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M S RAMAIAH INSTITUTE OF MANAGEMENT

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EMPIRICAL PROJECT REPORT SYNOPSIS
GROUP MEMBERS NAME & REGISTER NUMBER
SL
NO

REG.
NO

NAME

111101 ABHISHEK KHARE

AREA
AREA OF
SIGNATURE
OF
EMPIRICAL
SPECIAL
STUDY
ISATION
OM/MK
MARKETING

111109 M AVINASH RAO

OM/MK

MARKETING

111116 GAURAV MITTAL

FN/MK

MARKETING

NAME OF THE GUIDE: Prof. Swati Basu Ghose


DESIGNATION & QUALIFICATION: Asstt. Professor, M.com, MBA (Mrkng)
TITLE OF THE PROJECT:
Franchising Business In India: Customers attitude towards Franchises

STUDENTS DECLARATION

I hereby declare that the Project Report conducted on

Franchising Business In India: Customers attitude towards Franchises

Under the guidance of Prof. Swati Basu Ghose

Submitted in Partial fulfillment of the requirements for the


Degree of
POST GRADUATE DIPLOMA IN MANAGEMENT
TO
M.S.RAMAIAH INSTITUTE OF MANAGEMENT
It is my original work and the same has not been submitted for the award of any
other Degree/Diploma/Fellowship or other similar titles or prizes

Place: Bangalore
Date: 25TH Feb. 2013

STUDENT NAME
Reg. No

CERTIFICATE

This is to certify that the Project Report on

Franchising Business In India: Customers attitude towards Franchisee

Submitted in partial fulfillment of the requirements for the award of the degree of
POST GRADUATE DIPLOMA IN MANAGEMENT
TO
M.S.RAMAIAH INSTITUTE OF MANAGEMENT

Is a record of bonafide study carried out by Abhishek Khare,


Avinash Rao and Gaurav Mittal
Under my supervision and guidance and that no part of this report has been
submitted for the award of any other degree/diploma/fellowship or similar titles
or prizes.
FACULTY GUIDE
Signature

Name

: KNS

Qualifications:
Seal of Learning Center

ACKNOWLEDGEMENT

We extend our special gratitude to our beloved Dean Prof. Swami Nathan
Murthi & Academic Head PROF. V NARAYAN & Program Head PROF.
JAYASHREE KOWTAL for inspiring us to take up this project.

We wish to acknowledge our sincere gratitude and indebtedness to our


project guide Prof. Swati Basu Ghose of M.S. RAMAIAH INSTITUTE OF
MANAGEMENT Bangalore for her valuable guidance and constructive
suggestions in the preparation of project report.

STUDENT NAME

SYNOPSIS CONTENTS

CHAPTER 1
INTRODUCTION: BACKGROUND AND INDUSTRY PROFILE
About Franchising
Background
Types Of Franchising
Franchising in INDIA

Franchising Potential
Emerging Trends
Snapshot: Industry Growth
Trends fostering in the new decade.
CHAPTER 2
RESEARCH DESIGN
RESEARCH DESIGN
TITLE OF THE PROJECT
STATEMENT OF THE PROBLEM
RESEARCH METHODOLOGY
SCOPE OF THE REASEARCH
LIMITATIONS

CHAPTER 3
ANALYSIS AND INTERPRETATION

CHAPTER 4
SUMMARY OF FINDINGS
CHAPTER 5
CONCLUSIONS AND SUGGESTIONS
CHAPTER 6
BIBLIOGRAPHY

EXECUTIVE SUMMARY

CHAPTER 1
INTRODUCTION: BACKGROUND AND INDUSTRY PROFILE

INTRODUCTION

FRANCHISING :
Franchising has been long considered a good mode of entry into the market and effective
in getting established into the market. A franchise of a premier brand in the market in a
global scale or existing in markets located overseas has a well established umbrella of
standards and quality regarding performance criteria as per what customers have
demanded in those markets. In entering a particular country, a franchise serves as an
excellent combination of such quality and performance issues according to what
customers may demand and the knowledge of the local market related to customer
behavior, targeting, positioning and gaining a strong foothold in the market.
Franchising has, however, received different responses from different markets in varied
sectors across the country. Franchising is not dependent on the local customer base or the
quality alone. It has various other factors that affect the future growth, current viability
and survival of a franchise. It may either well establish he brand into the market or it can
also ruin the image of the brand as well as the parent company in the market forever.
Factors influencing franchising success in India vary from sector to sector, however,
certain factors such as understanding of customer demands, product delivery, post-service
follow-ups have been identified and extensively studied.

A Brief Background of Franchising


Franchising is big business in many areas of the world today. However, not that many people know how
it got started. The earliest franchising opportunity came about in 1850 with the Singer sewing machine,
when Isaac Singer decided that he needed a better way to market it and get it into the minds (and the
homes) of people. The next big franchise experiment came from Coca-Cola, and it was much more
successful.
The telegraph system was another example, since it was controlled by one company but many railroad
companies used it. Automobile manufacturers and the dealerships that they work with are also examples
of franchise agreements. In 1933, the modern franchising model really took off when people started
franchising fast food establishments. Motels also started franchising around that same time, and between

the two they took various countries by storm. Now there are both fast food and motel franchises all over
the world and people enjoy them because they're familiar and feel safe.
As more highways were built and people could travel from place to place more easily, individuals started
franchising more kinds of stores, because they were easier to get to and they were 'along the way'
instead of being out in the middle of nowhere. Not all companies are easily franchised, though. Some of
them don't duplicate well, a few of them just cost too much to operate, and there are others that just
aren't that marketable or that aren't run well, so they disappear.
However, there are still plenty of franchises out there, and more are coming along every day. They seem
to be part of the fabric of life in the UK, in the US, and in many other countries throughout the world. No
matter where they came from they are clearly around to stay and they won't be going anywhere. That's a
great thing for people who have started up these franchises and it's also a great thing for people who like
to eat/sleep/shop there, because they know that they'll always have that option, even when they travel
away from home.

Types of franchising

There are two major types of franchising found in US based on product and business format.
These two distinct franchising formats are called: (1) product or trade name franchising, and (2)
business format franchising.

Product or Trade Name Franchising

The product and trade name franchising system has evolved from suppliers or manufacturers
creating sales contracts with dealers to buy or sell their products or product lines. In this
relationship the dealer (franchisee) requires the trade name, trademark, and/or product from the
supplier or manufacturer. The franchisee identifies with the supplier through the product line.
This method of franchising consists primarily of distribution by a single supplier of
manufactured products to dealers who then in turn resell this to the end consumer. This
franchising approach has been used extensively in the auto and truck industry, the soft drink
bottling industry, and the tire and gasoline service station industries.

Business Format Franchising

We will be primarily concerned with the business format method of franchising which permits
the franchisee to use the franchisor's products and services, trade name, trademark, and most
importantly, the prescribed business format.

The business format provides the franchisee with great depth of knowledge and information
concerning a great breadth of business activities including: marketing, promotion, site selection,
price suggestions, grand opening plans, management, operations, training, financing, accounting
systems, and legal support or information. This method or business opportunity allows an
individual without prior experience an opportunity to be completely trained and informed about
how to operate a new and different business. This also requires the franchisor to take the
franchisee through a fairly extensive training program and to provide continuous training for the
franchisee even after the franchising unit has been started.

Conversion A new franchising technique allows independently operated businesses to convert


to the form of an existing franchise business system. The new franchisee is expected to make
changes in the existing business which would bring them into conformity with the common
marketing display and trade identity. The conversion system is generally considered a business
format franchise and has been successful in many real estate brokerages (Century 21), financial
services, floral shops, and home remodeling contractors.

Classification Based on Function:


Area Developer
Area developer franchises allow a business owner to own all franchises within one location. The location
can include a city or neighborhood. The franchisee often has to open a certain number of businesses
within a specific time period or follow other stipulations set by the parent company or franchisor. Area
development contracts typically require development in an area within five years.

Tax-Service Franchise
Tax-services businesses help consumers complete their tax forms and offer financial guidance. For
example, the Liberty Tax Service chain offers franchising in specific territories. The area developer earns
money through franchise fees from other franchisees who manage stores within the area. Developer
earnings also are based on revenues from all stores within their own territory. Liberty Tax Service offers
training on franchising for area developers.

Master Franchise
The master franchise is a popular way to spread American businesses to international territories. This
method allows one entity to find many franchisees in an overseas area. The master franchisor is
responsible for training and providing support to the new franchisees within the large area, which can
include an entire country. Master franchisers often establish training centers for new franchisees.

Single-Unit Franchise
In a single-unit franchise system, one person buys a store from the main company and operates it
according to the company's rules. Operating one store at a time is a good choice for new business
owners. Some successful operators of one store eventually buy more stores.

Franchising in India
Home to over a billion people, including a flourishing class of urban consumers possessing considerable amounts
of disposable income together with the continued growth of the economy have strengthened Indias claim to be a
viable and beneficial destination for a foreign franchisor. In the USA, almost a third of the retail sales come from
franchised outlets, with sales of trillion of dollars while in India, the industry is few million.
An important aspect which determines the feasibility of any franchising business in a country relates to the class of
consumers it caters to. India is a multi ethnic country with the second largest population in the world. Indian
consumers have experienced the standard of services offered overseas and have sufficient exposure through
media, which has further fuelled their expectations.

There are approximately 1150 national and international business format franchise systems in India in
2007.
Around 8 to 10 per cent Indian franchise systems have entered international markets.
There are an estimated 70, 000 units operating in business format franchises.
The growth rate in franchised units from 2005-06 to 2006-07 was 30 to 35 per cent for the last 4-5 years.
Some 500000 persons are employed in business format franchise organizations.
Franchising contributed less than 4 per cent to Indias Gross Domestic Product (GDP) in 2007.
Annual turnover is approximately us$ 4 billion.

Almost every product or service has a market in India but sometimes, innovative strategies like Indianisation of its
products and marketing techniques must be employed by a foreign franchisor to further access the sizable market
of India. In a franchised business, over 90 per cent succeed. This success rate usually lures entrepreneurs with no
experience but with a surplus capital and a will to succeed towards franchising. The franchisee benefits from a
tried tested and proven business concept, which can dramatically reduce the chances of failure.

Franchising potential in India:


Though the Franchising in India is at a very nascent stage, but this industry has clocked the growth rate of 25-30
per cent, the second fastest growing industry. Organized retailing though only at 6 per cent of the retailing, will take
off in a very big way. The Indian middle class is slowly expanding and now buys consumer appliances with more
disposable income. India offers lot of potential for the franchising community. Apart from Indians being very
entrepreneurial, franchising as a way of doing business has been well accepted.

Emerging trends :

Grown from a questionable and not so acceptable format to a readily admissible way of
business expansion in the country

The pioneering companies have shown franchising can work in any country

Brought a graphic change in over all working of the countrys business

Technology & internet are helping at both ends:

to create the awareness about new product & services, and

helping to serve the consumer better leading to fast proliferation of worthy


concepts & products.

Snapshot: Industry growth in the 2010


200 Home Grown Franchisors & 2,50,000 Franchisees (growing
entrepreneurship)
85% Success rate vis a vis 90% failure in self start up
Industry of over US$ 4 Billion
Highest retail outlet density in the world (Approx 12 million)
Remains the best entry & expansion strategy
Small format businesses are key economy drivers
Employs over 10 Million employees directly / indirectly

Sectoral break up

Key sectors that have gained tremendous ground in Franchising are Education includes
the Pre-schools, Vocational programs & coaching/ training businesses and now
tremendous focus is being franchising on the large format school franchisee.

Other sectors with tremendous franchising already happening are Food & Beverages and
apparels industry.

Key emerging sectors from franchising perspective are beauty & wellness segment such
as saloons & spas, health & fitness, stationery centers, home dcor etc

Also, we see nascent interest from non-retail sectors like PMCs, Business solutions etc.

Franchising: Sectoral break up

Trends fostering in the new decade

1. Organized approach
of franchising
Grown from a
questionable
and not so
acceptable
format to a
readily
admissible way
of business
expansion in
the country

2. Implementation of
best practices
Realizing franchise
as the best entry &
expansion strategy
Small to medium
format businesses
will adopt the best
practice/
international
proven concepts to
their business to

3. Policy & Regulations


Currently,
the industry
is non
regulated
and doesnt
bind the
franchisors
in any legal
ways
However, the scenario

CHAPTER 2
RESEARCH DESIGN

1. WORKING TITLE
Franchise Business In India: Customers attitude towards Franchises
2. BACKGROUND OF THE RESEARCH

Franchising has been long considered a good mode of entry into the market and effective
in getting established into the market. A franchise of a premier brand in the market in a
global scale or existing in markets located overseas has a well established umbrella of
standards and quality regarding performance criteria as per what customers have
demanded in those markets. In entering a particular country, a franchise serves as an
excellent combination of such quality and performance issues according to what
customers may demand and the knowledge of the local market related to customer
behavior, targeting, positioning and gaining a strong foothold in the market.
Franchising has, however, received different responses from different markets in varied
sectors across the country. Franchising is not dependent on the local customer base or the
quality alone. It has various other factors that affect the future growth, current viability
and survival of a franchise. It may either well establish he brand into the market or it can
also ruin the image of the brand as well as the parent company in the market forever.
Factors influencing franchising success in India vary from sector to sector, however,
certain factors such as understanding of customer demands, product delivery, post-service
follow-ups have been identified and extensively studied.
This study aims at understanding the causes for success as well as failure of various
franchises across different sectors in India and also, how to control them and to
understand how consumers in India generally behave towards franchising in India.
3. Scope

of Study

The study is a first in its field and as such, provides extensive insight as to how foreign
brands who want to gain entry and get established in the market can do so by focusing on
the factors affecting consumer behavior towards franchising and affect customer
decisions regarding buying behavior in franchise outlets.

4. RESEARCH OBJECTIVE

Objectives for the research study are specified:


1) To assess the attitude of consumers towards franchisees.
2) To assess the impact of the culture on consumer decision making with regards to
the franchising market.
3) To find out the measures taken by the industry to develop a positive attitude of
consumers.
4) To come out with suggestions and recommendations by which marketers can
influence the attitude formation and decision making process.

5. HYPOTHESIS

Null Hypothesis Customers have a positive attitude towards franchising reinforced by


the belief that franchising provides easy access to better quality products and services
that are worth of spending money on.
Alternative Hypothesis Customers are negatively influenced by franchise outlets and
often tend to avoid them as they believe indigenous brands and products have more
capability in understanding and fulfilling their needs and demands.

6. RESEARCH METHODOLOGY
Stage- I- Literature Research
Unprecedented globalizations have witnessed double digit economic growth resulting in fierce
competition and accelerated pace of innovation. As a result inflow of Foreign Direct investments
has become a striking measure of economic development in both developed and developing
countries. FDI and FII thus have become instruments of international economic integration and
stimulation. Fast growing economies like Singapore, China, and Korea etc. have registered
incredible growth at onset of FDI. Though US captures most of the FDI inflows, developing
countries still account for significant growth of FDI and rise in FII. FDI not only gives access to
foreign capital but also provides domestic countries with cutting edge technology, desired skill
sets, tools of innovation and other complementary skills. The policies drafted to stimulate the
flow of foreign capital in to India provided much needed impetus for India to emerge as an
attractive destination for foreign investors. External factors such as global economic cues, FDI &
FII, Exchange rate and Internal factors such as demand and supply, market cap, EPS generally
drive and dictates the Indian stock market. The current paper makes an attempt to study the
relationship and impact of FDI & FII on Rupee Exchange Rate using statistical measures
correlation coefficient, regression etc.
The Government of India announced its consent on the much awaited FDI in retail and aviation
last week. In line to this there are sectors like pharmaceuticals and insurance awaiting for nod

from the Cabinet. The overall sentiment with regards to growth has enhanced the FII flows. With
these policy reforms after an elongated period of delay, the Government has once again tried to
portray India as an attractive destination for foreign investors. With the Global economic
slowdown the FII flows in India had desiccated in 2011 which was carried forward in 2012
whereby USDINR printed its all-time high of 57.32 levels. The year 2012 has witnessed more
than $ 20 billion of inflows till date whereas the figure printed in 2011 for the same time frame
was hovering around $ 4 billion. To watch out for in the future is whether these fund flows
would continue in the future and would USDINR react in the same trend as earlier.
Stage- II - Approaches to Research Design

An extensive survey was conducted to analyze an average Indian franchisees


background which includes its age, education, family background, average royalty he is
paying, his aspirations regarding the business and loyalty towards the franchisor.
These franchisees belong to different sectors and geographical regions in India. Major
business verticals were food, retail, education, real estate, telecom, financial services, etc.
and franchisees from metro cities like Hyderabad, Delhi, Mumbai, Bangalore etc were
included for the survey purpose. Apart from online survey, personal interviews were
conducted to collate the desired information.
Some of the important brands who took part in this survey were Subway, Kuotons,
IMS, Kid-Zee, Puma, Sagar Ratna, Liliput, Aditya Birla Retail, Cox & Kings etc.

Sampling Plan
Random sampling spread in a local area of New B.E.L. Road, Bangalore, Karnataka.

Tools for collection of data


Surveying and Questioning (Personal Interviewing).

Plan of Analysis
Surveying, Data assimilation and Co-relation analysis, Linear Regression, Chi square
testing for hypothesis testing.
Stage-IV- Limitations

CHAPTER 3

ANALYSIS AND INTERPRETATION

Historical Indian Rupee Rate (INR USD)


Year
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011

FDI (US $ FII (US $ INR/USD


Million)
Million)
4,029
1,847
47.23
6,130
1,505
48.62
5,035
377
46.60
4,322
10,918
45.28
6,051
8,686
44.01
8,961
9,926
45.17
22,826
3,225
41.20
34,835
20,328
43.41
41,874
-15,017
48.32
37,745
29,048
45.65
32,901
29,422
46.61

FDI & FII DURING THE FINANCIAL YEAR 2011-12:

Financial
Year 2011-12
Apr, 2011
May, 2011
June,2011
July, 2011
Aug, 2011
Sept, 2011
Oct, 2011
Nov, 2011
Dec, 2011
Jan, 2012
Feb, 2012
Mar, 2012

FDI(In Rs.
FII(In Rs.
Crore)
Crore)
13,847
4.40
20,946
-3,705.37
25,371
2,662.76
4,886
4,281.50
12,814
-11,559.20
8,407
-3,088.87
5,715
1,842.47
12,909
-6,508.71
7,124
-2,387.14
10,288
9,469.14
10,874
23,236.38
40,766
6,526.73

FDI(In Rs. Crore)During 2011-12


45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
Apr, 2011
May, 2011
June,2011
July, 2011
Aug, 2011
Sept, 2011
Oct, 2011
Nov, 2011
Dec, 2011
Jan, 2012
Feb, 2012
Mar, 2012

FDI(In Rs. Crore)

Graph showing flow of FDI in India during 2011-12


FII(In Rs. Crore)During 2011-12
25000
20000
15000
10000
FII(In Rs. Crore)

5000

-5000
-10000

Apr, 2011
May, 2011
June,2011
July, 2011
Aug, 2011
Sept, 2011
Oct, 2011
Nov, 2011
Dec, 2011
Jan, 2012
Feb, 2012
Mar, 2012

-15000

Graph showing flow of FII in India during 2011-12

FDI & FII DURING THE FINANCIAL YEAR 2012-13:

Financial Year
2012-13
Apr, 2012
May, 2012
June,2012
July, 2012
Aug, 2012
Sept, 2012
Oct, 2012
Nov, 2012
Dec, 2012
Jan, 2013

FDI (In Rs.


FII (In Rs.
Crore)
Crore)
9,620
-1,663.36
7,229
-2,756.26
6,971
2,794.68
8,182
5,902.95
12,578
7,747.11
25,552
20,807.81
42,671
8,442.93
5,749
6,291.51
6,841
14,366.49
7,245
19,197.88

FDI (In Rs. Crore)During 2012-13


45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0

Jan, 2013

Dec, 2012

Nov, 2012

Oct, 2012

Sept, 2012

Aug, 2012

July, 2012

June,2012

May, 2012

Apr, 2012

FDI (In Rs. Crore)

Graph showing flow of FDI in India during 2012-13

FII (In Rs. Crore)During 2012-13


25,000.00
20,000.00
15,000.00
10,000.00

FII (In Rs. Crore)

5,000.00
Jan, 2013

Dec, 2012

Nov, 2012

Oct, 2012

Sept, 2012

Aug, 2012

July, 2012

June,2012

May, 2012

-5,000.00

Apr, 2012

0.00

Graph showing flow of FII in India during 2012-13

Numerical Value of Correlation Coefficient and Its Interpretation

In Correlation analysis, all variables are assumed to be random variables.


The value of correlation coefficient r lies between 1 and +1.
The value +1 implies that there is a perfect positive correlation, and the pairs of
values of x and y lie on a straight line with positive slope.
The value 1 implies that there is a perfect negative correlation.
In real life situations, when the variables are random variables, the correlation
coefficient does not equal the value 1(+1 or 1). Its value nearing 1, indicates
strong linear relationship, and its value nearing 0 indicates absence of linear
relationship
It is to be emphasized that the value of correlation coefficient r indicates the
extent or intensity of only linear relationship

Correlation Coefficient formula:

( xi x )( yi y )

( x x )
2

( yi y ) 2

Finding Correlation between FDI and Rupee Exchange Rate during 2011-12:

Financial Year
2011-12
Apr, 2011
May, 2011
June,2011
July, 2011
Aug, 2011
Sept, 2011
Oct, 2011
Nov, 2011
Dec, 2011
Jan, 2012
Feb, 2012
Mar, 2012

FDI(In Rs.
Crore) (X)
13,847
20,946
25,371
4,886
12,814
8,407
5,715
12,909
7,124
10,288
10,874
40,766

INR/1$
Weekly (Y)
44.227
44.935
44.822
44.365
45.482
47.247
49.057
50.607
51.910
50.927
49.105
50.147

FDI & Rupee Fluctuation During 2011-12


52
50
48
46
44

FDI During 2011-12

42

40,766

10,874

10,288

7,124

13,847
20,946
25,371
4,886
12,814
8,407
5,715
12,909

40

Graph showing flow of FDI in India and Rupee Fluctuation during 2011-12

Correlation

Month

XDIF

YDIF

XDIF*XDIF

YDIF*YDIF

XDIF*YDIF

April

13847

44.2275

-648.5833

-3.50875

420660.34

12.311327

2275.7168

May

20946

44.935

6450.4167

-2.80125

41607875.2

7.8470016

-18069.23

June

25371

44.8225

10875.417

-2.91375

118274688

8.4899391

-31688.25

July

4886

44.365

-9609.583

-3.37125

92344091.8

11.365327

32396.308

12814

45.4825

-1681.583

-2.25375

2827722.51

5.0793891

3789.8684

September

8407

47.2475

-6088.583

-0.48875

37070847

0.2388766

2975.7951

October

5715

49.0575

-8780.583

1.32125

77098643.7

1.7457016

-11601.35

November

12909

50.6075

-1586.583

2.87125

2517246.67

8.2440766

-4555.477

December

7124

51.91

-7371.583

4.17375

54340240.8

17.420189

-30767.15

January

10288

50.9275

-4207.583

3.19125

17703757.5

10.184077

-13427.45

February

10874

49.105

-3621.583

1.36875

13115865.8

1.8734766

-4957.042

March

40766

50.1475

26270.417

2.41125

690134792

5.8141266

63344.542

SUM

173947

572.835

159451.42

525.0988

1147456431

90.613506

2275.7168

12

12

14495.5833

47.73625

August

DF
MEAN

r = XDIF*YDIF
=
(XDIF*XDIF)* (YDIF*YDIF)

2275.7168___
33874.12*9.51

= 0.007

Interpretation

Since the correlation coefficient is near to 0 i.e. 0.007, which shows there is absence of linear
relationship between FDI and Rupee Exchange Rate. Therefore, Rupee Fluctuation does not
occur only due to FDI Flow in India.

Finding Correlation between FDI and Rupee Exchange Rate during 2012-13:

Financial Year
2012-13
Apr, 2012
May, 2012
June,2012
July, 2012
Aug, 2012
Sept, 2012
Oct, 2012
Nov, 2012
Dec, 2012
Jan, 2013

FDI(In Rs.
INR/1$
Crore) (X)
Weekly (Y)
9,620
51.765
7,229
54.217
6,971
55.852
8,182
55.307
12,578
55.490
25,552
53.737
42,671
53.052
5,749
54.740
6,841
54.667
7,245
54.335

FDI & Rupee Fluctuation During 2012-13


56
55
54
53
52
FDI During 2012-13

51
50

7,245

6,841

5,749

42,671

25,552

12,578

8,182

6,971

7,229

9,620

49

Graph showing flow of FDI in India and Rupee Fluctuation during 2012-13

Correlation

Month

XDIF

YDIF

XDIF*XDIF

YDIF*YDIF

XDIF*YDIF

April

9620

51.765

-3643.8

-2.5515

13277278.44

6.51015225

9297.1557

May

7229

54.2175

-6034.8

-0.099

36418811.04

0.009801

597.4452

June

6971

55.8525

-6292.8

1.536

39599331.84

2.359296

-5665.7408

July

8182

55.3075

-5081.8

0.991

25824691.24

0.982081

-3036.0638

August

12578

55.49

-685.8

1.1735

470321.64

1.37710225

-804.7863

September

25552

53.7375

12288.2

-0.579

150999859.2

0.335241

-7114.8678

October

42671

53.0525

29407.2

-1.264

864783411.8

1.597696

-3170.7008

November

5749

54.74

-7514.8

0.4235

56472219.04

0.17935225

-3182.5178

December

6841

54.6675

-6422.8

0.351

41252359.84

0.123201

-2254.4028

January

7245

54.335

-6018.8

0.0185

36225953.44

0.00034225

-111.3478

132638

543.165

1265324238

13.474265

-13445.827

10

10

SUM
DF

MEAN

13263.8

54.3165

r = XDIF*YDIF
=
(XDIF*XDIF)* (YDIF*YDIF)

-13445.827__
35571.39*3.67

= -0.10

.
Interpretation

Since the correlation coefficient is near to -1 i.e. -0.10 which shows there is perfect negative
correlation between FDI and Rupee Exchange Rate. Therefore, FDI Flow in India during
2012-13 does not have any impact on Rupee Fluctuation.

Finding Correlation between FII and Rupee Exchange Rate during 2011-12:

Financial Year
2011-12
Apr, 2011
May, 2011
June,2011
July, 2011
Aug, 2011
Sept, 2011
Oct, 2011
Nov, 2011
Dec, 2011
Jan, 2012
Feb, 2012

FII(In Rs.
INR/1$
Crore) (X)
Weekly (Y)
4.40
44.227
-3,705.37
44.935
2,662.76
44.822
4,281.50
44.365
-11,559.20
45.482
-3,088.87
47.247
1,842.47
49.057
-6,508.71
50.607
-2,387.14
51.910
9,469.14
50.927
23,236.38
49.105

Mar, 2012

6,526.73

50.147

FII & Rupee Flucuation During 2011-12


52
50
48
46
44
FII During 2011-12

42

6,526.73

23,236.38

9,469.14

-2,387.14

4.4
-3,705.37
2,662.76
4,281.50
-11,559.20
-3,088.87
1,842.47
-6,508.71

40

Graph showing flow of FII in India and Rupee Fluctuation during 2011-12

Correlation
Month

XDIF

YDIF

XDIF*XDIF

YDIF*YDIF

XDIF*YDIF

April

4.4

44.2275

-1726.774

-3.50875

2981749.023

12.31132656

6058.819

May

-3705.37

44.935

-5436.544

-2.80125

29556012.48

7.847001563

15229.12

June

2662.76

44.8225

931.58583

-2.91375

867852.1649

8.489939063

-2714.41

July

4281.5

44.365

2550.3258

-3.37125

6504161.856

11.36532656

-8597.79

August

-11559.2

45.4825

-13290.37

-2.25375

176634045.5

5.079389063

29953.18

September

-3088.87

47.2475

-4820.044

-0.48875

23232825.77

0.238876563

2355.797

October

1842.47

49.0575

111.29583

1.32125

12386.76252

1.745701562

147.0496

November

-6508.71

50.6075

-8239.884

2.87125

67895691.08

8.244076562

-23658.8

December

-2387.14

51.91

-4118.314

4.17375

16960511.58

17.42018906

-17188.8

January

9469.14

50.9275

7737.9658

3.19125

59876115.24

10.18407656

24693.78

February

23236.38

49.105

21505.206

1.36875

462473877.9

1.873476562

29435.25

March

6526.73

50.1475

4795.5558

2.41125

22997355.75

5.814126562

11563.28

SUM

20774.09

572.835

869992585.1

90.61350625

67276.51

DF

12.00

MEAN

1731.174

12
47.7363

r = XDIF*YDIF
=
(XDIF*XDIF)* (YDIF*YDIF)

67276.51
93273.39*9.52

= 0.075

Interpretation

Since the correlation coefficient is near to 0 i.e. 0.075, which shows there is absence of linear
relationship between FII and Rupee Exchange Rate. Therefore, Rupee Fluctuation does not occur
only due to FII Flow in India. There are also some other factors which contribute to Rupee
Fluctuation.

Finding Correlation between FII and Rupee Exchange Rate during 2012-13:

Financial Year
2012-13
Apr, 2012
May, 2012
June,2012
July, 2012
Aug, 2012
Sept, 2012
Oct, 2012
Nov, 2012
Dec, 2012
Jan, 2013

FII(In Rs.
INR/1$
Crore) (X)
Weekly (Y)
-1,663.36
51.765
-2,756.26
54.217
2,794.68
55.852
5,902.95
55.307
7,747.11
55.490
20,807.81
53.737
8,442.93
53.052
6,291.51
54.740
14,366.49
54.667
19,197.88
54.335

FII & Rupee Fluctuation During 2012-13


56
55
54
53
52
51
50
49
19,197.88

14,366.49

6,291.51

8,442.93

20,807.81

7,747.11

5,902.95

2,794.68

-2,756.26

-1,663.36

FII During 2012-13

Graph showing flow of FII in India and Rupee Fluctuation during 2012-13

Correlation

Month

XDIF

YDIF

XDIF*XDIF

YDIF*YDIF

XDIF*YDIF

April

-1663.36

51.765

-9776.5

-2.5515

95580617.05

6.51015225

24944.8265

May

-2756.26

54.2175

-10869

-0.099

118144595.5

0.009801

1076.073966

June

2794.68

55.8525

-5318.5

1.536

28286378.43

2.359296

-8169.206784

July

5902.95

55.3075

-2210.2

0.991

4885090.13

0.982081

-2190.331984

August

7747.11

55.49

-366.06

1.1735

134002.8521

1.37710225

-429.576104

September

20807.81

53.7375

12694.6

-0.579

161153783.2

0.335241

-7350.194244

October

8442.93

53.0525

329.756

-1.264

108739.0195

1.597696

-416.811584

November

6291.51

54.74

-1821.7

0.4235

3318459.729

0.17935225

-771.474704

December

14366.49

54.6675

6253.32

0.351

39103961

0.123201

2194.913916

January

19197.88

54.335

11084.7

0.0185

122870707.1

0.00034225

205.067061

SUM

81131.74

543.165

10

10

8113.174

54.3165

DF
MEAN

73018.6

488.8485

r = XDIF*YDIF
=
(XDIF*XDIF)* (YDIF*YDIF)

573586334

13.474265

9093.28604

9093.28604
= 0.1034
23949.66*3.67

Interpretation
Since the correlation coefficient is near to 0 i.e. 0.1034, which shows there is absence of linear
relationship between FII and Rupee Exchange Rate. Therefore, Rupee Fluctuation does not occur
only due to FDI Flow in India.

Combined Correlation between (FII & FDI) and Rupee Exchange Rate during 2011-12:-

Financial Year
2011-12
Apr, 2011
May, 2011
June,2011
July, 2011
Aug, 2011
Sept, 2011
Oct, 2011
Nov, 2011

FII & FDI


INR/1$
(In Rs.
Weekly (Y)
Crore) (X)
44.227
13,851
17,241
44.935
28,034
44.822
9,168
44.365
45.482
1,255
47.247
5,318
7,557
49.057
6,400
50.607

Dec, 2011
Jan, 2012
Feb, 2012
Mar, 2012

4,737
19,757
34,110
47,293

51.910
50.927
49.105
50.147

Combined (FDI & FII) & Rupee Fluctuation During


2011-12
52
50
48
46
44

Combined FDI & FII


During 2011-12

42

47,293

34,110

19,757

4,737

13,851
17,241
28,034
9,168
1,255
5,318
7,557
6,400

40

Correlation
Month

XDIF

YDIF

XDIF*XDIF

YDIF*YDIF

XDIF*YDIF

April

13851.4

44.2275

-2375.4

-3.50875

5642323.253

12.31132656

8334.535628

May

17,241

44.935

1013.87

-2.80125

1027937.446

7.847001563

-2840.110341

June

28,034

44.8225

11807

-2.91375

139405308

8.489939063

-34402.65353

July

9,168

44.365

-7059.3

-3.37125

49833116.45

11.36532656

23798.52185

August

1,255

45.4825

-14972

-2.25375

224159511.4

5.079389063

33743.04922

September

5,318

47.2475

-10909

-0.48875

118998153.9

0.238876563

5331.591691

October

7,557

49.0575

-8669.3

1.32125

75156545.76

1.745701562

-11454.29611

November

6,400

50.6075

-9826.5

2.87125

96559463.53

8.244076562

-28214.24481

December

4,737

51.91

-11490

4.17375

132017744.6

17.42018906

-47955.95969

January

19,757

50.9275

3530.38

3.19125

12463600.6

10.18407656

11266.33315

February

34,110

49.105

17883.6

1.36875

319823953.7

1.873476562

24478.2083

March

47,293

50.1475

31066

2.41125

965094647.4

5.814126562

74907.82619

194721.1

572.835

2140182306

90.61350625

56992.80154

12

12

16226.76

47.73625

SUM
DF
MEAN

r = XDIF*YDIF
=
(XDIF*XDIF)*(YDIF*YDIF)

56992.80154_ = 0.129
46262.10*9.51

Interpretation

Since the correlation coefficient is near to 0 i.e. 0.129, which shows there is absence of linear
relationship between combined (FDI & FII) and Rupee Exchange Rate. Therefore, Rupee
Fluctuation does not occur only due to FDI & FII Flow in India.

Combined Correlation between (FII & FDI) and Rupee Exchange Rate during 2012-13:

Financial Year
2012-13
Apr, 2012
May, 2012
June,2012
July, 2012
Aug, 2012
Sept, 2012
Oct, 2012
Nov, 2012

FII & FDI


INR/1$
(In Rs.
Weekly (Y)
Crore) (X)
7,956.64
51.765
4,472.74
54.217
9,765.68
55.852
14,084.95
55.307
20,325.11
55.490
46,359.81
53.737
51,113.93
53.052
12,040.51
54.740

Dec, 2012
Jan, 2013

21,207.49
26,442.88

54.667
54.335

Combined FDI & FII During 2012-13


56
55
54
53
52
51
50
49
26,442.88

21,207.49

12,040.51

51,113.93

46,359.81

20,325.11

14,084.95

9,765.68

4,472.74

7,956.64

Combined FDI & FII


During 2012-13

Graph showing Combined (FDI & FII) and Rupee Fluctuation during 2012-13

Correlation

Month

XDIF

YDIF

XDIF*XDIF

YDIF*YDIF

XDIF*YDIF

April

7956.64

51.765

-13420

-2.551

180105364.7

6.51015225

34241.9822

May

4472.74

54.2175

-16904

-0.099

285753127.1

0.009801

1673.519166

June

9765.68

55.8525

-11611

1.536

134822148.4

2.359296

-17834.94758

July

14084.95

55.3075

-7292

0.991

53173614.02

0.982081

-7226.395784

August

20325.11

55.49

-1051.9

1.1735

1106417.874

1.37710225

-1234.362404

September

46359.81

53.7375

24982.8

-0.579

624142094.6

0.335241

-14465.06204

October

51113.93

53.0525

29737

-1.264

884286552.1

1.597696

-37587.51238

November

12040.51

54.74

-9336.5

0.4235

87169560.02

0.17935225

-3953.992504

December

21207.49

54.6675

-169.48

0.351

28724.82626

0.123201

-59.488884

January

26442.88

54.335

SUM

213769.7

543.165

10

10

21376.97

54.3165

DF
MEAN

5065.91

0.0185

r = XDIF*YDIF
=
(XDIF*XDIF)* (YDIF*YDIF)

25663403.6

0.00034225

93.719261

2276251007

13.474265

-46352.54096

-46352.54096_ = -0.26
47710.07*3.67

Interpretation

Since the correlation coefficient is near to -1 i.e. -0.26, which shows there is absence of linear
relationship between combined (FDI & FII) and Rupee Exchange Rate. Therefore, Rupee
Fluctuation does not occur only due to FDI & FII Flow in India.

Indian Exports and Imports Statistics during 2011-12

MONTH
Apr-11
May-11
Jun-11
Jul-11
Aug-11
Sep-11
Oct-11
Nov-11
Dec-11

Exports (In
Billion Rs.)
1041.52
1190.98
1190.39
1173.8
1121.48
1265.2
1164.06
1135.2
1289.51

Imports (In
Billion Rs.)
1623.93
2033.63
1833.21
1825.82
1810.46
1893.72
2028.2
1988.61
2094.05

Jan-12
Feb-12
Mar-12

1299.44
1217.34
1421.73

2209.13
1963.63
2129.92

Indian Exports and Imports Statistics during 2012-13

MONTH

Apr-12
May-12
Jun-12
Jul-12
Aug-12
Sep-12
Oct-12
Nov-12
Dec-12
Jan-13

Exports
(In Billion
Rs.)
1216.92
1347.73
1390.13
1261.53
1215.4
1302.14
1215.63
1221.48
1359.5
1389.82

Imports
(In Billion
Rs.)
1923.02
2218.14
2004.53
2250.8
2078.59
2282.61
2377.59
2277.96
2325.24
2475.94

Finding Correlation between Rupee Exchange and Indian Export during 2011-12

MONTH
Apr-11
May-11
Jun-11
Jul-11
Aug-11
Sep-11
Oct-11
Nov-11

INR/1$ (X) Exports (Y)


44.2275
1041.52
44.935
1190.98
44.8225
1190.39
44.365
1173.8
45.4825
1121.48
47.2475
1265.2
49.0575
1164.06
50.6075
1135.2

Dec-11
Jan-12
Feb-12
Mar-12

51.91
50.9275
49.105
50.1475

1289.51
1299.44
1217.34
1421.73

Indian Exports & INR/1$


52
50
48
46
INR/1$ (X)

44
42
40

Graph showing Rupee Fluctuation and Indian Exports during 2011-12

Correlation

MONTH
Apr-11
May-11
Jun-11
Jul-11
Aug-11
Sep-11

INR/1$
EXPORT(Y) XDIF
YDIF
(X)
44.2275
1041.52 -3.50875 -167.701
44.935
1190.98 -2.80125 -18.2408
44.8225
1190.39 -2.91375 -18.8308
44.365
1173.8 -3.37125 -35.4208
45.4825
1121.48 -2.25375 -87.7408
47.2475
1265.2 -0.48875 55.97917

XDIF*XDIF YDIF*YDIF

XDIF*YDIF

12.311327
7.8470016
8.4899391
11.365327
5.0793891
0.2388766

588.420299
51.0971344
54.8683406
119.412484
197.745903
-27.359817

28123.57
332.728
354.60028
1254.6354
7698.4538
3133.6671

Oct-11
49.0575
Nov-11
50.6075
Dec-11
51.91
Jan-12
50.9275
Feb-12
49.105
Mar-12
50.1475
SUM
572.835
DF
12
MEAN
47.73625

1164.06
1135.2
1289.51
1299.44
1217.34
1421.73
14510.65
12
1209.2208

1.32125
2.87125
4.17375
3.19125
1.36875
2.41125

r = XDIF*YDIF
_____
(XDIF*XDIF)* (YDIF*YDIF)

-45.1608
-74.0208
80.28917
90.21917
8.119167
212.5092

1.7457016
8.2440766
17.420189
10.184077
1.8734766
5.8141266
90.613506

2039.5009
5479.0838
6446.3503
8139.498
65.920867
45160.146
108228.15

1855.52794
9.51*328.98

-59.668751
-212.53231
335.106909
287.911916
11.1131094
512.412728
1858.52794

= 0.594

Interpretation

Finding Correlation between Rupee Exchange and Indian Imports during 2011-12

MONTH

INR/1$ (X)

Apr-11
May-11
Jun-11
Jul-11
Aug-11

44.2275
44.935
44.8225
44.365
45.4825

IMPORT
(Y)
1623.93
2033.63
1833.21
1825.82
1810.46

Sep-11
Oct-11
Nov-11
Dec-11
Jan-12
Feb-12
Mar-12

47.2475
49.0575
50.6075
51.91
50.9275
49.105
50.1475

1893.72
2028.2
1988.61
2094.05
2209.13
1963.63
2129.92

INR/1$
52
50
48
46
INR/1$ (X)

44
42
40

Graph showing Rupee Fluctuation and Indian Imports during 2011-12

Correlation

MONTH

IMPORT(Y)

Apr-11

INR/1$
(X)
44.2275

XDIF

YDIF

XDIF*XDIF

YDIF*YDIF

XDIF*YDIF

1623.93

-3.50875

-328.929

12.311327

108194.4

1154.1302

May-11

44.935

2033.63

-2.80125

80.77083

7.8470016

6523.9275

-226.2593

Jun-11

44.8225

1833.21

-2.91375

-119.649

8.4899391

14315.923

348.62776

Jul-11

44.365

1825.82

-3.37125

-127.039

11.365327

16138.95

428.28079

Aug-11

45.4825

1810.46

-2.25375

-142.399

5.0793891

20277.523

320.93212

Sep-11

47.2475

1893.72

-0.48875

-59.1392

0.2388766

3497.441

28.904268

Oct-11

49.0575

2028.2

1.32125

75.34083

1.7457016

5676.2412

99.544076

Nov-11

50.6075

1988.61

2.87125

35.75083

8.2440766

1278.1221

102.64958

Dec-11

51.91

2094.05

4.17375

141.1908

17.420189

19934.851

589.29524

Jan-12

50.9275

2209.13

3.19125

256.2708

10.184077

65674.74

817.8243

Feb-12

49.105

1963.63

1.36875

10.77083

1.8734766

116.01085

14.742578

Mar-12

50.1475

2129.92

2.41125

177.0608

5.8141266

31350.539

426.93793

572.835

23434.31

90.613506

292978.67

4105.6096

12

12

47.73625

1952.8592

SUM
DF
MEAN

r = XDIF*YDIF
_____
(XDIF*XDIF)* (YDIF*YDIF)

4105.6096
9.51*541.27

= 0.7975

Interpretation

Finding Correlation between Rupee Exchange and Indian Export during 2012-13

MONTH INR/1$
(X)
Apr-12
51.765
May-12 54.2175
Jun-12
55.8525
Jul-12
55.3075
Aug-12
55.49

EXPORT
(Y)
1216.92
1347.73
1390.13
1261.53
1215.4

Sep-12
Oct-12
Nov-12
Dec-12
Jan-13

53.7375
53.0525
54.74
54.6675
54.335

1302.14
1215.63
1221.48
1359.5
1389.82

INR/1$
56
55
54
53
52

INR/1$ (X)

51
50
49

Graph showing Rupee Fluctuation and Indian Exports during 2012-13

Correlation

MONTH
Apr-11
May-11
Jun-11
Jul-11

INR/1$
EXPORT(Y) XDIF
YDIF
XDIF*XDIF
(X)
51.765
1216.92
-2.5515 -75.108 6.5101523
54.2175
1347.73
-0.099
55.702 0.009801
55.8525
1390.13
1.536
98.102 2.359296
55.3075
1261.53
0.991 -30.498 0.982081

YDIF*YDIF

XDIF*YDIF

5641.2117 191.638062
3102.7128
-5.514498
9624.0024 150.684672
930.128 -30.223518

Aug-11
Sep-11
Oct-11
Nov-11
Dec-11
Jan-12
SUM
DF
MEAN

55.49
53.7375
53.0525
54.74
54.6675
54.335
543.165
10
54.3165

1215.4
1302.14
1215.63
1221.48
1359.5
1389.82
12920.28
10
1292.028

1.1735
-0.579
-1.264
0.4235
0.351
0.0185

r = XDIF*YDIF
_____
(XDIF*XDIF)* (YDIF*YDIF)

-76.628 1.3771022 5871.8504


10.112 0.335241 102.25254
-76.398 1.597696 5836.6544
-70.548 0.1793522 4977.0203
67.472 0.123201 4552.4708
97.792 0.0003422 9563.2753
13.474265 50201.579

302.98873
3.67*224.05

-89.922958
-5.854848
96.567072
-29.877078
23.682672
1.809152
302.98873

= 0.368481

Interpretation

Finding Correlation between Rupee Exchange and Indian Imports during 2012-13

MONTH

INR/1$
(X)

Apr-12
May-12

51.765
54.2175

IMPORT
(Y)

1923.02
2218.14

Jun-12
Jul-12
Aug-12
Sep-12
Oct-12
Nov-12
Dec-12
Jan-13

55.8525
55.3075
55.49
53.7375
53.0525
54.74
54.6675
54.335

2004.53
2250.8
2078.59
2282.61
2377.59
2277.96
2325.24
2475.94

INR/1$ (X)
56
55
54
53
52

INR/1$ (X)

51
50
49

Graph showing Rupee Fluctuation and Indian Imports during 2012-13

Correlation

MONTH INR/1$ IMPORT


XDIF
YDIF
XDIF*XDIF YDIF*YDIF XDIF*YDIF
Apr-12
51.765
1923.02 -2.5515
- 6.5101523
89055.69 761.42373
298.422
May-12 54.2175
2218.14
-0.099
-3.302 0.009801 10.903204 0.326898

Jun-12

55.8525

2004.53

1.536

Jul-12
Aug-12

55.3075
55.49

2250.8
2078.59

0.991
1.1735

Sep-12
Oct-12
Nov-12
Dec-12
Jan-13
SUM
DF
MEAN

53.7375
53.0525
54.74
54.6675
54.335
543.165
10
54.3165

2282.61
2377.59
2277.96
2325.24
2475.94
22214.42
10
2221.442

-0.579
-1.264
0.4235
0.351
0.0185

r = XDIF*YDIF
_____
(XDIF*XDIF)* (YDIF*YDIF)

2.359296 47050.816 -333.1768


216.912
29.358 0.982081 861.89216 29.093778
- 1.3771022 20406.694 -167.6368
142.852
61.168 0.335241 3741.5242 -35.41627
156.148 1.597696 24382.198 -197.3711
56.518 0.1793522 3194.2843 23.935373
103.798 0.123201 10774.025 36.433098
254.498 0.0003422 64769.232 4.708213
13.474265 264247.26 122.3201

122.3201
= 0.064838
3.67*514.049

Interpretation

Finding Correlation between Rupee Exchange and Combined Indian (Imports & Exports)
during 2011-12

MONTH

INR/1$

COMBINED
(Imports &
Exports)
(Y)

(X)

Apr-11
May-11
Jun-11
Jul-11
Aug-11
Sep-11
Oct-11
Nov-11
Dec-11
Jan-12
Feb-12
Mar-12

44.2275
44.935
44.8225
44.365
45.4825
47.2475
49.0575
50.6075
51.91
50.9275
49.105
50.1475

2665.45
3224.61
3023.6
2999.62
2931.94
3158.92
3192.26
3123.81
3383.56
3509.07
3180.97
3551.65

INR/1$
52
50
48
46
44

INR/1$ (X)

42
40

Graph showing Rupee Fluctuation and Combined Indian (Imports & Exports)
during 2011-12
Correlation

MONTH
Apr-11
May-11
Jun-11
Jul-11
Aug-11
Sep-11
Oct-11
Nov-11
Dec-11
Jan-12
Feb-12
Mar-12
SUM
DF
MEAN

INR/1$
COMBINED
XDIF
(X)
(Y)
44.2275
2665.45 -3.50875
44.935
3224.61 -2.80125
44.8225
3023.6 -2.91375
44.365
2999.62 -3.37125
45.4825
2931.94 -2.25375
47.2475
3158.92 -0.48875
49.0575
3192.26
1.32125
50.6075
3123.81
2.87125
51.91
3383.56
4.17375
50.9275
3509.07
3.19125
49.105
3180.97
1.36875
50.1475
3551.65
2.41125
572.835
37945.46
12
12
47.73625 3162.121667

r = XDIF*YDIF
_____
(XDIF*XDIF)* (YDIF*YDIF)

YDIF

XDIF*XDIF YDIF*YDIF

-496.672
62.48833
-138.522
-162.502
-230.182
-3.20167
30.13833
-38.3117
221.4383
346.9483
18.84833
389.5283

12.311327
7.8470016
8.4899391
11.365327
5.0793891
0.2388766
1.7457016
8.2440766
17.420189
10.184077
1.8734766
5.8141266
90.613506

246682.74
3904.7918
19188.252
26406.792
52983.6
10.250669
908.31914
1467.7838
49034.935
120373.15
355.25967
151732.32
673048.2

5965.733
9.51*820.39

XDIF*YDIF
1742.697
-175.045
403.6175
547.8337
518.7719
1.564815
39.82027
-110.002
924.2282
1107.199
25.79866
939.2502
5965.733

= 0.764646

Interpretation

Finding Correlation between Rupee Exchange and Combined Indian (Imports & Exports)
during 2012-13

MONTH
Apr-11
May-11
Jun-11
Jul-11
Aug-11
Sep-11
Oct-11
Nov-11
Dec-11
Jan-12

COMBINED
(Imports &
Exports)
INR/1$ (Y)
(X)
51.765
3139.94
54.2175
3565.87
55.8525
3394.66
55.3075
3512.33
55.49
3293.99
53.7375
2584.75
53.0525
3593.22
54.74
3499.44
54.6675
3684.74
54.335
3865.76

INR/1$ (X)
56
55
54
53
52

INR/1$ (X)

51
50
49

Graph showing Rupee Fluctuation and Combined Indian (Imports & Exports)
during 2012-13

Correlation

MONTH
Apr-12
May-12
Jun-12
Jul-12
Aug-12
Sep-12
Oct-12
Nov-12
Dec-12
Jan-13
SUM
DF
MEAN

INR/1$
COMBINED
XDIF
YDIF
(X)
(y)
51.765
3139.94
-2.5515 -273.53
54.2175
3565.87
-0.099
152.4
55.8525
3394.66
1.536
-18.81
55.3075
3512.33
0.991
98.86
55.49
3293.99
1.1735 -119.48
53.7375
2584.75
-0.579 -828.72
53.0525
3593.22
-1.264
179.75
54.74
3499.44
0.4235
85.97
54.6675
3684.74
0.351
271.27
54.335
3865.76
0.0185
452.29
543.165
34134.7
10
10
54.3165
3413.47

r = XDIF*YDIF
_____
(XDIF*XDIF)* (YDIF*YDIF)

Interpretation

XDIF*XDIF YDIF*YDIF
6.5101523
0.009801
2.359296
0.982081
1.3771022
0.335241
1.597696
0.1793522
0.123201
0.0003422
13.474265

74818.661
23225.76
353.8161
9773.2996
14275.47
686776.84
32310.062
7390.8409
73587.413
204566.24
1127078.4

XDIF*YDIF
697.9118
-15.0876
-28.8922
97.97026
-140.21
479.8289
-227.204
36.40829
95.21577
8.367365
1004.309

1004.309
= 0.257768
3.67*1061.63

CHAPTER 4
SUMMARY OF FINDINGS

The Key Findings of the Study are as follows:

During 2001-10 the FDI and FII shows an upward trend with little sinking in between.

During 2011-12 and 2012-13 FDI and FII witnesses a downward trend due to Global
Economic Slowdown and Euro Debt Crisis.
During 2011-12 and 2012-13, the FDI has no impact on the Rupee Exchange Rate as
shown by Correlation Co-efficient for the two years i.e. 0.007 and -0.10 respectively.
Rupee Exchange Rate during these two years reflects to have the function of Pure Market
Forces (Demand & Supply) and other Economic Factors.
During 2011-12 and 2012-13, the FII does not seem to have an impact on Rupee
Exchange Rate as evidenced by Correlation Co-efficient for these two years i.e. 0.075
and 0.1034 respectively.
Combined FII and FDI flow into country also shows the same negative impact i.e. having
no linear relationship between both (FII & FDI) and Rupee Exchange Rate.
Exports and Imports during 2011-12 signals a constructive impression due to Fluctuation
in Rupee Exchange Rate i.e. during the period of Rupee Depreciation, the exports boost
up and vice-versa. On the other hand during the period of Rupee Appreciation, more
imports take place rather than exports.
Exports and Imports during 2012-13 witness a very mild linear relationship as shown by
Correlation Co-efficient for two years i.e. 0.3684 and 0.0648. That means Exports and
Imports get affected by Rupee Exchange Fluctuation but not much. This may be due to
lack of data as Export and Import data of February and March 2013 is yet to arrive at.

CHAPTER 5
CONCLUSION AND SUGGESTION

CONCLUSION
FDI plays an important role in the Economic Development of an Economy.

The exchange rate is a key financial variable that affects decisions made by foreign
exchange investors, exporters, importers, bankers, businesses, financial institutions,
policymakers and tourists in the developed as well as developing world.
There is a general perception that FDI and FII flow into the country is the key driver of
Rupee Exchange Rate, but this perception does not hold good always as findings of our
study showed that Rupee Exchange Rate and FDI & FII are independent.
There are other important factors that affect the Rupee Exchange Rate such as:
Market Situations.
Economic Factors.
Political Factors.
Special Factors

Rupee Fluctuation can be escaped through:


Hedging
Reducing Trade Deficit
RBIs control Polity

Major Determinants of Exchange Rates are:


Differentials in Inflation
Differentials in Interest rates
Current Account Deficit
Public Debt
Terms of Trade
Political Stability and Economic Performance

Suggestions

CHAPTER 6
BIBLIOGRAPHY

BIBLIOGRAPHY

www.rbi.org

www.investopedia.com

http://www.tradingeconomics.com/india/exports

http://www.tradingeconomics.com/india/imports

http://business.mapsofindia.com/india-market/falling-rupee-against-dollar.html
http://www.mbaknol.com/managerial-economics/factors-affecting-the-exchange-rate-ofindian-rupee/