FDI in India - An Analysis
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FDI IN INDIA – AN ANALYSISBY
K.Periasamy, Chennai
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0 1000 1500 1600 1 700 1820 1870 1913 1950 1973 1998 2005
0
5
1
0
15
2
0
25
3
0
35
4
0 MAJOR ECONOMIES SHARE OF WORLD GDP
Western Europe
China
India
Japan
United States
India
Year
Perc
enta
ge
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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.
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Economic Growth
Trade
Employment and skill levels
Technology diffusion and knowledge
transfer
Linkages and spillover to
domestic firms
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• Log of GDP = 4.12 + 0.466 Log of FDI
5.25.35.45.55.65.75.85.9
66.16.2
2 2.5 3 3.5 4
Log
of G
DP
Log of FDI
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INDIA – YEARLY NET FDI INFLOWS
0
1000
2000
3000
4000
5000
6000
US
$ m
illio
n
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INDIA – MAJOR INVESTING COUNTRIES
NOTE : 1) Mauritius is only the Route
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INDIA – FDI INVESTMENT BY USA
NOTE : 1) USA INVESTMENT IS NOT GREAT. BUT WE ALWAYS TALK ABOUT USA MNCs !
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INDIA – SECTORWISE FDI
31%
13%12%
11%
10%
6%
6% 4% 4%3%
Services Sector
Computer Software & hardwareTelecommunications
Housing & real Estate
Construction Activities
Power
Automobile Industry
Metallurgical Industries
Petroleum & Natural Gas
NOTE : 1) REASONABLY GOOD DISTRIBUTION.2) MORE FDI SAHLL BE ATTRACTED IN MANUFACTURING SECTOR
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INDIA – CUMULATIVE INFLOW OF FDI UPTO 08-09
NOTE : 1) THE TOTAL AS ON 2009 WAS JUST 24.6 Bn USD
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INDIA – CUMULATIVE INFLOW OF FDI 07-08 to 10-11
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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
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CHINA – REGIONWISE FLOW OF FDI
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INDIA – REGIONWISE FLOW OF FDI
NOTE : 1) PROGRESSIVE STATES RECEIVE MORE FDI AND GROW MORE !2) THIS IS THE REALITY.
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INDIA – GDP GROWTH
NOTE : 1) DRAMATIC INCREASE AFTER 1992. IT COINCIDES WITH LIBERALISATION AND FLOW OF FDI.
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INDIA – CHINA COMPARISON
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INDIA – CHINA COMPARISON
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FDI TREND – OUTLOWS WORLDWIDE
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FDI TREND – INFLOWS WORLDWIDE
NOTE : 1) STILL THE DEVELPED COUNTRIES RECEIVE THE MAXIMUM FDI2) THERE IS NET OUTFLOW FROM G203) WE NEED TO REALISE THE IMPORTANCE OF FDI
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THIS IS THE REALITY !
NOTE : 1) EVERY COUNTRY HAS GROWN AFTER OPENING UP OF THE ECONOMY2) FDI FLOWS AFTER OPENING UP ONLY3) 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
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THANK YOU