.56 3,32,935.60 2,40,974.98 1,78,047.76 1,50,129.05 1,32,448.04 1,12,242.06 61,686.39 50,915.59 44.01 8.72 7.64 5.53 4.08 3.44 3.04 2.57 1.42 1.17

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43

6.3.1Mauritius Mauritius invested Rs.19,18,633 million in India Up to the January 2010, equal to 44.01 percent of total FDI inflows. Many companies based outside of India utilize Mauritian holding companies to take advantage of the India- Mauritius Double Taxation Avoidance Agreement (DTAA). The DTAA allows foreign firms to bypass Indian capital gains taxes, and may allow some India-based firms to avoid paying certain taxes through a process known as round tripping.

The extent of round tripping by Indian companies through Mauritius is unknown. However, the Indian government is concerned enough about this problem to have asked the government of Mauritius to set up a joint monitoring mechanism to study these investment flows. The potential loss of tax revenue is of particular concern to the Indian government. These are the sectors which attracting more FDI from Mauritius Electrical equipment Gypsum and cement products Telecommunications Services sector that includes both non- financial and financial Fuels.

6.3.2Singapore Singapore continues to be the single largest investor in India amongst the Singapore with FDI inflows into Rs. 3,80,142 crores up to January 2010 Sector-wise distribution of FDI inflows received from Singapore the highest inflows have been in the services sector (financial and non financial), which accounts for about 30per cent of FDI inflows from Singapore. Petroleum and natural gas occupies the second place followed by computer software and hardware, mining and construction.

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6.3.3 U.S.A. The United States is the third largest source of FDI in India (7.64 per cent of the total), valued at 732335 crore in cumulative inflows up to January 2010. According to the Indian government, the top sectors attracting FDI from the United States to India are fuel, telecommunications, electrical equipment, food processing, and services. According to the available M&A data, the two top sectors attracting FDI inflows from the United States are computer systems design and programming and manufacturing

6.3.4 U.K. The United Kingdom is the fourth largest source of FDI in India (5.53 per cent of the total), valued at 2,40,974 crores in cumulative inflows up to January 2010 Over 17 UK companies under the aegis of the Nuclear Industry Association of UK have tied up with Ficci to identify joint venture and FDI possibilities in the civil nuclear energy sector. UK companies and policy makers the focus sectors for joint ventures, partnerships, and trade are non-conventional energy, IT, precision engineering, medical equipment, infrastructure equipment, and creative industries.

6.3.5Netherlands FDI from Netherlands to India has increased at a very fast pace over the last few years. Netherlands ranks fifth among all the countries that make investments in India. The total flow of FDI from Netherlands to India came to Rs. 1, 78,047 crores between 1991 and 2002. The total percentage of FDI from Netherlands to India stood at 4.08per cent out of the total foreign direct investment in the country up to August 2009.

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Following Various industries attracting FDI from Netherlands to India are:

Food processing industries Telecommunications that includes services of cellular mobile, basic telephone, and radio paging

Horticulture Electrical equipment that includes computer software and electronics Service sector that includes non- financial and financial services

6.4 Analysis of sectors attracting highest FDI equity inflows From April 2000 to March 2010 (Amount in Millions) Sr. No Country Amount of FDI per cent As Inflows To Total

FDI Inflow 1. Service Sector (Financial & Non Financial) 2. Computer Hardware 3. 4. 5. 6. 7. 8. 9. 10. Telecommunication Housing & Real Estate Construction Activities Automobile Industry Power Metallurgical Industries Petroleum & Natural Gas Chemical 3,68,899.62 3,25,021.36 2,65,492.96 1,90,172.22 1,79,849.92 1,25,785.57 1,11,957.00 1,01,680.18 8.46 7.46 6.09 4.36 4.13 2.89 2.57 2.33 Software & 4,13,419.03 9.48 9,65,210.77 22.14

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The sectors receiving the largest shares of total FDI inflows up to march 2010 were the service sector and computer software and hardware sector, each accounting for 22.14 and 9.48 percent respectively. These were followed by the telecommunications, real estate, construction and automobile sectors. The top sectors attracting FDI into India via M&A activity were manufacturing; information; and professional, scientific, and technical services. These sectors correspond closely with the sectors identified by the Indian government as attracting the largest shares of FDI inflows overall.

The ASSOCHAM has revealed that FDI in Chemicals sector (other than fertilizers) registered maximum growth of 227 per cent during April 2008 March FY 08. 2009 as compared to 11.71 per cent during the last fiscal. The sector attracted USD 749 million FDI in FY 09 as compared to USD 229 million in

During the year 2009 government had raised the FDI limit in telecom sector from 49 per cent to 74 per, which has contributed to the robust growth of FDI. The telecom sector registered a growth of 103 per cent during fiscal 2008-09 as compared to previous fiscal. The sector attracted USD 2558 million FDI in FY 09 as compared to the USD 1261 million in FY 08, acquired 9.37 per cent share in total FDI inflow. India automobile sector has been able to record 70 per cent growth in foreign investment. The FDI inflow in automobile sector has increased from USD 675 million to 1,152 million in FY 09 over FY 08. The other s ectors which registered growth in highest FDI inflow during April March 2009 were housing & real estate (28.55 per cent), computer software & hardware (18.94 per cent), construction activities including road & highways (16.35 per cent) and power (1.86 per cent).
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6.5Foreign Investment Promotion Board

The FIPB (Foreign Investment Promotion Board) is a government body that offers a single window clearance for proposals on foreign direct investment in the country that are not allowed access through the automatic route. Consisting of Senior Secretaries drawn from different ministries with Secretary ,Economic Affairs in the chair, this high powered body discusses and examines proposals for foreign investment in the country for restricted sectors ( as laid out in the Press notes and extant foreign investment policy) on a regular basis. Currently proposals for investment beyond 600 crores require the concurrence of the CCEA (Cabinet Committee on Economic Affairs). The threshold limit is likely to be raised to 1200 crore soon.The Board thus plays an important role in the administration and implementation of the Governments FDI policy. In circumstances where there is ambiguity or a conflict of interpretation, the FIPB has stepped in to provide solutions. Through its fast track working it has established its reputation as a body that does not unreasonably delay and is objective in its decision making. It therefore has a strong record of actively encouraging the flow of FDI into the country. The FIPB is assisted in this task by a FIPB Secretariat. The launch of e- filing facility is an important initiative of the Secretariat to further the cause of enhanced accessibility and transparency .

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CHAPTER 7 LOW INCOME COUNTRIES IN GLOBAL FDI RACE The situation of foreign direct investment has been relatively good in the recent times with an increase of 38per cent. Normally, the foreign direct investment is made mostly into the extractive industries. However, now the foreign direct investors are also looking to pump money into the manufacturing industry that has garnered 47per cent of the total foreign direct investment made in 1992. However, the situation has not been the same in the countries with a middle income range. The middle income countries have not received a steady inflow of foreign direct income coming their way. The situation is comparatively better in the low income countries. They have had an uninterrupted and continually increasing flow of foreign direct investment. It has been observed that the various debt crises, as well as, other forms of economic crises have had less effect on these countries. These countries had lesser amounts of commercial bank obligations, which again had been caused by the absence of proper financial markets, as well as the fact that their economies were not open to foreign direct investment. During the later phases of the decade of 70s the Asian countries started encouraging foreign direct investments in their economies. China has received the most of the foreign direct investment that was pumped into the countries with low income. It accounted for as much as 86per cent of the total foreign direct investment made in the lower income countries in with low income. It accounted for as much as 86per cent of the total foreign direct investment made in the lower income countries in 1995. The economic liberalization in China started in 1979. This led to an increase in the foreign direct investment in China. In the years between 1982 and 1991 the
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average foreign direct investment in China was US$ 2.5 billion. This average increased by seven times to become US$ 37.5 billion during 1995. A significant amount of the foreign direct investment in China was provided in the industrial sector. It was as much as 68per cent. Around 20per cent of the foreign direct investment of China was made in the real estate sector. During the same period Nigeria had been the second best in terms of receiving foreign direct investment. In the recent times India has risen to be the third major foreign direct investment destination in the recent years. Foreign direct investment started in India in 1991 with the initiation of the economic liberation. There were more initiatives that enabled India to garner foreign direct investments worth US$ 2.9 billion from 1991 to 1995. This was a significant increase from the previous twenty years when the total foreign direct investment in India was US$1 billion. Most of the foreign direct investment made in India has been in the infrastructural areas like telecommunications and power. In the manufacturing industry the emphasis has been on petroleum refining, vehicles and petrochemicals Vietnam is a low income country, which is supposed to have the same potential as China to generate foreign direct investment. The foreign direct investment laws were introduced in Vietnam in 1987-88. This led to an increase in the foreign direct investment made in the country. The amount stood at US$ 25 million in 1993 compared to US$ 8 million in 1993. This amount increased by 3 times after the USA removed its economic sanctions in 1994. The gas and petroleum industries were the biggest beneficiaries of the foreign direct investment. Bangladesh started receiving increasing foreign direct investment after 1991, when the economic reforms took place in the country.

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After 1991 it was possible for foreign companies to set up companies in Bangladesh without taking permission beforehand. The foreign direct investment rose from US$ 11 million in 1994 to US$ 125 million in 1995. As per the available statistics the manufacturing industry, comprising of clothing and textiles took up 20per cent of the total approved foreign direct investment. Food processing, chemicals and electric machinery were also important in this regard. The increase in the foreign direct investment in Ghana was remarkable as well. The figures increased from US$11.7 million, on an average, from 1986 to 1992 to US$ 201 million, on an average, from 1993 to 1995. This improvement was brought about by the privatization of the Ashanti Goldfields.

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CHAPTER 8. CONCLUSION

A large number of changes that were introduced in the countrys regulatory economic policies heralded the liberalization era of the FDI policy regime in India and brought about a structural breakthrough in the volume of the FDI inflows into the economy maintained a fluctuating and unsteady trend during the study period. It might be of interest to note that more than 50per cent of the total FDI inflows received by India , came from Mauritius, Singapore and the USA. The main reason for higher levels of investment from Mauritius was that the fact that India entered into a double taxation avoidance agreement (DTAA) with Mauritius were protected from taxation in India. Among the different sectors, the service sector had received the larger proportion followed by computer software and hardware sector and telecommunication sector. According to findings and results, we have concluded that FII did have significant impact on Sensex but there is less co-relation with Bankex and IT. One of the reasons for high degree of any linear relation can also be due to the sample data. The data was taken on monthly basis. The data on daily basis can give more positive results (may be). Also FII is not the only factor affecting the stock indices. There are other major factors that influence the bourses in the stock market. It is generally said that future is always uncertain. This saying is correct to some extent. But at the same time it is also said that exceptions are always there. This exception is about India's certain higher rate of growth in the coming future. The future of Indian economy is brighter because of its huge human resources, rapidly upcoming service sector, availability of large number of competent
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professionals, vast market for every product, increasing impact of consumerism, absence of controls and licenses, interest of foreign entrepreneurs in India and existence of four hundred million middle class people. Even today, India is producing largest number of billionaires in a year, take over by Indian multinationals is amazing, the craze of Indians to go abroad is rapidly diminishing, the Rupee is becoming stronger and stronger in relation to Dollar. India's say in the international diplomacy and political affairs has now become meaningful, thousands of foreigners are working as executives in India, packages are becoming lucrative and competitive and annual rate of growth is highest after China. This present picture gives some reflections of the future. But this is all in the absolute sense and not in the relative terms. A country can only grow if the Govt. policies allow more participation and is able to attract more and more foreign direct investment in India. Today, India provides highest returns on FDI than any other country in the world. India is poised for further growth in manufacturing, infrastructure, automobiles, auto components, food processing sectors, real estate development etc. In this context it is also worth mentioning that savings rate has also increased from 23% to 31% over the last year to this year. India's continuing ambivalence on FDI, as a result, exacts a heavy toll on the economy. Undoubtedly, India is ceding billions of dollars of FDI to its neighbours each year. While China achieved actual FDI inflows of around $45.3 billion in 1997, India settled for a mere $3.2 billion. India therefore stands to win in the next few years.

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8.1 Recommendations & Suggestions 1. FDI is good for growth of economy. 2. It generates employment for the country. 3. It increases standard living of the people. 4. Investment in a particular region leads to regional development. 5. The gap of regional disparity can be minimized. 6. New MNC comes with new Technology.

1. 2. 3. 4.

8.2 Limitations Of Research Profit of MNC will go outside the India. Balance of payment can be unfavorable for India The Government should control on much investment. Government must safeguard the interest of Indian economy. 8.3 Research Objective

To know the flow of investment in India To know how can India Grow by Investment. To Examine the trends and patterns in the FDI across different sectors and from different countries in India To know in which sector we can get more foreign currency in terms of investment in India To know which country s safe to invest. To know how much to invest in a developed country or in a developing. To know Which sector is good for investment. To know which country in investing in which country To know the reason for investment in India

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8.4 Research methodology In order to accomplish this project successfully we will take following steps. Data collection: Secondary Data: Books, newspapers, journals , other reports and projects, literatures,internet

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CHP 10.Bibliography www.rbi.org www.fin.in.nic www.sebi.org http://books.google.co.in/books?id=0VUafaE3pOIC&pg=PA4&dq=types +of+foreign+direct+investment&hl=en&ei=efzrS_rEAoy5rAfv34DbBg& sa=X&oi=book_result&ct=bookthumbnail&resnum=1&ved=0CDUQ6wEwAA#v=onepage&q=typesper cent20ofper cent20foreignper cent20directper cent20investment&f=false http://www.indiahousing.com/fdi-foreign-direct-investment.html http://finance.indiamart.com/investment_in_india/fdi.html http://www.answers.com/topic/foreign-direct-investment#History http://www.unctad.org/sections/dite_iiab/docs/diteiiab20041_en.pdf http://www.economywatch.com/foreign-direct-investment/ http://www.legalserviceindia.com/articles/fdi_india.htm

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