FDI in India has been increasing over the past few decades. [1] Developed countries received most FDI historically but developing countries like China and India have received higher amounts in recent years. [2] FDI provides benefits like economic growth, technology diffusion, employment opportunities and increases in domestic firm capabilities. [3] India's GDP growth increased dramatically after economic reforms in 1992 that coincided with rising FDI inflows.

1. FDI IN INDIA – AN ANALYSIS
BY
K.Periasamy, Chennai

2. 40
MAJOR ECONOMIES SHARE OF WORLD GDP
Western Europe
India
35
30
United States
15 20 25
Percentage
China
10
Japan
5
India
0
0 1000 1500 1600 1 700 1820 1870 1913 1950 1973 1998 2005
Year

3. DEVELOPED COUNTRIES HAVE RECEIVED MAXIMUM FDI
NOTE : 1) Only in the last 10 years, Developing countries have received higher FDI.
2) China has been consistently receiving higher FDI for the past 20 years.

4. Economic
Growth
Linkages and
spillover to Trade
domestic firms
Technology
diffusion and Employment
knowledge and skill levels
transfer

5. • Log of GDP = 4.12 + 0.466 Log of FDI
6.2
6.1
6
Log of GDP
5.9
5.8
5.7
5.6
5.5
5.4
5.3
5.2
2 2.5 3 3.5 4
Log of FDI

6. INDIA – YEARLY NET FDI INFLOWS
6000
5000
4000
US $ million
3000
2000
1000
0

7. INDIA – MAJOR INVESTING COUNTRIES
NOTE : 1) Mauritius is only the Route

8. INDIA – FDI INVESTMENT BY USA
NOTE : 1) USA INVESTMENT IS NOT GREAT. BUT WE ALWAYS TALK ABOUT USA MNCs !

9. INDIA – SECTORWISE FDI
Services Sector
3%
6% 4% 4% Computer Software &
6% hardware
Telecommunications
10% Housing & real Estate
31% Construction Activities
11% Power
Automobile Industry
12% Metallurgical Industries
13%
Petroleum & Natural Gas
NOTE : 1) REASONABLY GOOD DISTRIBUTION.
2) MORE FDI SAHLL BE ATTRACTED IN MANUFACTURING SECTOR

10. INDIA – CUMULATIVE INFLOW OF FDI UPTO 08-09
NOTE : 1) THE TOTAL AS ON 2009 WAS JUST 24.6 Bn USD

11. INDIA – CUMULATIVE INFLOW OF FDI
07-08 to 10-11

12. CHINA – CUMULATIVE INFLOW OF FDI
NOTE : 1) THE TOTAL AS ON 2009 WAS CLOSE TO 100 Bn USD COMPARED TO JUST 24.6 Bn USD IN INDIA

13. CHINA – REGIONWISE FLOW OF FDI

14. INDIA – REGIONWISE FLOW OF FDI
NOTE : 1) PROGRESSIVE STATES RECEIVE MORE FDI AND GROW MORE !
2) THIS IS THE REALITY.

15. INDIA – GDP GROWTH
NOTE : 1) DRAMATIC INCREASE AFTER 1992. IT COINCIDES WITH LIBERALISATION AND FLOW OF FDI.

16. INDIA – CHINA COMPARISON

17. INDIA – CHINA COMPARISON

18. FDI TREND – OUTLOWS WORLDWIDE

19. FDI TREND – INFLOWS WORLDWIDE
NOTE : 1) STILL THE DEVELPED COUNTRIES RECEIVE THE MAXIMUM FDI
2) THERE IS NET OUTFLOW FROM G20
3) WE NEED TO REALISE THE IMPORTANCE OF FDI

20. THIS IS THE REALITY !
NOTE : 1) EVERY COUNTRY HAS GROWN AFTER OPENING UP OF THE ECONOMY
2) FDI FLOWS AFTER OPENING UP ONLY
3) IF WE HAD OPENED UP OUR ECONOMY IN THE SAME MANNER AS CHINA DID IN THE
90s, BY NOW, WE WOULD HAVE BEEN BETTER OFF THAN CHINA

21. THANK YOU