c

c

„p 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.
„p © parent business enterprise and its foreign affiliate are the two sides of
the FDI relationship.
„p ×ogether they comprise an MNC. ×he parent enterprise through its
foreign direct investment effort seeks to exercise substantial control
over the foreign affiliate company.
„p 'Control' as defined by the UN, is ownership of greater than or equal to
10% of ordinary shares or access to voting rights in an incorporated firm.
„p For an unincorporated firm one needs to consider an equivalent
criterion.

c

FDI ×rend in India FDI Inflows Cumulative amount of FDI inflows (from ©ugust 1991 to July2006) Rs.
1,74,466 crores (USD 41.79 billion) (equity capital components only) ©mount of FDI inflows during
2006-07 (from ©pril 2006 to July2006) Rs. 13,055 crore (USD 2.89 billion) (equity capital components
only) Year wise FDI ×rend Current Year FDI ×rend 70,000 6000 60,000 5000 50,000 4000 40,000 Rs.
Crores Rs. Crores 30,000 3000 20,000 2000 10,000 1000 - 1991- 2000- 2001- 2002- 2003- 2004-
2005- 2006- 0 2000 2001 2002 2003 2004 2005 2006 2007* Jan-06 Feb-06 Mar-06 ©pr-06 May-06
Jun-06 Jul-06 * 2006-07 amount includes FDI received upto July06 124% growth in FDI over last year
comparative period

# FDI ×rend in India ×he share of top investing countries FDI inflows is as shown below: (©mounts in
INR crores / USD͛MM) * Includes inflows under NRI Schemes of RBI, stock swapped and advances
pending issue of shares

# FDI ×rend in India ×he top 10 sectors in India attracting highest FDI are as shown below: (©mounts
in INR crores / USD͛MM)

# FDI ×rend in India ×he statement on region-wise /state-wise break-up for FDI inflows is as shown
below:

# Global FDI ×rend Global FDI inflows rose to $916 billion in 2005, driven by significant increase in
both, value and no. of deals in both developed and developing countries Share of developing
countries in world FDI inflows fell slightly (to 36%), thereby increasing the gap in FDI inflows
between developed and developing countries to over $200 billion in 2005 FDI inflows, global and
by group of economies, 1980ʹ2005 (in USD billion) is as shown below: FDI has spread to become a
truly global phenomenon with FDI stocks now constituting over 20% of global GDP

# Global FDI ×rend United Kingdom was the largest recipient of FDI in 2005, ahead of the United
States, China and France Distribution of FDI by region and selected countries (in USD billion) is as
shown below:

# Global FDI ×rend ©mongst the developing regions, ©sia & Oceania regions witnessed steep
increase in FDI inflows while there has been a declining trend observed in ©frica & Latin ©merica
48% of FDI inflows to developed countries went to 5 countries ʹ China, Hong Kong, Singapore, Brazil
& Mexico Equity is the main constituent of FDI (65%), followed by intra-company loans (23%) and
reinvested earnings (12%) Investment in services (mainly finance) continued to grow rapidly
Current FDI growth seems to be led primarily by a few specific industries, rather than being broad-
based sectorally. Specifically, in 2005, oil and gas, utilities (e.g. telecommunications, energies,
transport), banking and real estate were the leading industries in terms of inward FDI ×he sectoral
breakdown of cross ʹ border M&© sales (in USD billion) from 1987-2005 is as shown below:

# Global FDI ×rend FDI Outflows FDI outflows stood at USD 779 billion in 2005 50% of the
outflows were from the firms based in US©, UK & Luxembourg Developing countries invested USD
117 billion (Mostly China & West ©sia) Bulk of the outflows from developing countries was intra-
regional; or in ©frica & Latin ©merica Reasons for growth in FDI Cross border M & © Better
Investment environment Intense competition pressure Desire to control & develop rich natural
resources in developing countries Green FDI
p

º 
  
cc

º

   
       p

!"# 

 #
$%º p
& # 

º pp $

#
$%º 
   
pp
pp   ! p  "º' ! p
pp
º
 º 
p
 

p 

 p  p

º


p    p

 p  p
   p  
p  p 

p

   p  p    p 
p
! p   p   p 
p
"#$   p    p 

 p 
p
%
p 
 p  p 
p
 &'
(
)
* p

 p   p 
p
%
 p   p 

p 

p

+ 
#
  p   p 
 p 
p
, 
,-  p    p  p 
p

  ./%
 p
 p   p  
p
% 
 0
. p   p  p 


# p 
 p 
 p 
p

/º
  p 
  p  p 

" 
 p    p   p 
p

(%
 #1
  p  p  
p 

p
, 
 p   p 

p 
p

++ ,#
#
  p 

  p 


p 

p
1
2
#&1%

 p  p 

p
 * p
+# p   p 

p 
p

 3 &14/ 5%
 * p   p  

p  
p
º 

 p  
 p  
p 
p

"4# 
 p   p  
p 
p
(
 1
  p   p 
 
p  
p
+  p   p  

p 
p




&1

#* p   p   

p 
p


 p   p  
p 
p
$!!
. p   p  
p 
p

#

º
  p  

p 


p 
p
1
+
/ p  
 p  p 
p

%
% p 
  p   p 
p

4.'
  p   p 
 p 
p
#

+
/ p  p 
 p 
p
,
+#+
/ p   p  p 
p

5' " 
 
  p   p 
p
,-  p
. p 
 p  p 
p
%
#26&17
#
  p 
p 
p

/* p
º5  %

 p 


p  p 
p

+ º
#   p


p   p 
p

, p   p    p 
p

(
)
 p 
 p  p 
p

%#

(%
p 
 p  p 
p
$/
   p 

 p  p  
p

8 # ! 8 p  

p
 p 
p

º#
p 
 p 
p  
p
  &%
 #
#
 
 p

p 
p
 
!!
* p
7 
57 
#%6
 p  p   p  
p

09  
#/ p  

p

 p 
p

1

  p 

 p  p  
p
º 
  p  p  p  
p
. .  p 

p

p  
p

2
 # 
# p 

 p 
p  
p

4/ 9º p  
p 
p  
p
$ 
#&º# !
* p   p 
p  
p
%
 p  p  p  
p


p   p 
p 
p
!

 p  p 
p 
p
%
 +
&'
  


 p  
p   p
# 

 p
4   1
  p 
p 
p  p
+ 5º
 /#
#
  p 
p  p

  p
+
  p 
 p  p  p
º(  p )*+,)+-, p .++-/) p   p

º
0 º 1    . p +2*2//-)* p ))+-, p 9

p
13
     
./- p +/-. p p
2 p
45 #  º
6   p *))-/ p ++-)) p p
7 1  p ),*,,-/ p ./)*-.* p p

º
 
   1 
 18     9 9   1     1
p
º" : &&8
1  !    
 1  18 73      1 p

- 
 c