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Assignment topic:

IMPACTS OF FDI ON INDIAN ECONOMY

Submitted To:
Prof. Asim Faheem

Submitted By:
Anas Sehole Muhammad Mustafa Qasim Arshad Hassan Anjum Butt M. Sohaib Akram Section D (Afternoon) 911 912 914 935 968 8th semester

Hailey College of Commerce University of the Punjab

Abstract:
The indian economy is growing and expanding for last decade. This article is to show the impact of the fdi on the in the development of Indian economy. In this both inward foreign direct investment and outward foreign direct investment.

Introduction
In 1991 the Indian government has changed its fdi policy. Reduces the taxes and gave subsidies. That increases the the flow of FDI both inward and outward. That has increased the speed and velocity of the growth of the service sector of the india. Also the it develops the human capital of india. Which has the positive impacts on the indian economy overall. It also have positive impact to some extent on the manufacturing industry.

Literature review:
(Sharama 2000) export growth in india has been much faster then GDP growth over the past few decades. Several factors appear to have contributed to this phenomena including foreign direct investment FDI. Indias exports have grown much faster than GDP over the past few decades. Its exports have grown ever faster since 1945-95 several factors appear to have contributed to this phenomena including FDI. Due to the increase in exports and production activity has improved the economy of India. (Kumar 2007) FDI has contributed in good way that it has increase employment opportunities and increase in production. On the other hand many Indian business invested in other countries make themselves multinationals companies. And earn good for their country. (Prakash, 2003)One of the distinguishing but unnoticed features of Indian economy during 1990s is the significant rise of outward FDI activity of Indian enterprises. Measured by the value of OFDI the period of 1996 alone saw an outflow of US$ 3,529 million compared to US$ 734 million. Importantly this increasing O-FDI activity from Indian economy is being driven by service sector enterprises than the manufacturing firms this lead to development of skilled labour force and increase in the GDP and economic growth (Pradhan 2007) the Indian multinational are growing in the world market. Is increasing the foreign currency reserves and GDP of

the country. The increase in O-FDI is becoming good for indian economy. (Banga 2003) the FDI from US has a positive and significant impact on the Indian manufacturing sectors. While the FDI from the japan does not have significant impact like US have. (Blomstorm 2003) the FDI has established the service sector of India. And helped in boosting the economy of India. Due to the outward FDI the service sector has established at very major level. Developed a technical and skilled labour force that has increased the human capital that is working everywhere in the world. In this way the overall economy has positive impact on it (Bosworth & Collins 2007) there are many services of the growth of the Indian economy. The service sector and human capital have shown great development. FDI is the one key source of this development. Kumar (2007) FDI has contributed in good way that it has increase employment opportunities and increase in production. On the other hand many Indian business invested in other countries make themselves multinationals companies. And earn good for their country. (Blomstorm 2003) the FDI has established the service sector of India. And helped in boosting the economy of India. Due to the outward FDI the service sector has established at very major level. Developed a technical and skilled labour force that has increased the human capital that is working everywhere in the world. In this way the overall economy has positive impact on it

Sharma (2000) export growth in India has been much faster than GDP growth over the past few decades. Several factors appear to have contributed to this phenomena including foreign direct investment FDI. Indias exports have grown much faster than GDP over the past few decades. Its exports have grown ever faster since 1945-95 several factors appear to have contributed to this phenomena including FDI. Due to the increase in exports and production activity has improved the economy of India.

Conclusion:
The FDI both inward and outward has done some very good things for india. The services sector has gained a lot. Especially the software industry has got great boom. Similarly it helped them to get skilled labour and their human capital is also increased the manufacturing sector also show some improvement due to inflow of the FDI. So we can conclude that FDI has helped in the growth of the indian economy

References
1. Sharma,k.(2000). Export growth in india: Has FDI played a role.Review of economics,11(1),41-62. 2. Kumar,N.(2007). Emerging TNCs:Trends, patterns and determinants of outward FDI by Indian enterprises.thunderbird international business

review,46(5)521-543.
3. Pradhan,P,J.(2003). Rise of the service sector outward FDI investments from the Indian economy.

Thunderbird international business review,41(4/5),381-405.


4. Pradhan,P,J.(2002). Growth of the Indian multinationals in the world economy: rethinking critical accounts. University of California, Irvine. 5. Banga,R.(2003). The economics of FDI incentives.

Review of economic,10(2), 60-95.


6. Blomstrom,M.(2003). The differential impact of the Japense and US FDI on exports of Indian manufacturing. International journal of financial

services,5(2),1-11.

7. Bosworth,B.,& Collins,S.(2007).sources of the growth in the Indian Economy . Thunderbird international

business review,6(3),3-33.