Business Environment Term Paper

Analyze the rationale for encouraging FDI (Business Environment)
A term paper
To analyze the rationale for encouraging FDI

(Business Environment)
By
Nadeem Yousuf
Reg. No: 11013296
Roll no: R1003A68 (Group – 1)
Department: Lovely School of Business
Submitted to
Mr. Prince Vohra

(Faculty of MBA)
BY: NADEEM YOUSUF Page 1

TABLE OF CONTENTS
S.No Particulars Page no.
1. Introduction 3-8
General introduction 3
Objectives of my study 3
Needs of FDI 4
Overview of FDI in India 5-7

Determinants of FDI 8
2. Review of related literature 9-14
3. Research Methodology 14
Research Design -
Data collection method -

4. Findings 14
5. Conclusions and Suggestions 15
6. Bibliography /Reference 15-18
1. INTRODUCTION TO FDI
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.
According to International Monetary Fund (IMF), FDI is

defined as investment that is made to acquire a lasting interest in an enterprise
operating in an economy other than that of investor. The investor’s purpose is to
have an effective voice in the management of an enterprise. The essence of FDI
is the transmission to the host country a package of capital, managerial skills
and technical knowledge.
A parent business enterprise and its foreign affiliate are the two sides of the
FDI relationship. Together they comprise an MNC. The parent enterprise
through its foreign direct investment effort seeks to exercise substantial control
over the foreign affiliate company. FDI can fill the gap between the desired
investment and locally mobilised savings. It supplies a package of needed
resources. A foreign direct investment is not an unmixed blessing. The
government in the developing countries have to be careful while deciding on the
magnitude, pattern and conditions of a private foreign investment.
Objectives of my study
• To list out the various factors that encourages foreign direct investment.
• To analyse India’s present scenario of FDI.
Need for FDI

The need for FDI arises due to the following reasons:
• Raising the level of Investment:
Foreign investment can fill the gap between desired investment and
locally mobilized savings. It supplies a package of needed resources. It
helps a number of UDC’s to possess huge mineral resources.
• Upgradation of technology:
Foreign investment can supply a package of needed resources such as

management experience and organizational and technical skills.FDI with
it brings huge technology to the host country.
• Exploitation of resources:
A number of underdeveloped countries process huge mineral resources

which await exploitation. These countries do not possess the required
technical skill; therefore depend upon foreign countries to undertake the
exploitation of their mineral wealth.
• Development of basic economic infrastructure:
Underdeveloped n developing countries require a huge capital investment

for the development of basic economic structure as their domestic capital
is often too inadequate.
• Balance of payments position:
In case of an adverse BOP situation in the host country, an investment

presents a short run solution to the problem.
• Revenue to the govt:
The profit generation by a foreign investment in the host country

contributes to the corporate tax revenue in the latter.
Overview of FDI in India
India has been ranked at the third place in global foreign direct investments in
2009 and will continue to remain among the top five attractive destinations for
international investors during 2010-11, according to United Nations Conference
on Trade and Development (UNCTAD) in a report on world investment
prospects titled, 'World Investment Prospects Survey 2009-2011' released in
July 2009.
The 2009 survey of the Japan Bank for International Cooperation released in
November 2009, conducted among Japanese investors continues to rank India as
the second most promising country for overseas business operations, after
China. A report released in February 2010 by Leeds University Business
School, commissioned by UK Trade & Investment (UKTI), ranks India among
the top three countries where British companies can do better business during
2012-14.
According to Ernst and Young's 2010 European Attractiveness Survey, India is

ranked as the 4th most attractive foreign direct investment (FDI) destination in
2010. However, it is ranked the 2nd most attractive destination following China
in the next three years.
Moreover, according to the Asian Investment Intentions survey released by the

Asia Pacific Foundation in Canada, more and more Canadian firms are now
focussing on India as an investment destination. From 8 per cent in 2005, the
percentage of Canadian companies showing interest in India has gone up to 13.4
per cent in 2010.

India attracted FDI equity inflows of US$ 2,214 million in April 2010. The
cumulative amount of FDI equity inflows from August 1991 to April 2010 stood
at US$ 134,642 million, according to the data released by the Department of
Industrial Policy and Promotion (DIPP).
The services sector comprising financial and non-financial services attracted 21

per cent of the total FDI equity inflow into India, with FDI worth US$ 4.4
billion during April-March 2009-10, while construction activities including
roadways and highways attracted second largest amount of FDI worth US$ 2.9
billion during the same period. Housing and real estate was the third highest
sector attracting FDI worth US$ 2.8 billion followed by telecommunications,
which garnered US$ 2.5 billion during the financial year 2009-10. The
automobile industry received FDI worth US$ 1.2 billion while power attracted
FDI worth US$ 1.4 billion. During April-March 2009-10, according to data
released by DIPP.
In April 2010, the telecommunication sector attracted the highest amount of FDI
worth US$ 430 million, followed by services sector at US$ 355 million and
computer hardware and software at US$ 172 million, according to data released
by DIPP. During the financial year 2009-10, Mauritius has led investors into
India with US$ 10.4 billion worth of FDI comprising 43 per cent of the total
FDI equity inflows into the country. The FDI equity inflows in Mauritius is
followed by Singapore at US$ 2.4 billion and the US with US$ 2 billion,
according to data released by DIPP.
During April 2010, Mauritius invested US$ 568 million in India, followed by
Singapore which invested US$ 434 million and Japan that invested US$ 327
million, according to latest data released by DIPP.

Investment Scenario
In May 2010, the government cleared 24 foreign investment proposals, worth

US$ 304.7 million. These include:
• Asia net’s proposal worth US$ 91.7 million to undertake the business of
broadcasting non-news and current affairs television channels.
• Global media magnate Rupert Murdoch-controlled Star India holdings'
investment of US$ 70 million to acquire shares of direct-to-home (DTH)
provider Tata Sky.
• AIP Power will set up power plants either directly or indirectly by
promotion of joint ventures at an investment of US$ 24.4 million.
Policy Initiatives
• The Government of India has released a comprehensive FDI policy

document effective from April 1, 2010. The Circular 1 of 2010
consolidates into one document all the prior policies/regulations on FDI
which are contained in FEMA, 1999; RBI Regulations under FEMA,
1999 and Press Notes/Press Releases/Clarifications issued by DIPP and
reflect the current 'policy framework' on FDI.
• Furthermore, the government has allowed the Foreign Investment
Promotion Board (FIPB), under the Ministry of Commerce and Industry,
to clear FDI proposals of up to US$ 258.3 million. Earlier all project
proposals that involved investment of above US$ 129.2 million were put
up before the Cabinet Committee of Economic Affairs (CCEA) for
approval. The relaxation would expedite FDI inflow, according to Mr P
Chidambaram, Union Home Minister.

• Exchange rate used: 1 USD = 47.07 INR (as on July 2010).
DETERMINANTS OF FOREIGN INVESTMENT
The factors influencing the determination of foreign direct investment in the

host country are explained as follows:
• Political stability:
Foreign institutional investors are generally reluctant to invest in

countries where political situations are unstable.
• Legal and Regulatory framework:
The relevant rules and regulations of the host country that are governing
the FDI decide the quantum of the later. The rules and regulations and
administrative procedures of the host country regarding foreign
investment must be transparent.
• Size of market:
Large developing countries provide substantial markets where the

consumer demands for certain goods far exceed the available suppliers.
This demand potential is a big draw for many foreign owned enterprises.
• Price and Exchange rates:
Price level and exchange rate of the host country determine the foreign
direct investment in a country. The instability in prices and exchange
rates affect the inflow of FDI.
• Access to basic inputs:

The availability and access of basic inputs such as oil and gas, minerals,
skilled and unskilled labour force and so on determine the extent of
foreign direct investment in the country.
2. REVIEW OF RELATED LIERATURE
REVIEW 1
The research is that of Susrat Carpenter who was a J.D candidate at A.U
Washington College of law and a candidate of international politics at
A.U. The objective of his research was to analyse India’s national
security through foreign Direct Investment. His study says that Govt
should create a committee to manage and review FDI proposals. The
conclusion of his research was that India is in dire need of FDI in order to
expand and become a South East Asian power. However India strikes fair
balance between protecting National security and inviting investment.
REVIEW 2
The second research is that done by Over Sea Development Institute in

September 1997. The research was done on whether to find out that FDI
flows to low income or high income countries. In the research they have
taken few countries in like China, India, Nigeria, Vietnam, Bangladesh
and Ghana and checked out the inflows of these countries with the help of
statistical data. With the help of this data they came to a conclusion that

over the last 25 years FDI in low income countries has been highly
concentrated. They came to a conclusion that large market size, low
labour cost and high returns are the major determinants in the decision to
invest in these countries.
REVIEW 3
The third research is done by a Committee from Mumbai in 2002 which

involved three members namely M.R Rangaachari, I.Srinivas and R.K
Pattnaik. The research was done to analyse and make the appropriate
recommendations to put FDI system in allignment with international
reporting practices. The objective of this research was not only to suggest
detailed operational and conceptional definition of FDI but also to
determine what should be ideal coverage of the data i.e. Retained
earnings, venture capital, ADR. GDR and other capital. They came up
with a conclusion that recording a comprehensive and up to date statistics
on FDI is a crucial pre requisite for economic analysis and policy making.
REVIEW 4
The fourth research is that done by OECD (Organization for economic
and corporate development) in 2009. The objective of the research is to
determine the challenges that India needs to address in increasing its FDI.
The objective was to determine how to narrow gaps of regional income
disparities and how to improve the nationwide investment. The
conclusion of their research was threat Govt of India may further relax
restrictions on inward FDI; develop a system of comparable FDI statistics
for sales and union territories.
REVIEW 5

The fifth research is that of JUSTIN BIRD. This research was mainly
used to understand the causes and effects of FDI in developing countries.
He analyzes the importance of FDI to Asian countries as a means of
finance. He came to a conclusion that India should implement VAT
through central and state govt. Fiscal responsibility needs to be addressed
to both the state and central govt level so that corruption and bureaucratic
influencing can be reduced.
REVIEW 6
The research is done by Kishore Sharma in Charles Sturt University,
Australia in July 2000. The research was to analyze whether FDI has
played a role in export performance or not taking into account India’s
investment policy and India’s export performance. The conclusion of his
study was that India’s exports have grown faster than GDP. The results
suggested that demand for India’s exports increases when its export prices
fall in relation to world prices.
REVIEW 7
The seventh research is done by Bishwanath and Rashmi Banga. The
research is done to analyze the impact of trade liberalization on FDI in
Indian industries. They estimated an econometric model to explain inter
industrial and inter temporal variations in the extent of foreign investment
in manufacturing industries using panel data for the post reform period.
The result of the research indicated trade liberalization and globalization
(particularly lowering the tariff rates) had a favourable effect to foreign
direct investment in Indian industries. The results showed that trade
liberalization had a favourable effect on foreign direct investment flows.
REVIEW 8

The eighth research was done by HENRY LOEWENDAHL. The research

was done to analyse role of investment promotion to attract foreign direct
investment. He developed a particular framework for providing insights
into different elements of successful investment promotion. The research
highlighted the importance of promotion for attracting inward investment.
The results of the research were as:
i. Promotion strategy should be based on coherent objective set.
ii. Effective facilitation.
iii. A coordinated and professional approach to project handling is

essential to compete successfully for international projects.
REVIEW 9
This research is done by KEITH E MASKUS in 1997 who was a

professor of economics in University of Colorado. His research was to
analyze the role of intellectual property rights in encouraging FDI and
technology transfer. The conclusion of the research is that there are
indications that strengthening intellectual property rights can be an
effective means of inducing additional inward FDI. Emerging economies
should recognize the strong complementary among IPR’s market
liberalization and deregulation and compliancy regimes. Considerable
attention should be given to achieve net gains from stronger IPR’s and
additional IPR’s licensing over time.
REVIEW 10
The tenth research is that of Sunita Sathye from University of Canberra

Bruce ACT, Australia. The research was done to analyze association

between a countries net FDI position and its level of development. In her
research she has adopted a theory through which countries tend to evolve
through five stages from being a net FDI recipient to being a net source of
FDI. She has used the data for 5 years obtained from United Nations
population and vital statistics report 2007. Keeping in line with IDP
theory both inflow and outflow were small in phase1 and gradually rose
up year by year. The study expects the outflows to be higher year by year.
REVIEW 11
This research is done by Wenhui Wei from university of New Jersey

USA in 2005. The research was to analyze the difference in FDI of China
and India. The study showed that China’s potentially huge domestic
market is a major determinant of its inward FDI from other countries
while for India both domestic as well as cheap labour cost are important
determinants of its inward FDI from other countries.
REVIEW 12
The research is done by Suman Chatterjee. The research was done to do

the economic analysis of FDI in India. The objective of the study was to
analyze the changes in global FDI flows and the place of India within.
The data used is aggregate annual time series at period covering (1980-
2005). The two hypothesis studied are push factors and pull factors. The
results found out that cost related factors, macro economic factors and
country profile of political risk index are the major determinants of
inward FDI flows.
REVIEW 13

This research is done to analyse whether FDI growth in India will be

everlasting or not. The research is being done by applying various
economic and environmental implications. The conclusion of the study is
that FDI provides index with stability in inflows of funds, access to
international markets export growth, transfer of technology and skills to
improve balance of payments. FDI is beneficial to Indian growth. It needs
to develop its infrastructure that will increase FDI.
REVIEW 14
The fourteenth research is that of Kulwinder Singh from centre of civil
society New Delhi in 2005. His research was on the critical analysis of
FDI in India. The objectives are to explore uneven beginnings of FDI and
examine developments relating to trends in two sectors- Industry n
infrastructure and Telecom sector. The results show that the concept and
material significance of FDI has evolved from the shadows of shallow
understanding to a proud show of force. There the impact of reforms in
India on policy environment for FDI presents a mixed picture and need to
be supplemented by more infrastructural reforms which are critical
missing link.
REVIEW 15
This research was done to analyze the trends and patterns of inflows of
FDI. The importance of FDI as an instrument of economic development
and growth was felt immensely after the world debt crisis of 1980.
Various trends in global regional inflows of FDI have been analysed from
the year 1991-2003. The conclusion was that global regional FDI flows as
a non debt instrument of economic growth and development reached
ascendency during last two decades. As a manufacturing sector India has

remained an important FDI absorbing sector of economy during the post

policy period.
3. RESEARCH METHODOLOGY
The research methodology includes the following:
• Research design
This research design applied is basically exploratory research. This

research is also called as formulative research. The objective of this
research is to gain familiarity with a phenomenon or to achieve new
insights into it
• Data collection method
In this research data is mainly collected through secondary data.

Secondary data are like books, newspaper, journals, magazines and internet.
4. FINDINGS
Some of the findings of the research were as:
• Investment promotion needs to be done to increase the foreign

direct investment flows.
• The countries with low income have a high foreign direct

investment flow.
• The infrastructure of the country is to be developed to increase

FDI.
• The FDI inflow in India is increasing year by year.

• India is becoming the most attractive FDI destination because of its

cheap labour cost and large market size.
• FDI flows need to be properly maintained to make the economy

grow.
5. CONCLUSION AND SUGGESTIONS
The conclusion of the above research is that India is going well from the point
of view of the inflow of FDI and needs to increase the inflow of FDI to
overcome china that is presently the top most attractive country for foreign
direct investment. The research also shows that the main reason for the
increasing foreign direct investment inflow in India is because of its huge
domestic market, it’s cheap labour cost and high returns.
In order to increase the flow of FDI in India, it needs to develop its

infrastructure so that more and more countries come to invest in our country. It
should also adopt a policy of trade liberalization to increase the flow of FDI. It
should also try to exploit all its resources as much as it can to make the
economy grow at a rapid rate.
6. REFERENCES/ BIBLIOGRAPHY
Various references used for the research were in the form of websites and
books. Some of them are given below:
I. WEBSITES:
1. www.google.com
2. www.proquest.com
3. www.scribd.com

4. www.docstoc.com
5. www.businessdictionary.com
6. www.ecohost.com
II. BOOKS:
1. Business Environment by SALIM SHAIKH
2. Business Environment by K.Ashwathappa and G.Sudarsana Reddy.
III. URL’S:
REVIEW 1
http://docs.google.com/viewer?
a=v&q=cache:qhN59LwO3jAJ:www.wcl.american.edu/blb/04/1carpenter.pdf+revie
w+on+encouraging+fdi&hl=en&gl=us&pid=bl&srcid=ADGEEShX1g8qAwNKl-
i_Tz-
03X1SNp6GQ0j7LWfj5WuH9K8Duq9wqzBFE8mSrIRbsckaglHR9Yde61wAoGoJk
uyf9ygNa6soKokY8Bj8paNQPY7beGgPq3jS8fW5B4_n6hfu_h9NVZMP&sig=AHI
EtbSqi2l29_Eeq8waU71dc3jm89cmGA
REVIEW 2
a=v&q=cache:YVMjrws6IjgJ:www.odi.org.uk/resources/download/1962.pdf+review
+on+encouraging+fdi&hl=en&gl=us&pid=bl&srcid=ADGEESiI8i3CB1dk5HjYoE6
N3y5Pw2LYQ043hwXZLb0XCIIihpcQlrXFFwFc3XEv5g9onqun8JFyS-
isML3UCWfz49Op21Nb-HDzcLbG6zlt8s3mJ7Y9frv7g8-TMN-
fLv5jUoEydViq&sig=AHIEtbSuPUYTJx6ys1qyDF4cKgpLQDvfyA
REVIEW 3
a=v&q=cache:t489cgMwtMYJ:dipp.nic.in/first_new/fdi.pdf+review+by+M.
R+Rangaachari,
+I.Srinivas+and+R.K+Pattnaik+on+fdi+in+india&hl=en&gl=us&pid=bl&
srcid=ADGEESgqeLj8oFphhrcJSMudBxZkV4wwqE_xR0qnFsN0Gq1TbuiHwO
iLOvYhfikrPw_yIs05N_DP0K6bW5_IwPaH5eHZYn_UwyCDttAsW9PUzlFvTgtb

C-
GqeQf77awpEklclp8pIV5&sig=AHIEtbQT5YdAeWqwtSRRFZIoYSo8Do0z4w
REVIEW 4
a=v&q=cache:fpLfTTwhOwJ:www.oecd.org/dataoecd/15/62/11810600.pdf+review+
on+encouraging+fdi&hl=en&gl=us&pid=bl&srcid=ADGEEShZCOk17ZaSh7Jl_ivin
1aez7XUOGzKoJBO4m07rYfl2UvBtD2LyCLRUMA2dijBdn2kKtCF3M9HtVtqv6o
2mawS49IkyRiFpWOvYxtS7VIn1IHytUQrGGUT9GNbJEw-
tZ7aTd&sig=AHIEtbRkMgmC90YYRvv0XC8MiHxRmEIOqw
REVIEW 5
http://webcache.googleusercontent.com/search?
q=cache:09BxfLpLv2YJ:departments.oxy.edu/urc/projects/abstracts/2003/Bird.ppt+r
eview+by+by+a+justin+bird+on+foreign+direct+investment+india&cd=1&hl=en&ct
=clnk&gl=us
REVIEW 6
http://www.google.com/search?
hl=en&biw=1230&bih=453&noj=1&&sa=X&ei=RWfCTNLlG5PWtQPL0uGdDA&
ved=0CBIQBSgA&q=review+by+by+a+kishor+sharma+on+foreign+direct+investm
ent+india&spell=1
REVIEW 7
a=v&q=cache:HG1L3DENw2EJ:www.unescap.org/tid/artnet/mtg/tipc_s2banga.pdf+
review+by+by+a+bishwanath+and+rashmi+banga+on+foreign+direct+investment+in
dia&hl=en&gl=us&pid=bl&srcid=ADGEESjn9gIld0iStMzz7zldHuuiEIQ9yRggJA4f
x5PiQFb3fGhnPFK8twWQU_Cs7ho7ZmnYgKXdfcHaYC0Dh_uodEtdobTWerR1i
w3rla5teLRD1an_mkojnuFmDw9_NBGjOh4yVr&sig=AHIEtbQCW2dOpNR6MSer
siEaO1ZKN0t2Gw
REVIEW 8
http://www.google.com/url?
sa=t&source=web&cd=3&ved=0CB8QFjAC&url=http%3A%2F
%2Fse2.isn.ch%2Fserviceengine%2FFiles%2FISFPub
%2F29192%2Fipublicationdocument_singledocument%2F275C317C-D753-
4AF1-A30E-60CFC6128CA5%2Fen%2F157_Turkeys
%2Bperformance.pdf&ei=Sr3FTNvcFoXEsAOn9dhB&usg=AFQjCNEM1_2QH
PjLZ4oOYbuCmwuv9-DD3Q&sig2=wfPq038NuUAskzZZolyK_g
REVIEW 9
a=v&q=cache:hEt014RMw6sJ:www.law.duke.edu/shell/cite.pl%3F9%2BDuke
%2BJ.%2BComp.%2B%26%2BInt'l%2BL.
%2B109%2Bpdf+review+by+by+KEITH+E+MASKUS+on+foreign+direct+investm
ent+india&hl=en&gl=us&pid=bl&srcid=ADGEESgwOuNrunh1pmurkxUxYS9ptxP
on1lruJCklco2eW9AKcdDzoOkSI4oedNAKDIy0rmtQBgffLMEztB8_t3bBhZJqJ1Z
OkPLcmB07RmlXnJMVk2nooB4iaQt4GzIpKnAKDD3ExpG&sig=AHIEtbR0e-
RKtBuLS1r1Jp8qI8SmOby7MQ
REVIEW 10
a=v&q=cache:7OeX1NswmbwJ:www.bizresearchpapers.com/Paper20new.pdf+revie
w+by+sunita+sathye+on+foreign+direct+investment+india&hl=en&gl=us&pid=bl&s
rcid=ADGEEShf_oLJdRIcCLeHQh4qzbVuIUyscUQ1sKBn8Jt0agaHldYhtZMCCz8
e1lSZfdRtzV1F62TL02nZteGGOeIEQO2fTXCF9KLUgpYRoJwHATPo7_B_R6LF
63aVXeaHwr227SZNBNM&sig=AHIEtbTy5RGmf32SzlOu5Vs9Xxnas2A6HA
REVIEW 11

a=v&q=cache:zjXTlnllTOsJ:www.aiecon.org/advanced/suggestedreadings/PDF/sug3
57.pdf+review+by+by+Wenhui+Wei+on+foreign+direct+investment+india&hl=en&
gl=us&pid=bl&srcid=ADGEESjsVcEZrcs3demN7PUDqK4lstKeXmWakIU0dUizNi
_VlthpVdgt2BPbEfJ6eCIpA5WeUyTIeAwAyidWtyHTGVhA7dEqdenwdp5e4LJYZ
d1rqqSiAoO_16hAXwVS5tu_r5zXJjR8&sig=AHIEtbS69R4uRTD05Jrun-
y58trdGkp3lA
REVIEW 14
a=v&q=cache:1Pscv4TpXE8J:unpan1.un.org/intradoc/groups/public/documents/apcit
y/unpan024036.pdf+fdi+in+india&hl=en&gl=us&pid=bl&srcid=ADGEESjEH22J3h
WDr55FjOcbB5cUaJrBgRiolG5CRAeR_Rdbmil-
exgMt8COKw8uJUvV8lk7zpFe0nCC_wNbEImzMyMJgOM6KOwDl6PR_lVOIwfh
MloG6RaRLAIR0Ol0MXcDx8Es9eLK&sig=AHIEtbQpnP_aMsIlqOjbz7QVjO5xkC
_SJQhttp://www.google.com/search?
q=review+on+foreign+direct+investment+india&hl=en&biw=1230&bih=453&noj=1
&prmd=b&ei=vGTCTPTgG4W-sAOxrrGEDA&start=50&sa=N

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Analyze the rationale for encouraging FDI (Business Environment)

To analyze the rationale for encouraging FDI

Reg. No: 11013296

Roll no: R1003A68 (Group – 1)

Department: Lovely School of Business

Mr. Prince Vohra

BY: NADEEM YOUSUF Page 1

S.No Particulars Page no.

Overview of FDI in India 5-7

Data collection method -

5. Conclusions and Suggestions 15

6. Bibliography /Reference 15-18

Foreign direct investment is that investment, which is made to serve the

According to International Monetary Fund (IMF), FDI is

• To analyse India’s present scenario of FDI.

Need for FDI

BY: NADEEM YOUSUF Page 3

The need for FDI arises due to the following reasons:

• Raising the level of Investment:

Foreign investment can supply a package of needed resources such as

A number of underdeveloped countries process huge mineral resources

• Development of basic economic infrastructure:

Underdeveloped n developing countries require a huge capital investment

• Balance of payments position:

In case of an adverse BOP situation in the host country, an investment

• Revenue to the govt:

The profit generation by a foreign investment in the host country

Overview of FDI in India

According to Ernst and Young's 2010 European Attractiveness Survey, India is

Moreover, according to the Asian Investment Intentions survey released by the

BY: NADEEM YOUSUF Page 5

The services sector comprising financial and non-financial services attracted 21

BY: NADEEM YOUSUF Page 6

In May 2010, the government cleared 24 foreign investment proposals, worth

• The Government of India has released a comprehensive FDI policy

BY: NADEEM YOUSUF Page 7

• Exchange rate used: 1 USD = 47.07 INR (as on July 2010).

DETERMINANTS OF FOREIGN INVESTMENT

The factors influencing the determination of foreign direct investment in the

Foreign institutional investors are generally reluctant to invest in

• Legal and Regulatory framework:

Large developing countries provide substantial markets where the

• Price and Exchange rates:

• Access to basic inputs:

BY: NADEEM YOUSUF Page 8

2. REVIEW OF RELATED LIERATURE

The second research is that done by Over Sea Development Institute in

BY: NADEEM YOUSUF Page 9

The third research is done by a Committee from Mumbai in 2002 which

BY: NADEEM YOUSUF Page 10

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The eighth research was done by HENRY LOEWENDAHL. The research

i. Promotion strategy should be based on coherent objective set.

ii. Effective facilitation.

iii. A coordinated and professional approach to project handling is

This research is done by KEITH E MASKUS in 1997 who was a

The tenth research is that of Sunita Sathye from University of Canberra

BY: NADEEM YOUSUF Page 12

This research is done by Wenhui Wei from university of New Jersey

The research is done by Suman Chatterjee. The research was done to do

BY: NADEEM YOUSUF Page 13

This research is done to analyse whether FDI growth in India will be