FOREIGN DIRECT INVESTMENT IN INDIAN ECONOMY A Project Report Submitted in Partial Fulfillment of the Requirements for the degree of Master of Business Administration of Sikkim Manipal Universit! In"ia
UNDER T#E GUIDANCE OF$ &&&&&&&&&&&&&&&&&&&&&&& Instit(teofMana)ement Ne+Del,i
SU%MITTED %Y$ '''''''''''' RO**NO'&&&&&&&&&&& CENTERCODENO-' ../
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This is to certify that the project entitled 1 Foreign Direct Investment Indian Economy” submitted by Prem Chand Bhashkar, to Guru Nanak Dev University, Amritsar in partial fulfillment for the Degree of master of Business conomics !"B# is a Bonafide research $ork completed under my guidance and supervision% This is an srcinal piece of &ork and has not been submitted in part or full for any other degree to this or any university 'institute%
Place: Delhi Dated(
Ms. TA! "AT#!$IA %Fac<y '&ide( e) Delhi instit&te o* Management%
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)irst, and foremost, * $ould like to e+tend my deepest gratitude to Dr% "% Bhatt and "s Tanu athuria my academic and research advisor for their valuable advice, time, guidance, and encouragement throughout the course of this project% -uccessful completion of the project and culmination of my efforts reminds me for indebt ness to$ards "r%"% Bhatt and "s%Tanu athuria for their guidance throughout the .roject% * $ould also like to thank my /ibrary -taff and 0omputer -taff members for their valuable time and support throughout the completion of this project%
Prem Chand Bhashkar $oll o.+,-,/0,
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Table of Content 1 2 3
!ntroduction """"""""""""""""""" #$12 Scope of stud% """"""""""""""""""13$1& 'iterature re(ie)s""""""""""""""""" 1*$2+ 'imitation of research report""""""""""""" 2+ Research approach """""""""""""""" 2#$2, Type of Research…………………………….. ………25-26 Nature of the data……………………………. ……….25 Data source…………………………………………. ….26 Tools of analysis………………………………………..27
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Anal%sis and discussion$""""""""""""""2-$#+ Role of F.! in !ndian /conom% )D* inflo$ 0ountry $ise11111111111123 )D* *nflo$ -ector $ise111111111111% 45 )D* *nflo$ -tate $ise111111111111%144
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0onclusion Summar%"""""""""""""" #&$#* Suggestions """"""""""""""""""&1$&* Anneure Bibliograph%"""""""""""""""""" &,$*# 'ist of 4ables
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1. IT$2D!CTI2 )D* is an important constituent of the globali6ation efforts of the $orld economy% )D* flo$s constitute capital provided by foreign investors, directly or indirectly to enterprises in another economy $ith an e+pectation of obtaining profits derived from the capital participation in the management of the enterprise in $hich they invest% The foreign investors ac7uire o$nership of assets in the host country firms in proportion to their e7uity holdings% )D* by definition is supposed to reflect a long8 term commitment as it involves normally a stake of 9:; or more in a host country enterprise, together $ith managerial control% This is the empirical definition of )D* adopted by many countries to distinguish it from portfolio flo$s% .ortfolio investments are also made by foreign investors but their main concern is the appreciation of the value of their capital and the return that it can generate regardless of any long8term relationship consideration or control of the enterprise% 0onceptually, the main difference bet$een the )D* and the portfolio investment is in the lasting interest e+pressed by the non8resident direct investor in the resident enterprise of the domestic economy% The lasting interest underlines a firm desire on the part of the non8resident investor to be associated $ith the long8term business activities of the resident enterprise by e+erting significant influence on the management of the enterprise% &ith )D*, a foreign investor has greater risk compared to e+porting or licensing, but has considerably more managerial control over the operation%
$ole o* FDI The importance of )D* e+ten ds beyond the financial capital that flo$s into the country% *n addition, )D* inflo$s can be a tool for bringing kno$ledge, managerial skills and capability, product design, 7uality characteristics, brand names, channels for international marketing of products, etc% and conse7uent integration into global production chains, $hich are the foundation of a successful e+ports strategy !Blom-trom, okko and
Borens6tein, De Gregorio and /ee, 9==?> De "ello, 9===> United Nations 0onference on Trade and Development !UN0TAD# 9===> /all, 5:::> @rgani6ation for conomic 0ooperation and Development !@0D#
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5::5, /ipsey, 9===#% )D* could benefit both the domestic industry as $ell as the consumer, by providing opportunities for technological transfer and upgradation, access to global managerial skills and practices, optimal utili6ation of human capabilities and natural resources, making industry internationally competitive, opening up e+port markets, providing back$ard and for$ard linkages and access to international 7uality goods and services and augmenting employment opportunities% )or all these reasons, )D* is regarded as an important vehicle for economic development particularly for developing economies% )D* flo$s are usually preferred over other forms of e+ternal finance because they are non8debt creating, non8 volatile9= and their returns depend on the performance of the projects financed by the investors% *n a $orld of increased competition and rapid technological change, their complimentary and catalytic role can be very valuable%
Choice o* 3ocation o* FDI Dunnings o$nership location internali6ation !@/*# paradigm indicates the demand side determinants of )D* inflo$s to the host country in terms of the location advantages that the foreign investor derives by making the )D*% The paradigm sho$s that under certain conditions it becomes profitable for the investor to produce in the foreign country rather than simply producing the good at home and e+porting it to the foreign market% lements constituting location advantages include resource endo$ments and also economic and social factors such as market si6e and structure, prospects for market gro$th and degree of development, the cultural, legal, political and institutional environment and government legislation and policies of the host country% *n terms of the demand8side factors, the hosts overall attractiveness to )D* is determined by the location advantages it possesses% Because resource endo$ments are not evenly distributed among countries and social and economic factors as $ell as government policies are different among countries, the attractiveness of host countries to )D* is different% 0hoice of location is motivated by a number of firm8 specific variables that categori6e )D* into several types, depending on the underlying motivations 88 resource8seeking, market8seeking, efficiency8seeking and strategic8 asset seeking !Dunning, 9==?#% *nvesting firms make )D* $ith the goal and e+pectation of profits through attaining competitive advantage over other firms that could be translated to tangible returns
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above and beyond their srcinal investment% Given the additional fi+ed costs involved in operating in a foreign country and $ith a multitude of potential locations to choose among, entrepreneurs in making the choice of locating the venue for )D* is responsive to the relative incentives offered by different locations% o$ever, in attaining competitive advantage, the investing firms also have to take care of the costs and uncertainties around the returns e+pected from )D*% These may be the endogenous costs associated $ith coordination and control, administrative costs etc% and also the e+ogenous costs arising from the various risks and uncertainties in the business environment of the investing international companies in the destination location% The choice of location is thus an important strategic factor for the foreign investors in )D* decision because a firmCs location influences the distance and closeness of the resources% *t also influences the cost of transport and communication to the market% The location also determines the kind of ra$ materials and kno$ledge that are available to the firm% Available ra$ materials and kno$ledge in turn further defines some of the firmCs possibilities to gain competitive advantage% As long as a firmCs location cannot be imitated, this might give the firm advantages compared to its competitors% )rom the kno$ledge perspective, a location $ith abundance of technical kno$ledge might be a contribution for the firm to access labor $ith the appropriate skills and kno$ledge
Investment Climate &hile most developing countries pursue regulations and restrictions on the economic activities of "N0s operating $ithin their territory, in vie$ of the actual and potential benefits of )D*, they are also increasingly offering incentives to attract )D* as a part of the increasing competition amongst )D*8receiving countries% The strategic importance of the choice of location of )D* in the perception of foreign investors is also creating a competition among the )D*8seeking countries% As a part of the effort, the host countries offer incentive schemes to the foreign investors% These incentives that constitute some of the factors behind competitive advantage may be in terms of lo$er cost for labor and'or physical resources, secure access to physical resources, pro+imity to major markets $ith affluent customers, advantages of integration, improved 7uality and increased market share% o$ever, the reali6ed level of )D*
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flo$ing into different countries indicates that the attractiveness of all countries is not the same% *n general, private investors !domestic or foreign# are guided by their e+pectation of the potential return and risk of their investment, in choosing among alternative opportunities% *n other $ords, )D* is driven, among other factors, by e+pected profitability, relative costs'prices, confidence in macroeconomic policy, political stability, the 7uality of contracting and legal enforcement, e%g%, contract la$, bankrupcy la$, etc% These e+pectations of the investing foreign firms are shaped by a host of institutional, regulatory and infrastructure8related factors and policies that can be summari6ed as the Cinvestment climateC prevailing in the recipient economy% A pre8condition to )D* inflo$s is the creation and sustenance of a $ell8designed business environment% The ne$ institutional economics literature $ith its emphasis on transaction costs have focused on the creation of an appropriate business environment or investment climateE for the benefits of )D*
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to be reali6ed by a
developing economy !)ields and .feffermann, 5::2#% The 7uality of the investment climate determines the success of the recipient firms in attracting significant )D* inflo$s% A favorable investment climate implies the e+istence of no or minimum transaction costs and hence a potentially competitive investment environment%
*ndia is the seventh largest and second most populous country in the $orld% A ne$ spirit of economic freedom is no$ stirring in the country, bringing s$eeping changes in its $ake% A series of ambitious economic reforms aimed at deregulating the country and stimulating foreign investment has moved *ndia firmly into the front ranks of the rapidly gro$ing Asia .acific region and unleashed the latent strengths of a comple+ and rapidly changing nation% *ndiaCs process of economic reform is firmly rooted in a political consensus that spans her diverse political parties% *ndiaCs democracy is a kno$n and stable factor, $hich has taken deep roots over nearly half a century% *mportantly, *ndia has no fundamental conflict bet$een its political and economic systems% *ts political institutions have fostered an open society $ith strong collective and individual rights and an environment supportive of free economic enterprise% *ndiaCs time tested institutions offer foreign investors a transparent environment that
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guarantees the security of their long8term investments% These include a free and vibrant press, a judiciary that can and does overrule the government, a sophisticated legal and accounting system and a user8friendly intellectual infrastructure% *ndiaCs dynamic and highly competitive private sector has long been the backbone of its economic activity% *t accounts for over F4; of its Gross Domestic .roduct and offers considerable
scope
for
joint
ventures
and
collaborations%
Today, *ndia is one of the most e+citing emerging markets in the $orld% -killed managerial and technical manpo$er that match the best available in the $orld and a middle class $hose si6e e+ceeds the population of the U-A or the uropean Union, provide *ndia $ith a distinct cutting edge in global competition% )oreign direct investment !)D*# has emerged as the most important source of e+ternal resource flo$s to developing countries over the 9==:s and has become a significant part of capital formation in the country despite their share in global distribution of )D* continuing to remain small or even declining% )D* usually flo$s as a bundle of resources including, besides capital, production technology, organi6ational and managerial skills, marketing kno$8ho$, and even market access through the marketing net$orks of multinational enterprises !"Ns# $ho undertake )D*% These skills tend to spill over to domestic enterprises in the host country% Therefore, )D* can be e+pected to contribute to gro$th more than proportionately compared to domestic investments in the host country% There is no$ a body of literature that has analy6ed the effect of )D* on gro$th in inter8country frame$ork and other analy6ing kno$ledge spillovers to domestic enterprises from "Ns !see e%g% De "elo 9==F, umar and -iddhartha 9==F, and -aggi 5:::, for recent revie$s of literature#% o$ever, the mi+ed findings reached by these studies on the role of )D* inflo$s in host country gro$th and on kno$ledge spillovers from "Ns suggest that these relationships are not une7uivocal% The primary consideration for e+pecting a more favourable effect of )D* on gro$th is e+ternalities of "N entry for domestic firms% The e+ternalities such as spillovers may not take place in some cases because of poor linkages $ith the domestic enterprises or poor absorptive capacity, for instance% )D* projects vary in terms of generation of linkages for domestic enterprises% There is also a possibility of "N entry affecting domestic enterprises adversely given the market po$er of their proprietary assets such as superior technology, appeal of brand names and aggressive marketing techni7ues% Therefore, )D* may cro$d8out domestic
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investment and may thus be immiseri6ing !)ry 9==5, and Agosin and "ayer 5:::#% The cro$ding out effect may be sharper $hen the technology gap bet$een foreign and domestic firms is very $ide to be bridged% )urthermore, because )D* may be attracted to a country by high gro$th rates, among other factors, the observed relationships bet$een )D* and gro$th rate may suffer from causality pro Another problem $hich may have affected the e+isting studies is that they are all made in a comparative static frame$ork $hile effect of )D* on domestic investment and gro$th could be of a dynamic nature% There may be t$o rounds of effect of "N entry on domestic investment% The initial round of effect may be felt by domestic firms in the industry $here the foreign entry has taken place% Because of superior asset bundle of foreign entrant, domestic enterprises may be affected adversely as their market share is eroded% The subse7uent round of effect may be more favorable $ith domestic rivals absorbing spillovers of kno$ledge !demonstration based learning# as $ell as diffusion of kno$ledge through vertical linkages $ith domestic enterprises% The net effect of )D* on domestic investments $ould depend on relative $eights of these t$o rounds of effects% Given the dynamic nature of the effect of )D* on domestic investment and gro$th, analysis in a comparative static frame$ork may yield biased results%
4ome o* the 5rinci5al com5onents that India e6cl&ded *rom the IMF de*inition )hile estimating act&al FDI in*lo)s )ere: Heinvested earnings by foreign companies !$hich are part of foreign investor profits that are not distributed to shareholders as dividends and are retained and reinvested in the affiliates in the host country#% .roceeds of foreign e7uity listings and foreign subordinated loans to domestic subsidiaries as part of inter8company !short and long8term# debt transactions% @verseas commercial borro$ings !financial leasing, trade credits, grants, bonds# by foreign direct investors in foreign invested firms% 7uity $ell over 5: per cent in the form of American Depository Heceipts !ADHs# and Global Depository Heceipts !GDHs# held by )oreign *nstitutional *nvestors !)**s#% *nvestment made by international bodies in *ndian companies as venture capital funds% Grants given by the parent company to the subsidiaries in *ndia%
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Non8cash ac7uisition of e7uity, earnings data of indirectly held )D* enterprises, as per *") definition, $hich are normally included in other country statistics% 0ontrol premium' non8competition fee, etc% paid by the foreigners% The investment made by foreign investor'entity on s$ap basis% )oreign currency convertible bonds%
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4C2PE 2F 4T!D7
*ndia is the second largest country in the $orld, $ith a population of over 9 billion peoples% As a developing country, *ndias economy is characteri6ed by $age rates that are significantly lo$er than those in most developed countries% These t$o traits combine to make *ndia a natural destination for foreign direct investment !)D*#% Until recently, ho$ever, *ndia has attracted only a small share of global )D*, primarily due to government restrictions on foreign involvement in the economy% But beginning in 9==9 and accelerating rapidly since 5:::, *ndia has liberali6ed its investment regulations and actively encouraged ne$ foreign *nvestment, a sharp reversal from decades of discouraging economic integration $ith the Global economy% Global investors have responded $ith enthusiasm% Total net foreign investment inflo$s $ere I9F%5 billion in 5::4J:K, of $hich net )D* $as valued at I3%F billion in 5::4J:K%9 Net )D* *nflo$s for the 5::KJ:F fiscal years $ere more than tripled to I94%F billion%5 *ndia received 0umulative net )D* inflo$s of I3?%5 billion bet$een August 9==9 and December 5::F *ndia is the second largest country in the $orld, $ith a population of over 9 billion people% As a developing country, *ndias economy is characteri6ed by $age rates that are significantly lo$er than those in most developed countries% These t$o traits combine to make *ndia a natural destination for foreign direct investment !)D*#% Until recently, ho$ever, *ndia has attracted only a small share of global )D*, primarily due to government restrictions on foreign involvement in the economy% But beginning in 9==9 and accelerating rapidly since 5:::, *ndia has liberali6ed its investment regulations and actively encouraged ne$ foreign investment, a sharp reversal from decades of discouraging economic integration $ith the global economy% Global investors have responded $ith enthusiasm% Total net foreign investment inflo$s $ere I9F%5 billion in 5::4J:K, of $hich net )D* $as valued at I3%F billion in 5::4J:K%9 Net )D* inflo$s for the 5::KJ:F fiscal year $eremore than tripled to I94%F billion%5 *ndia received cumulative net )D* inflo$s of I3?%5 billion bet$een August 9==9 and December 5::K%2 The remainder of this chapter gives an overvie$ of )D* activity in *ndia, particularly in the service sector !the largest target for )D*
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in *ndia to date#, and discusses the data used in the study% The study then closely e+amines trends related to )D* in *ndia, including the principal country sources and industry destinations of this capital, and the regional destinations of )D* $ithin the country% &e also look at major multinational corporations invested in *ndia today, and the role of U%-% investors% The study goes on to e+amine *ndias economic climate for )D*, its regulatory environment, the incentives available to foreign investors through -pecial conomic
The remainder of this chapter gives an overvie$ of )D* activity in *ndia, !the largest target for )D* in *ndia to date#, and discusses the data used in the study% The study then closely e+amines trends related to )D* in *ndia, including the principal country sources and industry destinations of this capital, and the regional destinations of )D* $ithin the country% &e also look at major multinational corporations invested in *ndia today, and the role of U%-% investors% The study goes on to e+amine *ndias economic climate for )D*, its regulatory environment, the incentives available to foreign investors through -pecial conomic
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*nitiative, passed into U%-% la$ in December 5::K%? The United -tates has also reduced the use of e+port controls on e+ports to *ndia% As of )ebruary 5::F, only 9 percent of U%-% e+ports to *ndia re7uired a license, do$n from 53 percent in 9=== and =: percent in previous years% *n recognition of the improved relationship, the U%-% Department of 0ommerce is in the process of establishing its ne$ Trusted 0ustomerE program, set to begin in 5::F $ith *ndia as the first partner country% The program is e+pected to encourage repeat e+ports of U%-% goods to *ndia%= This $ill promote additional )D* by U%-% firms in *ndia, as the Trusted 0ustomer program $ill make it easier for U%-%8based multinational corporations !"N0s# to ship goods to their affiliates in *ndia for manufacturing or additional processing%
289ective o* the $esearch
To Understand $hat is )D* and &hy it is *mportant for any country like *ndiaM
To no$ the Different modes of )D* in *ndia%
To Analyse through yearly data of different sectors%
/imitation of )D* inflo$ in *ndia%
3imitation o* research re5ort
Data used is taken from the source $hich may not be correctly predicted%
/ack of time to make the project, as such a project re7uired lot of time for analysis and because of the limitation of the time, project can not be analy6ed properly%
Theories $hich are used in the project may lack some proper concept $hich can be one of its limitation%
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Data used in the project is based on some selected economic survey $hich is basically calculated by using some selected economic parameter
)D* in itself is a big concept and it is 7uite difficult to focus every part of it%
The data taken front the secondary source like internet, ne$s paper, books may lack some proper e+planation or may be not correctly interpreted $hich can be one of its main limitation%
1*
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. 3ITE$AT!$E $E;IE< *ndia is a Union of -tates based on the frame$ork of cooperative federalism% &ithin the cooperative frame$ork, there is also a re7uirement to develop competitive strengths for the -tates so that they can e+cel at the national level and the global level% 0ompetitiveness helps in ensuring economic and managerial efficiency and to be creative to meet ne$ challenges% These are essential to survive and prosper in a fast changing $orld of today% *n addition, in order to strengthen democratic processes and institution, $e should all truly strive for substantive decentrali6ation%E Dr.
A.P.=. ABD!A3 "A3AM > E< DE3#I> ? =!37 ,,. The relationships bet$een )D*, gro$th and domestic investment for a sample of 9:F developing countries for the 9=?:8== period% A dynamic nature of the effect of )D* on host country gro$th is posited covering an initial generally adverse competitive effect and a subse7uent usually more favorable effect through back$ard linkages $ith the net effect depending on the 7uality of )D*% .anel data estimations in a production function frame$ork suggest a positive effect of )D* on gro$th% o$ever, tests of causality find that in a majority of cases the direction of causation is not pronounced and in a substantial number of cases the direction of causation actually runs from gro$th to )D*% )urther estimations corroborate the proposition that )D* affects domestic investments in a dynamic manner $ith a negative initial effect and the subse7uent positive effects for the panel data as $ell as for most of the countries individually% Although )D* appears to cro$d8out domestic investments in net terms, in general, some countries have had favorable effect of )D* on domestic investments in net terms suggesting a role for host country policies% *t is concluded $ith a fe$ policy remarks including lessons for the on8going attempt to $rite rules on investment in the &T@ frame$ork% A'E4# "!MA$> =A7A P$A"A4# > ,,
)oreign Direct investment !)D*# limits $ere liberali6ed in *ndia to allo$ more than fifty8one percent o$nership of private sector banks in )ebruary, 5::5% .ortfolios of private sector and government o$ned banks posted significant and large value gains surrounding the announcement, the gains by private sector banks being almost double
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that by government banks% The analyses sho$ that the price increase is higher for smaller banks that have less debt, are less efficient, less productive, and burdened $ith non8performing assets% &e conclude the evidence is consistent $ith the hypothesis that the valuation gains refle ct the vulnerability to and B.;.P#AI >
C#IM27 '#24# I ,,-.
The second mode of servicesprovision is called consumption abroad. In this instance, consumers move to the service providers. This has important implications for the production of the service and the location of the factors of production. Examples of this mode of service provision include the education of students in countries other than their home country, or tourism. Not many services employ this mode of provision. The main restrictions on consumption abroad are controls on the movement of currency and people, for example, limits on the amount of currency allowed to cross borders and visas required for students or tourists.
SERVICE
SECTOR LIBERALIZATION ,2005- 06 , ARTICLE- 3.
+port gro$th in *ndia has been much faster than GD. gro$th over the past fe$ decades%-everal factors appear to have contributed to this phenomenon including foreign direct investment !)D*#% o$ever, despite increasing inflo$s of )D* especially in recent years there has not been any attempt to assess its contribution to *ndiaCs e+port performanceone of the channels through $hich )D* influences gro$th% Using annual data for 9=F:8=? $e investigate the determinants of e+port performance in *ndia in a simultaneous e7uation frame$ork% Hesults suggest that demand for *ndian e+ports increases $hen its e+port prices fall in relation to $orld prices% )urthermore, the real appreciation of the rupee adversely effects *ndiaCs e+ports% +port supply is positively related to the domestic relative price of e+ports and higher domestic demand reduces e+port supply% )oreign investment appears to have statistically no significant impact on e+port performance although the coefficient of )D* has a positive sign% ECONOMICS TIMES, 23 FEB.2005.
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Net foreign direct investment !)D*# flo$s into *ndia reached I94%F billion in *ndias 5::KJ:F fiscal year, more than triple the I3%F billion recorded during 5::4J:K, $ith the largest share of )D* flo$s from "auritius, follo$ed by the United -tates and the United ingdom% This study e+amines )D* in *ndia, in the conte+t of the *ndian economic and regulatory environment% &e present )D* trends in *ndia, by country and by industry, using official government data from *ndia, the United -tates, and international organi6ations% To supplement the official data, the study also discusses specific investment activities of multinational companies in *ndia, representing a $ide range of countries and industries% To illustrate the driving forces behind these trends, the study also discusses the investment climate in *ndia, *ndian government incentives to foreign investors, particularly -pecial conomic ? A!'> ,,?
The *ndian economy opened up in 9==9 $ithin the frame$ork of liberal economic reforms% )D* inflo$s $ere stimulated in industry and services, so benefiting from the many comparative advantages of the country !human resources, emerging market#% *n 5::3, )D* inflo$s officially amounted to I 4%2 billion% They mainly came from the United -tates and "auritius and concerned industrial sectors% *n parallel, some *ndian firms started to gro$ in importance and to invest abroad( they had the financial means, e+perience, and ambition to ac7uire international recognition and they $ere encouraged by the *ndian government% )D* issued by *ndian firms amounted to more than I5 billion in 5::3> it $as principally addressed to developing countries and to Hussia, ho$ever the share of industriali6ed countries $as on the rise, and manufacturing and non financial sectors accounted for the bulk of it B7 IDIA EC22M7> ".M.P. 4#$I;A4TA
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Bet$een 9==9 and 5::4, )D* received by *ndia $as mainly related to manufacturing, notably sectors such as electrical e7uipment !including computer soft$are and electronics# $hich received 55%4; of )D* inflo$s, transportation industry !93%3;#, telecommunications !92%5;#, fuels !99%K;#, and chemicals !?%F;#% -ervices accounted for 92%3;% *n recent years, some sectors such as electrical e7uipment, services, drugs and pharmaceuticals, cement and gypsum products, metallurgical industries have had the $ind behind them insofar as more than the half of )D* regarding them $as made after 5::5, compared to an average of 2=%3; for all sectors% A!A3 $EP2$T %'2;T> 2F IDIA ,,/(
Although it may seem natural to argue that foreign direct investment !)D*# can convey great advantages to host countries, this paper sho$s that the benefits of )D* vary greatly across sectors by e+amining the effect of foreign direct investment on gro$th in the primary, manufacturing, and services sectors% An empirical analysis using cross8country data for the period 9=?989=== suggests that total )D* e+erts an ambiguous effect on gro$th% )oreign direct investments in the primary sector, ho$ever, tend to have a negative effect on gro$th, $hile investment in manufacturing a positive one% vidence from the service sector is ambiguous% TIME4 2F IDIA
0, MA$C# ,,? -trong and consistent emphasis on self8reliance in its economic development programmes over the years by the Government of *ndia have enabled *ndia to build up a huge and versatile cadre of professionals $ith e+pertise and skills across a vast and $ide8ranging spectrum of disciplines like
ealth 0are, Tourism, ducation,
ngineering, 0ommunications, Transportation, *nformation Technology, Banking, )inance, "anagement and a host of others% A si6eable part of this $orkforce of professionals makes up the countrys gro$ing consultancy sector $hich is offering its accumulated e+perience and e+pertise at home and abroad% A note$orthy feature of *ndias consultancy professionals is their capability and capacity to provide e+pertise especially suitable for developing countries, in addition
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to offering consultancy in sophisticated areas !information technology, advanced financial and banking services etc%# in developed countries like the U-A, U, )rance, &est Germany and Australia, Hussia and
0*-
countries , etc%
)*@ is one of the important service organi6ation for helping the *ndian consultancy firms engaged in e+ports% "ost of )*@s member consultancy organi6ations are also registered $ith international and national consultancy organi6ations, reflecting the global acceptance of their high credentials FED$ATI2 2F IDIA .
E@P2$T 2$'AIATI2> E< DE3#I> IDIA>,,?
The liberal investment regime, rapid gro$th of the economy, strong macro economic fundamentals, progressive de8licensing of sectors and the ease in doing business has attracted global corporations to invest in *ndia And conse7uent to policy changes and procedural simplifications, )D* e7uity inflo$s have registered a phenomenal ups$ing% )D* inflo$s have recorded over five8fold increase in the last three years, from U-I 5%5 billion in 5::28:3 to U-I 94%F billion in 5::K8:F% -imultaneously, )D* share in *ndiaCs GD. has increased from :%FF per cent to 5%29 per cent% -ignificantly, )D* has come to play an increasing role in the economic gro$th of the country% The share of )D* in total investment has more than doubled from 5%44 per cent in 5::28:3 to K%35 5::K8:F% Destination *ndia According to the AT earney )D* 0onfidence *nde+ 5::F, *ndia continues to be the second most preferred destination for attracting global )D* inflo$s, a position it has held since 5::4% -imilarly, UN0TADCs &orld *nvestment Heport, 5::4 considers *ndia the 5nd most attractive investment destination among the Transnational 0orporations !TN0s#% 0learly, *ndia is in the reckoning% And the figures appear to be improving by the day% )D* e7uity inflo$s $hich totaled U-I 4%4 billion in 5::48:K gre$ by almost three times to U-I 94%F billion in 5::K8:F% *n fact, going by the international best practices for calculating )D* $ould place *ndiaCs total )D* at U-I 9=%4 billion in 5::K8:F against U-I F%F5 billion in 5::48:K, representing a $hopping 942 per cent gro$th rate% This huge inflo$ of )D* has in turn reversed the past trend, $ith )D* inflo$s overtaking the portfolio investment inflo$s by almost U-I 4%K billion in 5::K8:F,
23
according to the HB*Cs report on *nternational *nvestment .osition% T#E TIME4
2F IDIA. / DEC. ,,? )oreign direct investment !)D*# has the potential to generate employment, raise productivity, transfer skills and technology, enhance e+ports and contribute to the long8term economic development of the $orlds developing countries% "ore than ever, countries at all levels of development seek to leverage )D* for development% To increase understanding of issues related to )D* and enhance its benefits for developing countries, particularly the least developed countries !/D0s#, UN0TAD analyses )D* trends and their impact on development> compiles data on )D*> provides advisory services and training on international investment issues> helps developing countries improve policies and institutions that deal $ith )D*> and helps these countries participate in international negotiations on investment% )oreign affiliates of some K3,::: transnational corporations !TN0s# generate 42 million jobs% )D* is the largest source of e+ternal finance for developing countries% Developing countries in$ard stock of )D* amounted to about one third of their GD., compared to just 9: per cent in 9=?:%!CAD %!nited ation s Con*erence
on trade and devlo5meant(> ,,-
)or small and medium si6ed companies, )D* represents an opportunity to become more actively involved in international business activities% *n the past 94 years, the classic definition of )D* as noted above has changed considerably% This notion of a change in the classic definition, ho$ever, must be kept in the proper conte+t% Oery clearly, over 5'2 of direct foreign investment is still made in the form of fi+tures, machinery, e7uipment and buildings% "oreover, larger multinational corporations and conglomerates still make the over$helming percentage of )D*% But, $ith the advent of the *nternet, theincreasing role of technology, loosening of direct investment restrictions in many markets and decreasing communication costs means that ne$er, non8traditional forms of investment $ill play an important role in the future% "any governments, especially in industriali6ed and developed nations, pay very close attention to foreign direct investment because the investment flo$s into and out of their economies can and does have a significant impact% *n the United -tates, the Bureau of conomic Analysis, a section of the U%-% Department of 0ommerce, is
2+
responsible for collecting economic data about the economy including information about foreign direct investment flo$s% "onitoring this data is very helpful in trying to determine the impact of such investments on the overall economy, but is especially helpful in evaluating industry segments% -tate and local governments $atch closely because they $ant to track their foreign investment attraction programs for successful outcomes% EC22MIC4 TIME4 > 10 AP$I3 > ,,/.
2#
2&
0. $E4EA$C# MET2D232'7 $esearch is a human activity based on intellectual investigation and is aimed at discovering, interpreting, and revising human kno$ledge different aspects of the $orld% Hesearch can use thescientific method, but need not do so% Hesearch is defined as the systematic and objective process of gathering recording and analy6ing data for aid in making business decisions% To kno$ the ans$ers to the 7uestions like $ho, $hat, $here, $hy and ho$, a proper strategy is adopted to get the fruitful results% o
Ty5e o* $esearch
*t refers to frame$ork to test the specificity of the hypotheses% *t involves use of various techni7ues or functions% *t includes the sources of collecting the data, the $ays to analy6e the data, the length and depth of such a research% )ollo$ing research techni7ues are adopted% The goal of the research process is to produce ne$ kno$ledge, $hich takes three main forms(
+ploratory research8 $hich structures and identifies solutions to different research problems%
0onstructive research8$hich develops solutions to a problem%
mpirical research8$hich tests the feasibility of a solution using empirical evidence,
*n this project empirical research is basically used
E65loratory research: The chief purpose of e+ploratory research is to reach a better understanding of the research problem% This includes helping to identify the variables $hich should be measured $ithin the study% &hen there is little understanding of the topic it is impossible to formulate hypotheses $ithout some e+ploratory studies% )or e+ample, crop residues such a stra$ are high in lignin !a $ood8like substance# and lo$ in nutrients% This makes them a poor animal feed since the lignin acts against digestibility and the lo$ nutrient content means poor food value% o$ever, if treated in a strong alkali, plus a little heat, the lignin breaks do$n
2*
and the nutrient content increases% A company $as established to e+ploit this technology and did so successfully for 3 seasons% After this period sales began to slo$ do$n% Three other manufacturers had entered the market by this time% The company, Animal )eed -ystems, did not kno$ $hether the $hole industry had slo$ed do$n or if only their product $as suffering% Nor did they kno$ if the problem $as temporary in that perhaps the market comprised of Pearly adoptersP had been saturated but it $as only a matter of time before other farmers began to buy their systems $hen they sa$ ho$ $ell they $orked% *t $as also possible that if a problem did e+ist it could lie in any one of a number of areas( animal populations might be declining, distributors may not be promoting the product aggressively, customers may be e+periencing difficulties in getting the chemicals, and so on and on% This is a good e+ample of a situation $here insufficient kno$ledge prevented the development of clear objectives, since the problem could not be articulated $ith any precision and therefore research of an e+ploratory nature $as re7uired% -uch research can take the form of literature searches, informal personal intervie$s $ith distributors and users'non8users of the product and'or focus group intervie$s $ith farmers and'or distributors% +ploratory research is intended to help researchers formulate a problem in such a $ay that it can be researched and suggest testable hypotheses% o
Nat(re of t,e "ata
4econdary datait is defined as the situation in $hich *nformation is collected from secondary sources, i%e%, not directly compiled by the analyst> may include published or unpublished $ork based on research that relies on primary sources of any material other than primary sources used to prepare a $ritten $ork% -econdary data has been gathered by others for their o$n purposes, but the data could be useful in the analysis of a $ide range of real property% *n general, secondary data e+ists in published sources% % -econdary data is generated by means of primary data gathering techni7ues% *n this project -econdary data is collected from various sources and analy6ed
2,
o
Data source
Various Internet sites. Text oo!s. Ne"s papers. #a$a%ines.
o
Tools of analysis
&ie-'harts Ta(les )raphs Dia$ra*.
2-
35
-. AA374I4 AD DI4C!44I2 *ndependent *ndias economic development program has been based on the key objectives of self8reliance and social e7uity% Till the eighties, *ndias industrial policy created *ndias industrial base under a system of licensing, strict foreign e+change controls and e+cessive protection from imports, $hich protected even inefficient and internationally non8competitive enterprises%
)ollo$ing as series of economic reform measures since 9==9, *ndia has responded positively to the dramatic changes that have been introduced over the last decade% *ndia is the $orlds fourth largest economy !based on ...# and rated as one of the fastest gro$ing% *t is estimated that the economy shall gro$ at K ; in )Q :2, despite the gloomy economic climate in the $orld%
Indias 5resent economic stat&s reveals the *ollo)ing 5ro*ile: □
A Gross Domestic .roduct of I 334 Billion
□
The 3th largest economy in terms of .urchasing .o$er .arity !...#, $ith a GN. of U-I 9%? Billion
□
-i+th fastest gro$ing economy, projected to be F894; larger than Lapans by 5:9:
□
A strong agriculture sector accounting for nearly 54; of national output and 94; of e+ports, $ith self sufficiency in all important crops e+cept oilseeds
□
A diverse industrial base $ith self reliance in all core industries and a $ide range of engineering products, but domestically $eak in electronic hard$are technology
□
A robust services sector accounting for 3=; of national product, and gro$ing by F; annually
31
□
"ature financial sector and capital market $ith over =::: listed companies and market capitali6ation e7uivalent to U- I 5 trillion, $ith the Banking and finance sector gro$ing by F%4;
The Changing Face o* the Economy
*n 9==9 the 0entral Government embarked on a program of economic liberali6ation% This included, among others removal of governmental control, rationali6ation of regulation, attracting )oreign *nvestment% The government has also identified the infrastructure sector !.o$er, Telecommunications, and Transportation# as a key target and is taking steps to attract investments in the area%
32
ncouraged by economic developments over the past decade, the government is committed score a GD. gro$th rate =; by the year 5::4% the fact is that the *ndian economy is gro$ing faster than ever before% Bet$een 9==58=2 and 9==F8=?, *ndiaCs GD. at 9=?:8?9 prices has recorded a trend gro$th rate of 4%3 per cent% Never once has the gro$th rate fallen belo$ 4 per cent since 9==98=5 $hen it gre$ by only 9 per cent and $hen the economic liberali6ation process started%
Source: ABN AMRO 2002 2vervie) o* FDI Activity in India
Co&ntry 4o&rces o* FDI )oreign investors have begun to take a more active role in the *ndian economy in recent years% By country, the largest direct investor in *ndia is "auritius, largely because of the *ndia8"auritius double8ta+ation treaty%3 )irms based in "auritius invested I9K%: billion in *ndia bet$een 9==9 and 5::K, e7ual to 2= percent of total )D* inflo$s% The second largest investor in *ndia is the United -tates, $ith total capital flo$s of I4%K billion during the 9==9J5::K period, follo$ed by the United ingdom, the Netherlands, and Lapan%4 Bet$een 9==9 and 5::4, the United -tates ranked first in terms of total )D* approvals, $hich amounted to IKF%? billion !53 percent of total )D* approvals#%K The largest shares of U%-% investment are directed to the fuels, telecommunications, electrical e7uipment, food processing, and services sectors% The $arming of the political and economic relationship bet$een the United -tates and *ndia is likely to further encourage U%-% investment there% An important e+ample of the closer relationship is the U%-%8*ndia 0ivil Nuclear 0ooperation *nitiative, passed into U%-% la$ in December 5::K%? The United -tates has also reduced the use of e+port controls on e+ports to *ndia% As of )ebruary 5::F, only 9 percent of U%-% e+ports to *ndia re7uired a license, do$n from 53 percent in 9=== and =: percent in previous years% *n recognition of the improved relationship, the U%-% Department of 0ommerce is in the process of establishing its ne$ Trusted 0ustomerE program, set to begin in 5::F $ith *ndia as the first partner country% The program is e+pected to encourage repeat e+ports of U%-% goods to *ndia%= This $ill promote additional )D* by U%-% firms in *ndia, as the Trusted 0ustomer program $ill make it easier for U%-%8 based multinational corporations !"N0s# to ship goods to their affiliates in *ndia for manufacturing or additional processing%
33
Post+Ad9&stment FDI In*lo)s Data in India The HB* in mid85::2 revised the data on )D* from the financial year 5:::8:9 on$ards by adopting a ne$ definition of )D* in accordance $ith *") norms% The earlier estimates $ere based only on e7uity investment by foreign companies% The revised data on )D* no$ include all items indicated under e7uity capital !e+cept non8 cash ac7uisitions#% The e7uity capital of unincorporated entities includes the e7uity capital of foreign banks branches in *ndia% The ne$ method of accounting also includes reinvested earningsE and other capitalE as t$o additional categories of investments made by these foreign companies% &hile reinvested earnings refer to retained earnings of )D* companies, other capitalE covers inter8corporate debt transactions bet$een related entities% All items under the reinvested earnings have been included e+cept reinvested earnings of indirectly held direct investment enterprises% Data under Rother capital relate to short8term and long8term inter corporate debt, trade credit !more than 9?: days#, suppliers credit !more than 9?: days#, and financial leasing% The inclusion of re8invested earnings and inter8 corporate debt marks a change in the )D* definition in accordance $ith *nternational "onetary )und norms% *n this e+ercise, thus, out of the fourteen items mentioned by the *") in Table 9:, the follo$ing si+ items are not included in the revised *ndian )D* inflo$ data% These are !i# non8cash ac7uisitions, !ii# reinvested earnings of indirectly held direct investment enterprises, !iii# short8term trade credit, !iv# financial derivatives, !v# debt securities and !vi# land S buildings% The government is e+ploring the feasibility of including these items in future% Adjusted )D* data for these three years are presented in Table 95% *t is evident that, the present coverage is significantly $ider than the earlier practice of disseminating )D* data covering the e7uity capital only% The earlier estimates $ere based only on e7uity investment by foreign companies% The ne$ method of accounting includes reinvested earningsE and other capitalE as t$o additional categories of investments made by these foreign companies% As a result, the )D* estimate has shot up% &hile reinvested earnings refer to retained earnings of )D* companies, other capitalE covers inter8corporate debt transactions bet$een related entities% -hort8term and long8term inter8corporate debt, trade credit, suppliers credit, financial leasing have been included in under the other capitalE head%
3+
)or the year 5:::8:9, the )D* into *ndia has been pegged at I3%:2 billion instead of the pre8adjustment data indicating I5%23 billion% This hike of F5 percent is accounted for by the ne$ly included items 88 reinvested earnings !I9%24 billion#, other capital !I5%? billion# and the banking capital of I :%:K billion% -imilarly, the revised )D* inflo$ figures for 5::98:5 has also been increased by 4F percent% The revised aggregate )D* inflo$s declined by U- 9%3F billion in 5::58:2 !53 percent# compared to 5::98:5% This $as principally due to a sharp drop in fresh e7uity inflo$s, $hich might be indicative of a commensurate decline in fresh investment projects% Qet, compared to the pre8revision data, there has been a rise of the amount of about F2;%
FDI in Indias 4ervice 4ector The service sector has been the primary destination of )D* in *ndia since 9==9% As identified by *ndias "inistry of 0ommerce S *ndustry, the service sector accounted for 9F percent of total )D* inflo$s to *ndia bet$een August 9==9 and December 5::K% Another 9F percent of )D* inflo$s is invested in the telecommunications and transportation industries, $hich generally involve both e7uipment and services%9: )rom the mid89==:s, *ndia has been an important destination for investment in off shoring services such as soft$are, call centres, and other business process outsourcing !B.@#%99 According to one recent estimate, *ndias information technology !*T# off shoring market $ill be valued in e+cess of I5:: billion by 5::?, $ith more than one8fourth of the $orld *T off shoring market cantered in *ndia% Hevenue from offshore services is predicted to e7ual F percent of *ndias GD. by 5::?, and account for one8third of foreign e+change flo$s into the country%95 This flo$ of capital relies on *ndias $ell8educated, nglish8speaking, and relatively lo$8 paid $orkers%92 *ndia has offered substantial incentives to attract )D* in *T and B.@8related services off shoring, up to an estimated IK,::: per full8time e7uivalent $orker !)T# in the *T services area, and I5,::: per )T in the B.@ area% According to some reports, ho$ever, increasing competition is making it more difficult for *ndian firms to attract and keep B.@ employees $ith the necessary skills, leading to increasing $ages% *B", for e+ample, increased its *ndian staff by 2K percent in 5::K, to 42,::: $orkers, and has plans to invest a further IK billion in *ndia over the ne+t 2 years, for an e+pected total of 95:,::: employees in the country by 5::?%94 iring difficulties are among the factors that have encouraged some *ndia8based B.@ firms to engage in outbound )D* by establishing facilities outside
3#
of *ndia% *nfosys Technologies, for instance, reportedly has plans to employ K,::: $orkers in 0hina, and -atyam 0omputer -ervices has 4:: people based in 0hina, $ith more to come, along $ith 5,4:: $orkers each in "alaysia, gypt, and -audi Arabia% "ost *ndian industries have been fully opened to )D*, $ith foreigners permitted to o$n up to 9:: percent of e7uity in *ndian companies% o$ever, *ndia continues to limit )D* in a number of industries by enforcing overall caps on total foreign8o$ned e7uity shares, $ith the caps changing as *ndias liberali6ation process continues% .ermitted e7uity limits for foreign investors vary for different industries% The level of )D* activity follo$ing each change in regulations testifies to foreign investors interest in the *ndian market, particularly in key service sectors% 7uity limits for foreign investment in most types of telecommunications companies $ere raised from 3= percent to F3 percent in November 5::4, resulting in a $ave of ne$ )D* primarily focused on *ndias cellular telecommunications industry% 0umulative )D* inflo$s in telecommunications from August 9==9 to December 5::K $ere I2%= billion, and annual inflo$s jumped from I4?? million in 5::3J:4 to I2%: billion in 5::4J:K%9F The value of reported mergers and ac7uisitions !"SA# in telecommunications rose from I9:4 million in 5::2 to I9%5 billion in 5::3, I3%9 billion in 5::K, and I99%3 billion in just the first 2 months of 5::F, primarily on the strength of Oodafone Groups I99%9 billion ac7uisition of utchison ssar Telecom, $hich $as approved in April 5::F% *ndias stock e+changes have also been recently opened to foreign investment, $ith a 5K percent foreign e7uity cap, limited to 4 percent for any single foreign investor% )oreign investors reached the 5K percent cap in the National -tock +change of *ndia in "arch 5::F% As of the same date, the -ingapore +change and Deutsche Borse each controlled 4 percent of the Bombay -tock +change% @ther industries $hich maintain significant barriers to )D* include the insurance sector and ne$spaper publishing, $here foreign e7uity is limited to 5K percent, and the retail sector, $here foreign firms are permitted to invest up to 49 percent e7uity, but only in single8brand distribution outlets% )oreign investors have also e+pressed interest in investing in these sectors, as *ndias government debates $hether to lift the limits% *n the retail sector, &al8 "art announced a joint venture $ith *ndia8based Bharti in November 5::K, under $hich Bharti $ould invest I5%4 billion in a ne$ chain of retail stores that $ould be 9:: percent o$ned by the *ndian firm% &al8"art $ould provide logistics and $holesale supply services through a 4:(4: joint venture $ith Bharti% The deal is
3&
$idely seen as a $ay for &al8"art to enter the gro$ing *ndian retail market despite the )D* restrictions%59 *n the insurance industry, foreign investment $as first permitted in 5:::, $ith the lifting of the *ndian state8o$ned insurance companys monopoly, allo$ing competition from both domestic and foreign8o$ned private firms% During the 5:::J:9 fiscal year, 9K privately o$ned firms entered the *ndian market, most as 5K percent joint ventures bet$een globally competitive foreign insurers and *ndian firms%55 Amid e+pectations that the government $ould raise the foreign e7uity limit to 3= percent, at least si+ insurance joint ventures concluded agreements that $ould allo$ the foreign partner to raise its share to that level once government regulations have changed, but as of April 5::F, the e7uity limit for foreign insurance investors remains at 5K percent%
3*
1
C(m(lative amo(nt of FDI inflo+s
Rs 263265+1 crore
US2 /3!4millio
Rs #162+3 crore
US2 8-!49 millio
Rs 26,362,+ crore
US2 46!:millio
!from August 9==9 to "arch 5::F# 2
Amo(nt of FDI inflo+s "(rin) -..67 -..5
!from April 5::F to December 5::F# 3
C(m(lative amo(nt of FDI inflo+s
!updated up to December 5::F#
FACT S#EET ON FOREIGN DIRECT INVESTMENT ;FDI< From A787S4 1--1 to ./0/MB/R 255*
%&5 dated &5 to Decem8er ,,(
I' FDI E=UITY INF*O>S$ A' CUMU*ATIVE FDI E=UITY INF*O>S !e7uity capital components only#: Note $ )D* inflo$s include amount received on account of advances pending for issue of shares for the years 9=== to 5::3%
TREND OF FDI INF*O> TO A** T#E >OR*D OUT OF ::3': %I**ION US2
3,
1
Rs 26226&,5 crore
C(m(lative amo(nt of FDI inflo+s
US2 /.!4millio
!from April 5::: to December 5::F# %' FDI E=UITY INF*O>S ;>IT# COM?ANY7>ISE< AVAI*A%*E -...7-..6$
C' FDI E=UITY INF*O>S DURING FINANCIA* YEAR -..67-..5$ Financial 7ear ,,+,, %A5ril+March(
Amo&nt o* FDI in*lo)s %In $s. crore(
1 2 3 +
%In !4 mn(
April 255*
&6-2*
8!43:
Ma% 255*
,6&+2
-!8-.
9une 255*
#65+,
8!-:5
9ul% 255*
26,+-
6./
363-+
5:8
26,*&
68:
,655,
-!.-6
*63#3
8!543
&61+&
8!//5
/8!-3: +2613,
8-!499 -62*3
;B< --
;B< :6
# August 255* & September 255* * :ctober 255* , ;o(ember 255* - .ecember 255* -..67-..5 ;(p to De@emer -..6< 255&$255* age gro)th o(er last %ear
3-
D' FDI E=UITY INF*O>S DURING CA*ENDAR YEAR -..6 Calendar 7ear ,, %=an&ary+Decem8er(
Amo&nt o* *di in*lo) !n 7S ?
!n 0r 1
9anuar% 255* Februar% 255* March 255* @ April 255*
2 3 + # &
Ma% 255* 9une 255* * 9ul% 255* , August 255* - September 255* 15 :ctober 255* 11 ;o(ember 255* 12 .ecember 255* Year -..6 ;(pto De@emer -..6< ear 255&
,6#1# 365,1 1&6,-& &6-2,
8!9-8 495 :!5:5 8!43:
,6&+2 #65+, 26,+363-+ 26,*& ,655, *63#3 &61+& 69!6:4 #563#* ;B< /5
-!8-. 8!-:5 6./ 5:8 68: -!.-6 8!543 8!//5 89!8/4
116122 ;B< 6-
E' S#ARE OF TO? INVESTING COUNTRIES FDI E=UITY INF*O>S %Financial year+)ise(: $anks
Co&ntry
age )ith total In*lo)s
,,-+,? %A5ril+ March(
,,?+,/ %A5ril+ March(
,,/+, %A5ril+ March(
,,+, %A5ril+ Dec.(
C&m&lative In*lo)s
#61+1 ;8!8-9<
116++1 ;-!/6.<
2,6*#;4!:4:<
226+3# ;/!/43<
,,632# ;-.!8.3<
33'34
%in terms o* r&5ees(
%*rom A5ril. ,,, to Dec. ,,(
1
MAURITIUS
2
U'S'A'
365## ;449<
26215 ;/.-<
36,&1 ;5/4<
26#+5 ;4-6<
1,121 ;3!.6.<
9'8-
3
U''
+#, ;8.8<
161&+ ;-44<
,63,;8!565<
16153 ;-63<
1#6+*, ;:!348<
6'69
+
SINGA?OR E
,22 ;853<
1621, ;-6/<
26&&2 ;/65<
#6&32 ;8!388<
116+3, ;-!49/<
/'64
#
NET#ER*A NDS
1621* ;-46<
3+5 ;64<
26-5# ;433<
26151 ;/-/<
1162+3 ;-!/:/<
/'44
&
A?AN
#*# ;8-4<
-2# ;-.5<
3,2 ;5/<
,6&2;8!935<
3':3
;4:6<
26&35
*
GERMANY
&&3 ;83/<
163+# ;:.:<
#+5 ;8-.<
161-# ;-9:<
#6,#;8!:-:<
-'9/
,
FRANCE
#3* ;886<
,2 ;85<
#2, ;886<
3#, ;59<
361#;6./<
8'/9
-
CY?RUS
12 ;:<
315 ;6.<
2&& ;/5<
261-2 ;/:3<
26,*+ ;45/<
8'3/
15
S>ITER* AND
3#3 ;66<
+2& ;94<
2#* ;/4<
,&1 ;-88<
26*-2 ;4:3<
8'38
-3!48: ;/!/34<
6.!4:. ;8/!6-4<
/8!-3: ;8-!499<
-!--!45. ;/.!4-5<
7
TOTA* FDI INF*O>S
86!8:5 ;:!6/3<
+5
Note: %i( Incl&des in*lo)s &nder $I 4chemes o* $BI> stock s)a55ed and advances 5ending *or
iss&e o*
shares.
%ii( C&m&lative co&ntry+)ise FDI in*lo)s !from April 5::: to December 5::F# G Anne6+HA. %iii( age )orked o&t in r&5ees terms FDI in*lo)s received thro&gh FIPBJ4IAK $BIs A&tomatic $o&teK acL&isition o* e6isting shares only .
The United -tates and the uropean Union are the largest ac7uirers of *ndian companies, measured by both value and number of deals % )or the number of "SA deals $ith a reported value, the U%-% and the U together accounted for over I? billion, or roughly KF percent of the total value in the *ndian "SA market bet$een 5::: and 5::K% *ndian government statistics do not present information on the industry distribution of )D* inflo$s from each source country% o$ever, an analysis of "SA and greenfield )D* project data sheds light on the industry destinations for the major countries% "anufacturing is the leading industry destination, follo$ed by information !including telecommunications services# and professional, scientific, and technical services !including business services such as data processing and telephone call centres#%
Ma&riti&s According to *ndian government statistics, "auritius accounts for the largest share of cumulative )D* inflo$s to *ndia from 9==9 to 5::K, nearly 3: percent %*t is Unlikely, given the small si6e of the "auritian economy, that much of the capital destined for *ndia srcinated in "auritius% According to /oco "onitor data, only four Greenfield )D* projects !all from 5::5# list "auritius as the source country%22 "any companies based outside of *ndia utili6e "auritian holding companies to take advantage of the *ndia8 "auritius Double Ta+ation Avoidance Agreement !DTAA#% The DTAA allo$s foreign firms to bypass *ndian capital gains ta+es, and may allo$ some *ndia8based firms to avoid paying certain ta+es through a process kno$n as round tripping
+1
The e+tent of round tripping by *ndian companies through "auritius is unkno$n% o$ever, the *ndian government is concerned enough about this problem to have asked the government of "auritius to set up a joint monitoring mechanism to study these investment flo$s% The potential loss of ta+ revenue is of particular concern to the *ndian government% The e+istence of the treaty makes it difficult to clearly understand the pattern of )D* flo$s, and likely leads to reduced ta+ revenues collected by the *ndian government%
!nited 4tates The United -tates is the second largest source of )D* in *ndia !92 percent of the total#, valued at I4%K billion in cumulative inflo$s bet$een August 9==9 and December 5::K% According to the *ndian government, the top sectors attracting )D* from the United -tates to *ndia during 9==9J5::3 !latest available# are fuel !2K percent#, telecommunications !99 percent#, electrical e7uipment !9: percent#, food processing != percent#, and services !? percent#% According to the available "SA data, the t$o top sectors attracting )D* inflo$s from the United -tates are computer systems design and programming and manufacturing% These data roughly correspond to the overall )D* sectoral breakdo$n $ith the e+ception of fuel !including po$er generation and oil refineries#% Given *ndias
+2
general lack of e+isting po$er infrastructure, operations involved $ith po$er generation and oil refineries may be better suited to Greenfield investments% U%-% companies that are actively pursuing or have recently completed "SA deals in the *ndian telecommunications, electrical e7uipment, and service sectors include @racle, *ntel, *B", ., and lectronic Data -ystems !D-#% )ord, .arker8annifin, -ara /ee, -0 Lohnson, and 0aterpillar have been actively investing in the manufacturing sector% According to *ndian government statistics, )D* inflo$s from the United -tates accounted for 92 percent of total )D* inflo$s bet$een August 9==9 and December 5::K% According to /oco "onitor data for 5::5J:K, U%-% Greenfield investment has averaged 33 percent of the total number of projects listed and 9? percent of the total reported value for projects% The industry receiving the largest share of U%-% Greenfield )D* has been follo$ed by electronics and business services % Among the announced *0T projects that have value data reported, Googles I9 billion investment in internet infrastructure in Andhra .radesh is the largest% The internet search engine company intends to open a server farmE !a collection of computer servers# to enhance its internet and data storage services in Asia%2= "ost of the other U%-%8funded *0T projects are for soft$are development% Heported Greenfield )D* projects by U%-% companies have been generally smaller by value !about one8thir d the si6e, on average# than projects financed by non8U%-% companies% -ome of this disparity in si6e may be e+plained by the much greater emphasis on HSD activities, including soft$are development, by U%-% firms than by non8U%-% firms investing in *ndia% @ver one8half of all listed HSD projects $ere funded by U%-% companies, and research facilities tend to re7uire considerably less capital than manufacturing facilities% -ince 5::5, many of the major U%-% soft$are and computer brands, such as "icrosoft, oney$ell, 0isco -ystems, Adobe -ystems, "cAfee, and *ntel have established HSD operations in *ndia, primarily in yderabad or Bangalore% The majority of U%-% electronics companies that have announced Greenfield projects in *ndia are concentrated in the semiconductor sector% By far the largest such project is A"Ds chip manufacturing facility in yderabad, Andhra .radesh% This I2 billion site $ill produce about 2:,::: $afers per month, $ith each $afer containing bet$een 9:: and 9,::: chips% *ntel plans to invest close to I9 billion in *ndia, primarily e+panding the companys HSD center in Bangalore, over a multi8 year period%
+3
@fficial data on )D* flo$s and stocks is compiled on a balance of payments !B@.# basis, and reflects the total capital that crosses borders% These data are one indicator of the level of )D* in a given country, and generally the indicator that is most $idely available% An alternate indicator of )D* activity is the e+tent of operations by foreign8 o$ned affiliates in a given economy% These data are not available for all countries% )or the United -tates, ho$ever, there is a substantial amount of available information, including data on sales and assets of U%-%8 o$ned affiliates in *ndia, employment by those affiliates, and HSD performed by U%-% J o$ned )irms in *ndia assets of U%-%8o$ned affiliates in *ndia, employment by those affiliates, and HSD performed *n 5::3 !latest available#, there $ere 4FF affiliates of U%-% firms in *ndia, of $hich 9=? $ere majority8o$ned by U%-% firms !table 58K#% U%-% majority8o$ned affiliates !"@)As# employed a total of 9K4,K:: $orkers in *ndia% The largest share !2K percent# $as found in the manufacturing sector, most prominently in the machinery, chemicals, and transportation e7uipment manufacturing segments% @ther important categories of employment are professional, scientific, and technical services> and $holesale trade, $ith 5= percent and 9? percent of U%-% affiliate employment, respectively% &hile manufacturing remains the largest sector for U%-% employment, the latter t$o sectors have accounted for an increasing share of employment by U%-%8o$ned affiliates in recent years %U%-%8o$ned manufacturing affiliates also reported larger assets than affiliates in other sectors in 5::3, follo$ed by finance and insurance, and utilities affiliates% The top four sectors in terms of value8added by U%-%8o$ned affiliates in *ndia $ere, Hespectively, manufacturing> $holesale trade> professional, scientific, and technical services> and information services !primarily telecommunications, most likely#% &ithin the manufacturing sector, the largest industries $ere chemicals and machinery manufacturing% *n 5::2, U%-% "@)As reported HSD8related e+penditures of I?9 million in *ndia% @f this total, 32 percent $as in the manufacturing sector, $ith most of the remainder likely in the area of professional, scientific, and technical services% Given the sharp increase in overall )D* in *ndia since 5::2, and the individual projects noted above, HSD8related e+penditures by U%-% "@)As have also likely increased%
E&ro5ean !nion
++
&ithin the uropean Union, the largest country investors $ere the United ingdom and the Netherlands, $ith I2%F billion and I5%4 billion, respectively, of cumulative )D* inflo$s bet$een 9==9 and 5::K% The United ingdom, the Netherlands, and Germany together accounted for almost F4 percent of all )D* flo$s from the U to *ndia % All U countries together accounted for appro+imately 54 percent of all )D* inflo$s to *ndia bet$een August 9==9 and December 5::K% )D* from the U to *ndia is
primarily
concentrated
in
the
po$er'energy,
telecommunications,
and
transportation sectors% The available "SA data sho$s that the top sectors attracting )D* from the uropean Union are similar to )D* from the United -tates% "anufacturing> information services> and professional, scientific, and technical services have attracted the largest shares of )D* inflo$s from the U to *ndia since 5:::% Unilever, Heuters Group, .S@ .orts /td, Oodafone, and Barclays are e+amples of U companies investing in *ndia by means of mergers and ac7uisitions% uropean companies accounted for 29 percent of the total number and 32 percent of the total value for all reported Greenfield )D* projects% The number of U Greenfield projects $as distributed among four major clusters( *0T !9F percent#, heavy industry !9K percent#, business and financial services !94 percent#, and transport !99 percent#% o$ever, the heavy industry cluster accounted for the majority !K? percent# of the total value of these projects%
=a5an Lapan $as the fourth largest source of cumulative )D* inflo$s in *ndia bet$een 9==9 and 5::K, but the recent trend of )D* inflo$s from Lapan differs from those of other source countries% )D* inflo$s to *ndia from most other principal source countries have steadily increased since 5:::, but inflo$s from Lapan to *ndia have decreased during this time period % There does not appear to be a single factor that e+plains the recent decline in )D* inflo$s from Lapan to *ndia% *ndia is, ho$ever, one of the largest recipients of Lapanese @fficial Development Assistance !@DA#, through $hich Lapan has assisted *ndia in building infrastructure, including electricity generation, transportation, and $ater supply%
+#
*t is possible that this Lapanese government assistance may cro$d out some private sector Lapanese investment% The top sectors attracting )D* inflo$s from Lapan to !ndia <9anuar% 2555 to ;o(ember 255&= are transportation <#+ percent=6 electrical equipment 6 telecommunications6 and services !2 percent#% The available "SA data
corresponds $ith the overall )D* trends in sectors attracting inflo$s from Lapan to *ndia% 0ompanies dealing in the transportation industry, specifically automobiles, and the auto component'peripheral industries dominate "SA activity from Lapan to *ndia, including Qamaha "otors, Toyota, irloskar Auto .arts /td%, and "itsubishi eavy *ndustries /td% Lapanese companies have also invested in an estimated 93? greenfield )D* projects valued at least at I2%F billion bet$een 5::5 and 5::K% Lapanese companies accounted for a relatively small share of greenfield )D* in *ndia( 4 percent of the projects and 3 percent of the value% The transport e7uipment cluster received the largest share !23 percent# of Lapanese Greenfield )D* projects and F= percent of Lapanese greenfield )D* value% The largest project in the cluster is Nissans I9%4 billion> e+portoriented passenger car plant in "anesar, @rissa%The *0T and electronics clusters each garnered 9F percent of the projects, but only small amounts of value% The only other cluster to receive more than a 9: percent share of Lapanese capital $as the chemical, plastics, and rubber industry% *n one prominent e+ample, "itsubishi 0hemical is investing I2K? million to e+pand its e+isting basic organic chemicals production in aldia, &est Bengal% *n April 5::F, Lapanese and *ndian officials announced a major ne$ collaboration bet$een the t$o countries to build a ne$ Delhi8"umbai industrial corridor, to be funded through a public8private partnership and private8sector )D*, primarily from Lapanese companies% The project is e+pected to begin in Lanuary 5::? $ith initial investment of I5 billion from the t$o countries% The corridor $ill cross K states and e+tend for 9,3?2 km, in an area inhabited by 9?: million people% At completion in 5:94, the corridor is e+pected to include total )D* of I34J4: billion% A large share of that total is destined for infrastructure, including a 3,::: "& po$er plant, 2 ports, and K airports, along $ith additional connections to e+isting ports% .rivate investment is e+pected to fund 9:895 ne$ industrial 6ones, upgrade 4JK e+isting airports, and set up 9: logistics parks% The *ndian government e+pects that by 5:5:, the industrial corridor $ill contribute to employment gro$th of 94 percent in the region, 5? percent gro$th in industrial output, and 2? percent gro$th in e+ports %
+&
!nited Ara8 Emirates %!AE( The UA ranked fourteenth in )D* stock in *ndia in 5::K, but the t$o countries are in the process of signing several economic and political cooperation agreements $hich $ill likely lead to increased UA investment in *ndia% The "arch 5::F visit to *ndia by officials from Dubai has already produced commitments for cross border investments of over I2: billion over the ne+t t$o years% -ectors attracting interest from the UA include ports, infrastructure, and hotel construction% @ne notable recent agreement involves a 4:(4: joint venture bet$een Dubai8based Nakheel and *ndian real estate developer D/)% The company plans to develop 3:,::: acres for housing $ith an initial investment of I9: billion% Greenfield )D* projects in *ndia from UA8based investors are valued at more than I5 billion in each of the last t$o years, many of $hich are aimed at infrastructure and real estate development% The three clusters $ith the largest number of UA8funded greenfield )D* projects during 5::5J:K are light industry> property, tourism, and leisure> and logistics% The light industry projects, concentrated in te+tiles and building materials, are typically less capital intensive% 0onversely, heavy industry had only one UA8funded greenfield )D* project, but it $as valued at I9%9 billion( Dubai Aluminum is setting up a mine, refinery, and smelter in @rissa%44 Dubai .orts &orld has been the most active UA investor in *ndias logistics cluster, $ith plans to establish container port operations in numerous *ndian ports% The e+tensive net$ork is, in fact, leading to 7uestions about $hether the company is gaining too large a share of the market $ith its control of 4: percent of *ndias container shipping traffic% UA investors claim that one reason for their increased interest in *ndia is related to the U%-% response to the -eptember 99, 5::9 terrorist attacks on the United -tates% The U%-% market is perceived to be less $elcoming to foreign o$nership, particularly from the Gulf states, so investors are looking for other markets to absorb their investment dollars
F' SECTORS ATTRACTING #IG#EST FDI E=UITY INF*O>S$ Amo&nt $&5ees in crore %!4 in million(
+*
$anks
4ector
1
SERVICES SECTOR
2 3
+
# & * , -
15
COM?UTER SOFT>ARE H #ARD>ARE TE*ECOMMUNICA TIONS ER C#EMICA*S
,,-+,? %A5ril+ March(
,,?+,/ %A5ril+ March(
,,/+, %A5ril+ March(
,,+, %A5ril+ Dec.(
C&m&lativ e In*lo)s !April 5::: to Dec% 5::F# 3-6+21
age )ith total In*lo)s %In terms o* r&5ees(
16-,& ;333<
263-;/3:<
2165+* ;3!443<
156313 ;-!/:-<
26++1 ;/:9<
&61*2 ;8!:6/<
116*,& ;-!483<
+6#3;8!8:4<
3165,3 ;6!..3<
8/'4/
#*5 ;8-/<
26**& ;4-3<
261## ;365<
+6232 ;8!.3:<
1#6,** ;:!4-:<
6'99
&-& ;8/-<
&&* ;8/8<
+6+2+ ;95/<
+621+ ;8!.3/<
156&5;-!34/<
/':3
##;8--< 5 ;.< 2+1
&35 ;83:< 1*1 ;:5< 3,&
162#+ ;-64< 26121 ;346< *13
1632# ;::.< 16+,& ;839< -5*
,6+,+ ;8!59-< ,63,* ;-!.85< &6&#-
3'-6
;/:< -5;895< 163+3 ;-9-<
;56< 16*31 ;:9.< *&5 ;86-<
;8/6< -35 ;-./< -*5 ;-8/<
;--5< *&1 ;859< ,,& ;--:<
;8!34/< #6-,3 ;8!:3/< #61&& ;8!84/<
,3& ;85-<
&6#+5 ;836<
*6,&& ;86:<
16-15 ;358<
+6#*2 ;8!.46<
89'53
;5!963<
Note$ C&m&lative 4ector+ )ise FDI in*lo)s !from April 5::: to December 5::F#+ Anne6+HB.
Distri8&tion o* FDI )ithin India )D* inflo$s $ithin *ndia are heavily concentrated around t$o major cities, "umbai and Ne$ Delhi, $ith 0hennai, Bangalore, yderabad and Ahmedabad also dra$ing significant shares of )D* inflo$s#% )or statistical purposes, *ndias Department of *ndustrial .olicy and .romotion !D*..# divides the country into 9K regional offices% As illustrated in , the top K regions account for t$o8thirds of all )D* inflo$s to *ndia bet$een 5::: and 5::F, $ith the "umbai and Ne$ Delhi regions together accounting for just under onehalf of the total%9K This is consistent $ith greenfield )D* data, $hich sho$s that the 4 *ndian states that received the largest number of
+,
3'-- :':/ :'.8 -'4.
-':.
greenfield )D* projects in 5::K, based on the total number of projects reported, $ere "aharashtra !5: percent, includes the city of "umbai#, G' STATEMENT ON R%IS REGIONA* OFFICE7>ISE ;>IT# STATE COVERED< FDI E=UITY INF*O>S8 !from April 5::: to December 5::F#( $anks
$BIs + $egional 2**ice
1
M7MBA!
2
;/C ./'D!
3 + #
D./RABA . ADM/.ABA . E:'EA4A
& *
,
age )ith FDI in*lo)s !in rupee terms#
4tate covered
MA#ARAS#T RA! DADRA H NAGAR #AVE*I! DAMAN H DIU DE*#I! ?ART OF U? AND #ARYANA
#16+++-&
$&5ees in crore 88!588'-
+#61,2--
8.!:.-':
22*+
BA;8A':R/
ARNATAA
1+65,-*#
:!--/'.
*5-
0D/;;A!
TAMI* NADU! ?ONDIC#ERR Y AND#RA ?RADES#
13652112
-!9-/'.
&##
,6+5533
8!9:-'8
+23
GUARAT
#6&5,,5
8!-/5'9
2,2
>EST %ENGA*! SIIM! ANDAMAN H NICO%AR IS*ANDS C#ANDIGAR #! ?UNA%! #ARYANA! #IMAC#A* ?RADES#
3613&&3
63-'.
1#,
16*#+*2
:53'-
5,,
0DA;.!8AR D
!4 in million
2#-5
-
PA;A9!
GOA
,#+-5
854'/
5+3
15
E:0D!
+,&5*
88.'3
52+
11
BD:PA'
ERA*A! *AS#AD>E E? MAD#YA ?RADES#! C#ATTISGAR
++2,&
8.8'6
522
12
# ORISSA
3-##2
55'6
525
13
BD7BA;/SD CAR 9A!P7R
RAAST#AN
32&32
6:'3
51&
1+
EA;P7R
*1&&
84'3
55+
1#
87CADA4!
#23,
88'6
553
UTTAR ?RADES#! UTTRANC#A * ASSAM! ARUNAC#A* ?RADES#! MANI?UR! MEG#A*AYA! MIORAM! NAGA*AND! TRI?URA
+-
1&
1*
PA4;A
%I#AR! #AR#AN D RB!GS R/8!:;S ;:4 !;.!0A4/.3
1*,
.'3
555
#363,,+#
1265*,+
2&,*
SU%' TOTA*
895!4/9'-3
1,
StocH S)apped
1-
Ad(ance of !nflo)s !from 5::: to 5::3# RB!Gs$;R! Schemes
25 GRAND TOTA*
83!/-/'33
3/!-35':
$
: !- 9 / '5 5!94-'--
8!94-'5
/::'.4
8 - 8 ':
---!469'94
/ . !4 - 5 '-
!from April 5::: to December 5::F#
9
Incl&des HeL&ity ca5ital com5onents only. The $egion+)ise FDI in*lo)s are classi*ied as 5er $BIs + $egion+)ise in*lo)s> *&rnished 8y $BI> M&m8ai. : $e5resents in*lo)s thro&gh acL&isition o* e6isting shares 8y trans*er *rom residents. For this> $egion+ )ise in*ormation is not 5rovided 8y $eserve Bank o* India.
arnataka !94 percent, includes the city of Bangalore#, Tamil Nadu !92 percent, includes thecity of 0hennai#, Delhi != percent, includes the city of Ne$ Delhi#, and Andhra .radesh !?percent, includes the city of yderabad#%The key industries attracting )D* to the "aharashtra region are energy, transportation, services, telecommunications, and electrical e7uipment% "aharashtras transportation industry holds a particular concentration of "N0 affiliates in auto components manufacturing% .rominent e+amples include *NH -picer *ndia, o$ned by U%-%8based Dana 0orp%> alyani /emmer6 /td%, o$ned by U%-%8based ayes /emmer6 *nternational> -chrader Duncan, an affiliate of British8based Tomkins plc> and )iat *ndia, an auto parts subsidiary of the *talian auto manufacturer% *n the services area, leading firms include -tandar d 0hartered Bank, an affiliate of the British8based bank> *8)le+ -olutions, o$ned by U%-%8based @racle 0orp%> 0iticorp )inance and 8 -erve *nternational, both affiliates of U%-%8based 0itigroup> and -outh ast Asia "arine ngineering and 0onstruction, o$ned by Technip @ffshore *nternational, based in )rance% The key sectors attracting )D* inflo$s to Delhi are similar( telecommunications, transportation, electrical e7uipment !including soft$are#, and services% Delhi ranks second in total )D* inflo$s behind "aharashtra% U%-%8o$ned *B" is not only the largest computer services company in *ndia, but is also the "N0 $ith the largest number of employees in *ndia !appro+imately 42,:::#, second only to *B"s $ork force in the United -tates% *n addition to Delhi, *B" also has facilities in Bangalore,
#5
$ 7
0hennai, olkata, .une, Gurgaon, and yderabad% Goodyear, one of the largest global tire manufacturers, has built t$o manufacturing facilities near Delhi, entering into a joint venture $ith *ndian company 0eat /td% and ac7uiring *ndia8based -outh Asia Tyres% Goodyear has made an initial investment of I95%2 million to redesign 2:: retail outlets to better adapt to *ndian consumer preferences% The states of Uttar .radesh and aryana are also contained in the Ne$ Delhi region, as identified by *ndias statistical agencies% The geographic pro+imity of both states to Ne$ Delhi helps them to attract )D*% Due to its abundance of natural resources, Uttar .radesh attracts )D* in chemicals, pharmaceuticals, and mining and minerals% aryana attracts )D* in the electrical e7uipment, transportation, and food processing sectors% Lapan8based onda "otor 0o% has a large presence throughout *ndia, including ondas joint venture $ith ero 0ycles, $hich has gro$n into the $orlds largest motorcycle company since its inception in9=?3% The companys presence in aryana includes an HSD centre that supports t$o manufacturing facilities $hich together produce over 2 million motorcycles annually% U%- based Do$ 0orning and U%%8based Gla+o-mithline have invested in the states chemical and pharmaceutical industries, respectively% Automotive and auto components are the largest sectors attracting )D* into Tamil Nadu% )ord, yundai, and "itsubushi all have multi8million dollar investments in Tamil Nadu% The state capital, 0hennai, is sometimes called the Detroit of *ndia%E @ther sectors attracting )D* include port infrastructure, *0T, and electronics% The bulk of projects in Andhra .radesh, $hich includes the city of yderabad, are associated $ith soft$are and, to a lesser e+tent, hard$are for computers and telecommunications% The same is true of projects in arnataka, $here Bangalore is located> arnataka also has a large number of projects in the automotive sector% *ndias more rural areas have attracted a smaller number of high8value projects% /arge Greenfield )D* projects in @rissa include bau+ite mining and associated aluminium smelting operations as $ell as steel and automotive facilities% .ohang *ron and -teel 0o%s !.@-0@ 8orea# planned steel mill in @rissa is e+pected to be the largest )D* project in *ndia, and $ill ultimately involve I95 billion in total )D* on 3::: acres, $ith an annual steel making capacity of 95 million tons by 5:5:% As of "ay 5::F, ho$ever, the .@-0@ project $as generating intense local opposition by farmers $orried about the loss of their land, and its future $as uncertain% /u+embourg8based Arcelor8"ittal, the $orlds largest steel maker, has also signed a
#1
memorandum of understanding $ith the @rissa state government to build an I?%F billion steel mill, but faces similar opposition to its plans% @ther companies investing in greenfield metals production and auto projects in @rissa include Hussian Aluminum, Oedanta Hesources !United ingdom#, Dubai Aluminum, and Nissan !Lapan#% The state of @rissa accounted for 94 and 2: percent, respectively, of the total value of greenfield )D* reported in 5::3 and 5::4% As of April 5::F, Arcelor8"ittal $as also considering investing in a second large steel mill in *ndia, in the state of Lharkhand
II' F DI INF*O>S FINANCIA* YEAR7>ISE DATA$ A' AS ?ER INTERNATIONA* %EST ?RACTICES$ %Amo&nt !4 million( S. No.
Financia l Year (AprilMarch)
Equity
F$ Route* Acquisiti on Route
1991-2000 (from August 1991 to 15,483 March 2000)
Reinvested earnings
!ther capital
"otal F#$ $n%lo&s
' gro o previ y
R$+s Auto,atic Route* Equity capital o% unincorporated odies
-
- $
15,483
-
1.
2000-01
2,339
61
1,350
279
4,029
-
2.
2001-02
3,904
191
1,645
390
6,130
(+) 52
3.
2002-03
2,574
190
1,833
438
5,035
(-) 18
4.
2003-04
2,197
32
1,460
633
4,322
(-) 14
5.
2004-05
3,250
528
1,904
369
6,051
(+) 40
6.
2005-06
15,483
897
5,540
506
8,961
(+) 28 (+) 153
7.
2006-07 (P)
4,029
334
15,585
254
22,079
8.
2007-08 (P) +(A!r"#-
12,699
334
2,054
254
15,341
$cm&r 2007
#2
'**A (from A!r"# 2000 to $cm&r 2007)
48,088
2,668
18,097
3,095
71,948
M.A*./ **A(from August 1991 to $cm&r 2007)
63,571
2,668
18,097
3,095
87,431
(/) $BIs B&lletin Fe8r&ary ,, dt: 10 .,.,, %Ta8le o. -/ G F2$EI' I;E4TMET IF32<4(. ($i) 0+ Figures %or equity capital o% unincorporated odies %or 1223-245 1224-26 are esti,ates. ($ii) 78 #ata in respect o% 0Re-invested earnings+ 5 0!ther capital+ %or the year 1229-1223 5 1 223-1224 are esti,ated as average o% previous t&o years. (iv) () All %igures are provisional (v) :pdated y R$ up to #ece,er 1224. (vi) ; $nclude S&ap o% Shares :S< =./ illion. (vii) #ata on F#$ have een revised since 1222-2/ &ith e>pend coverage to approach international est practices. (viii) Monthly data on co,ponents o% F#$ as per e>pend coverage are not availale. (i>) R$ has included the a,ount o% :S< ?1 ,illion %or the ,onth o% April 1224 during this ulletin.
B. FINANCIAL YEAR-WISE DIPP’S FDI EQUIY INFL!WS" #E$%&'( )*+&'* )+//' /(" S N!.
F&/*/)&* Y* #A+& *)
A%/' FDI I/ #I/)%&/: *;*/) I/ %+ I/ US? ) &&/ 60,605 16,698
A%/' FDI I/ #<)%&/: *;*/) I/ %+ I/ US? ) &&/ 59,698 16,484
#A 1 2 3
1991-2000 #A%:%' 1991-*) 2000 2000-2001 2001-2002 2002-2003
4
-
12,646 19,361 14,932
2,908 4,222 3,134
10,733 18,654 12,955
2,463 4,065 2,722
#@65= #-33=
2003-2004
12,117
2,634
10,237
2,225
#-18=
5 6
2004-2005 2005-2006
17,138 24,613
3,759 5,546
14,653 24,613
3,219 5,546
#@45= #@72=
7
2006-2007 2007-2008 #A+&-D). 2007 S% ''* #1' 8 # *+& 2000- D).2007 C%%*'&; ''* #* @ # # *%:%' 1991 ' D). 2007
70,630 51,243
15,726 12,699
70,630 51,243
15,726 12,699
#@184= -
222,680
50,628
213,718
48,665
-
283,284
67,326
273,416
65,149
-
8 B
=A>E ; P;&% (*
ot@ (i) FE#A$ (Foreign E>change #ealers Association o% $ndia) conversion rate %ro, rupees to :S dollar applied on the asis o% ,onthly average rate provided y R$ (#EA) Mu,ai. (ii) ; $ncluds StocB S&ap o% Shares :S< =.1 illion %or the year 1223-1224.
#3
III. F!REI>N ECN!L!>Y RANSFER" #F A%:%' 1991 ' D) 2007 A. NUBER !F CUULAIE FC APPR!ALS No. !% co,ullcative F"C approval(from August 1991 to December 2007)
7,941 No. !% co,ullcative F"C approval(from April 2006 to March 2007) o. o* FTC a55rovals d&ring ,,+, !from April 5::F to December 5::F#
81 95
B. C!UNRY-WISE ECN!L!>Y RANSFER APPR!ALS" C%/'(
No. o% "echnical Collaorations approved 1,772
'age &ith total tech. approvals
22.31
USA
1,106
13.93
>ERANY
868 860
10.93 10.83
APAN U
484
6.09
2,851
35.91
IALY !ERS
B S/04:RS$C!S/ 4/0D;:':8 4RA;SF/R APPR:IA'S RA;ES S/04:R
1 2
;::F >A8/ C!4D 4/0D;!0A' 4:4A' 0:''AB:A4!:; 4/0D
APPR:I/. /lectric /quipments
3 !ndustrialMachiner% + 4ransportation!ndustr% # Mismatch/ngineeringindustr% & :ther Sector 4:4A':FA''S/04:RS
,-& *+2 ++2 36*+* *6-+1
APPR:IA'S 1#,5 111& 15-+ -3+ ##* +*115555
#+
Ra
The sectors receiving the largest shares of total )D* inflo$s bet$een August 9==9 an December 5::F $ere the electrical e7uipment sector and the services sector, each accounting for 9F percent% These $ere follo$ed by the telecommunications, transportation, fuels, and chemicals sectors% The top sectors attracting )D* into *ndia via "SA activity $ere manufacturing> information> and professional, scientific, and technical services%4= These sectors correspond closely $ith the sectors identified by the *ndian government as attracting the largest shares of )D* inflo$s overall% *0T and electronics have been the largest industry recipients of Greenfield )D* into *ndia in recent years, but have seen the number of ne$ Greenfield projects plateau since 5::3% These data do not signify that Greenfield investment in these sectors has stagnated% Hather, the si6e of the projects in these industries has increased substantially% )or e+ample, global semiconductor manufacturers Advanced "icro Devices !A"D 8 United -tates# and )le+tronics !-ingapore# have entered into separate joint ventures $ith -em*ndia to build semiconductor manufacturing facilities in yderabad% The I2 billion A"D8-em*ndia joint venture $ill produce semiconductor chips $hich can then be used to manufacture lectronic products in the )le+tronics8-em*ndia I2 billion joint venture% The chip fabrication facility $ill manufacture chips for cell phones, set8top bo+es, personal computers, and similar products% -em*ndia is attempting to capitali6e on *ndias domestic demand for semiconductors, predicted to gro$ from I2%2 billion in 5::K to I3: billion in 5:9K% The heavy industry and transport e7uipment sectors together attracted over I2: billion in Greenfield )D* projects in 5::K% The cluster $ith the highest reported value during 5::5J:K is heavy industry% .rojects in this sector tend to be highly capital intensive, $ith single projects fre7uently re7uiring up$ards of IK billion in start8up investment costs% The largest recent e+amples include the .@-0@ and Arcelor8"ittal -teel projects noted above, and Oedanta Hesources !United ingdom# aluminum smelter project, all planned for the state of @rissa% Heported greenfield )D* in the transport e7uipment sector e+ceeded I99 billion in 5::K% Another major recipient sector $as property, tourism and leisure, $ith over IK%9 billion in 5::K% This level of investment $as $ell above the annual average for this sector, although still belo$ the high of I=%5 billion in 5::3% The Asian tsunami on December 5K, 5::3, may have dampened enthusiasm for such investment, as investment plunged to just over I9:: million in 5::4 before rebounding to IK%9 billion in 5::K% The industry is e+pected to continue to attract substantial )D*% At
##
least 4: non8*ndian hotel chains planned to enter the market as of April 5::F, targeting *ndias lo$ level of hotel penetration around the country% *n particular, Hoyal *ndian Haj *nternational 0orp% has signed a contract $ith 0hoice otels to build 94,::: hotel rooms around the country, $ith an estimated )D* value of IK billion% )D* projects have become more $idely distributed across industries over time% *n 5::5, )D* projects $ere concentrated in the *0T industry, follo$ed by business and financial services> and electronics% By 5::K, the distribution of the projects among the clusters $as more uniform, although the *0T cluster still $as the largest% % ven if an industrys share of the total pie decreased bet$een 5::5 and 5::K, that industry may still have significantly increased its total Greenfield )D*% The *0T sector is a case in point, do$n 95 percent by relative share from 5::5 to 5::K, but recording increased )D* of more than I3%9 billion%
0 S4A4/$C!S/ 4/0D;:':8 4RA;SF/RAPPR:IA'SJ
RA;ES
S4A4/
1 2 3 +
Maharastra 4amilnadu 8ujrat Dar%ana
;::F 4/0D;!0A'S 0:''AB:RA4!:; APPR:I/. 163*1 &&5 &5, 3#&
>A8/ C!4D 4:4A' 4/0D APPR:IA'S
#
.elhi
31#
3-*
&
:ther states Total of all states
+6331 *6-+1
#,32 15555
1*2& ,31 *&& ++,
#&
#*
?.C2C3!4I2:+ @pening and )D* have really created ne$ opportunities for *ndias development and boosted the performances of local firms as $ell as the globali6ation of some of them% -uch a trend has undeniably raised *ndians stature among developing countries% o$ever, the potential of the country to catch up the levels of the leading economies in the coming decades, often touched on, is not 7uite guaranteed% *ndia has an e+tremely hard job to perpetuate its advantages, to achieve further productivity gains and to ensure that all segments of its population participate in the income gro$th% The challenge that *ndia has to take up is, in many regards, close to that of 0hina% &hat is sure it is that, because of their si6e, of their capabilities and of their ambitions both of these emerging countries have the possibility to alter the international economic landscape over the coming generation% BQ Hesearch * able to find out ans$er of these 7uestion(8 To Understand $hat is )D* and &hy it is *mportant for any country like *ndiaM "odes of )D* in *ndia% Analysis through yearly data of different sectors% /imitation of )D* inflo$ in *ndia%
#,
4!MMA$7:+ *ndias recent liberali6ation of its foreign investment regulations has generated strong interest by foreign investors, turning *ndia into one of the fastest gro$ing destinations for global foreign direct investment !)D*# inflo$s% )oreign firms are setting up joint ventures and $holly o$ned enterprises in services such as computer soft$are, telecommunications, financial services, and tourism, and manufactured goods including
transportation
e7uipment,
chemicals,
pharmaceuticals,
and
food
processing% This study e+amines )D* flo$s into *ndia, by country and by industry, supplemented by a discussion of major foreign ac7uisitions of *ndian companies, and greenfield )D* by foreign firms% The study also e+amines *ndias investment environment, special economic 6ones
Princi5al *indings regarding FDI in India incl&de: V Net )D* in *ndia $as valued at I3%F billion in the 5::4J:K *ndian fiscal year, and more than tripled, to I94%F billion, in the 5::KJ:F fiscal year% Almost one8half of all )D* is invested in the "umbai and Ne$ Delhi regions%
V By country, the largest investors in *ndia are "auritius, the United -tates, and the United ingdom% *nvestors based in many countries have taken advantage of the *ndia8"auritius bilateral ta+ treaty to set up holding companies in "auritius $hich subse7uently invest in *ndia, thus reducing their ta+ obligations% By industry, the largest destinations for )D* are electrical e7uipment !including computer soft$are
#-
and electronics#, services, telecommunications, and transportation%
V *ndia offers both positive and negative incentives for foreign investors% .ositives include strong economic gro$th leading to increased buying po$er by the middle class, lo$ $ages compared to @0D countries, and an educated $ork force% Negatives include inade7uate infrastructure, rising salaries for key jobs, and bureaucratic delays in obtaining necessary permits and licenses%
V *ndias -pecial conomic
V U%-%, uropean, and Lapanese automakers and auto component manufacturers all have significant investments in *ndia% "ost )D* in the automotive industry has been focused on sales to the domestic market, but more foreign investors are no$ producing autos and components in *ndia for e+port%
V *ndias 5::4 changes to its .atent /a$ have motivated substantial ne$ )D* in the pharmaceutical industry, but global pharmaceutical firms are $aiting to see ho$ the ne$ la$ is interpreted before further e+panding product patenting and commerciali6ation activities in *ndia%
&5
&1
/.4!''E4TI2:+ Possi8le Directions o* Im5rovement in FDI In*lo)s *or India The paper indicates that )D* has been playing an increasingly important role in the *ndian economy since the reforms $ere undertaken a decade ago% -ince the initiation of economic reforms by the *ndian government in 9==9 !ten years after 0hinaCs open door policy#, attracting )D* has been an important area% o$ever, *ndia continues to be at the lo$er end $ith respect to the global competition for )D*, in spite of opening up of significant market opportunities% The previous Government had targeted )D* of I9: billion by 9==F but, even as late as 5::2, less than half of the target has been achieved% *ndia $ould need to overcome both domestic as $ell as e+ternal economic challenges to take advantage of these opportunities% The likely strategies that policymakers $ould need to adopt in the light of these challenges therefore, have to be multi8pronged, $ith focus on both the domestic as $ell as the global market% *n order to be competitive $ith 0hina, *ndia needs to give greater orientation to$ards e+port8driven )D* in manufacturing% )or this, *ndia needs to have focussed development of e+port processing 6ones and -
&2
certain unfavorable elements in the investment climate fabric of *ndia% *n particular, *ndia $ould need to focus on certain strategies in order to improve its 7uality of )D* and correspondingly its global competitiveness, gro$th prospects, and the attractiveness to )D* inflo$s% These are as follo$s(
1. Ado5t an E65ort G2riented FDI Policy *t is $ell8recogni6ed that e+port8oriented )D* is an important means of e+panding manufactured e+ports for developing countries, as it helps improve the 7uality and competitiveness of manufacturing industries% *t is $ell documented that in the 9=F:s and 9=?:s, )D* played a crucial role in the rapid e+port gro$th achieved by ast AsiaCs ne$ly industriali6ed economies% +port8orientation in 0hina 0hina has been successful in attracting huge e+port oriented )D* inflo$s in recent years% Table 55 sho$s that over the late 9==:s till 5::9, the share of foreign funded enterprises in 0hinese e+ports have consistently remained over 3:; during this period and has e+ceeded 4:; in 5::9% 0hina has pushed up the "N0 share in e+ports from 9F per cent in 9==9 to over 34 per cent in 9=== to around 4: per cent in 5::9 as compared to a mere 2 per cent of e+ports by "N0 affiliates in *ndia% 0hina invited in foreign direct investors to provide the capital and the e+pertise to achieve e+port competitiveness in a $ide range of sectors, including electronics, apparel, plastic toys, stuffed animals, ceramics, and many other labor8intensive sectors% *n each sector, the key $as to link foreign investor capital and e+pertise $ith a large and lo$8cost 0hinese labor force% The foreign investors brought in the product design, speciali6ed machine tools and capital goods, key intermediate products, and kno$ledge of $orld marketing channels% The 0hinese assured these foreign investors certain key conditions for profitability, such as lo$ ta+es, reliable infrastructure, physical security, ade7uate po$er, decent logistics for the import and e+port of goods, and so forth% confirms that the contribution of services in 0hinas e+ports is negligible% &e observe that the manufactured e+ports as a percentage of total e+ports have al$ays demonstrated a rising trend reaching around =:; in 5::9%
&3
&ithin the manufacturing e+ports, about 4F; $as by the chemicals, light S te+tile industrial products, machinery and transport e7uipment, minerals and metallurgical products, rubber products etc% over 9==985::9% .resumably, a substantial percentage of these e+ports especially in the mechanical and electrical products sector $as contributed by the "N0s F5% +port8@rientation in *ndia )ocus of )D* in *ndia is mainly on sectors such as infrastructure, po$er, capital goods and food processing, none of $hich fall under e+port8oriented units% @nly one8 fourth of total approvals $ere directed to$ards major e+porting sectors like te+tiles, chemicals S pharmaceuticals, leather goods, transport, metallurgical industries and food processing industries% @f *ndias e+port basket of soft$are products and services, gems and je$elry, minerals, and agricultural products, )D* is allo$ed only in soft$are products% *ndia needs a larger e+port market for manufactured goods $here )D* could flo$ in% )or e+ample, the handicraft sector has consistently made the largest contribution to e+ports over the 9==:s% But since this sector falls under the reserved small8scale category, )D* is practically non8e+istent in this area% Hecommendations for *ndia .erhaps $ith the opening up of the small8scale industries, "N0s could be attracted and e+port8oriented )D* could get a significant boost% Also, comparing Table 53 !machinery and transport e7uipment in 0hina# $ith Table 54 !engineering figures in *ndia#, $e observe that *ndia lags very much behind 0hina in the e+port of machinery and electronics goods% This can be mitigated if *ndia adopts competent incentive measures like ta+ break to attract )D* from the "N0s in these capital8intensive industries%
. 'enerate and E65and 4Es in India +port8oriented industries can be fostered through the creation of different types of special economic 6ones !-
&+
country% "ore generally, the relatively successful industrial policies have had a fe$ common characteristics% )irst, they have aimed to promote e+ports, rather than to protect the domestic market> second, they have provided subsidies on the basis of successful performance !for e+ample, the gro$th of e+ports# rather than to cover losses> and third, they have been temporary rather than permanent subsidies !for e+ample, a five8year ta+ holiday for ne$ e+port firms#% -
&#
do not need a license to import goods% Unlike in *ndias previous generation of +port .rocessing po$er is distributed through sub8stations that are dedicated to distributing po$er only to a specific -<% Additional infrastructure facilities include developed plots, built8up space, and telecommunication lines, as $ell as supportive services, such as in8house customs facilities, post offices, banks, canteens, courier services, travel agents, medical services, shopping, food services, and $orker housing% "ost importantly, ho$ever, the -
&&
high$ays% "any *ndian high$ays are narro$ and congested, $ith poor surface 7uality and the rail system also faces severe capacity constraints $ith very high rail freight costs%95 By contrast, most -
:. Im5rove the Investment Climate the different major factors determining the investment climate of *ndia to$ards the beginning of this decade and compares them $ith that of 0hina% Apart from the items covered by the table, there are certain other lacuna in the institutional structure of *ndia that re7uires attention% @ne major problem in *ndia is that there is a lack of harmoni6ation of government policies in *ndia% T$o events, $hich occurred in 9==4, illustrate this lack of coordination and often8contradictory government policy and damaged *ndia as an investor8friendly country% )irst, nronCs project $ith the "aharashtra -tate government $as scrapped after it had been approved by the government% )urthermore, entucky )ried 0hickenCs license in Ne$ Delhi, *ndiaCs capital city $as revoked as the company $as accused of using ingredients that $ere harmful
-. $ed&ction in Poverty level. ven $ith its strong economic gro$th in recent years, *ndia remains a developing country,$ith many of its people enjoying little benefit from the countrys economic gro$th% An estimated 54 percent of the population lives belo$ the poverty line,9: and the GN. per capita $as only IK5: in 5::3%99 -eventy percent of the *ndian population lives in rural areas, $hich are often difficult to access because of poor roads%95 This poverty and poor infrastructure make it harder for foreign firms to establish and e+pand their presence in much of the *ndian market %
?. Ed&cated
&*
colleges for professional education !engineering, technology, medical, and teacher education#, and universities'institutes%2= *n 5::2J:3, there $ere appro+imately =,3:: colleges for general education, 5,F4: colleges for professional education, and 2:: universities'institutes%3: *ndia has the third largest number of students in higher education in the $orld, trailing only the United -tates and 0hina% nglish is the primary language of instruction in these schools, $hich means that most educated *ndian $orkers speak at least some nglish%39 *n *ndia, there are more than 5::,::: engineering graduates annually, more than 2::,::: post graduates from non8 engineering colleges, 5%9 million other graduates, and about =,::: .hDs% "any foreign investors have established HSD centers in *ndia and have made it an important location for soft$are development% *ndeed, 5: percent of the )ortune 4:: companies have HSD facilities in *ndia, dra$n in large part by this vast pool of scientific and technical e+pertise%
/. B&rea&cracy and Corr&5tion +cessive bureaucracy and corruption discourage )D* by distorting the efficient allocation of resources, increasing the cost of doing business, and breeding mistrust of government officials% Although *ndia has taken steps in recent years to open up more sectors of its economy to )D* and to streamline the investment process, )D* into the country remains hindered by government bureaucracy and corruption% )oreign businesses report instances $here investment decisions and approval by *ndian government ministries drag on for lengthy periods of time for no apparent reason% The *ndian government procurement system for certain areas of business has been plagued by instances of corruption> a number of government officials have been convicted under *ndian anti8corruption la$s in the past several years% Hecently, the &orld bank suspended funding for some health care projects in *ndia due to allegations of fraud and corruption in the procurement of medicines% *n a survey of business e+ecutives, respondents indicated that inefficient government bureaucracy and corruption $ere the second and fourth most problematic factors, respectively, for doing business in *ndia%
&,
&-
.BIB3I2'$AP#7+ + Nitisha .atel% )D* in Hetail -ector( *ndiaE, joint report of *0H*H8Department of 0onsumer Affairs !Government of *ndia#, published by Academic )oundation, 5::4,
+ The British /one .arent 0ohort -tudy( 9==989==?E, Department of -ocial -ecurity Hesearch Heport No% 95?, published by 0orporate Document -ervices, /ondon, 5::: $ith )inlayson, /%> )ord, H%> "arsh, A% and "cay -%
+ .aolo Guerrieri, .%/elio *apadre and Georg oopmann !eds#, 0ultural Diversity Audio8visual policies and international trade( the case of *ndiaE in and *nternational conomic *ntegration( The Global Governance of the Audio8Oisual -ector, d$ard lgar .ublishing /imited, U, 5::4%
+L% "ittal and %D% Haju GAT- and Developing 0ountries( ey *ssues and .rospect for *ndiaE in &orld Trade @rgani6ation ( A critical study of its first decade, Ne$ ra /a$ .ublications, Ne$ Delhi, 5::4%
+ Bibek Debroy and "ohammad -a7ib *ndia and GAT- 5::: Negotiations( *ssues and -tate of .layE in )uture Negotiations *ssues at &T@( An *ndia 0hina .erspective, Globus Books, Lune 5::3%
+ Deepika "G Doha Hound of -ervices Negotiations( *ndian .erspectiveE in *ndia and the &T@( The Development Agenda, *0)A* .ress publication !forthcoming#
+ D% Barro$clough and <%%o6ul8&right Developing 0ountry( the 0ase of *ndiaE in 0reative *ndustries andDeveloping 0ountries( Ooice, 0hoice and conomic Gro$th, Houtledge publication,
*5
$e*ereed =o&rnals:
+ PDeveloping 0ountries and GAT- Negotiations( The 0ase of *ndiaP, Global conomy Lournal( Ool% 4( No% 5, Article 9%
+ "aritime and Air Transport -ervices( *ndias Approach to .rivati6ationE in Transport and 0ommunication Bulletin for Asia and the .acific, UN-0A., No F2, 5::2 $ith Huchika -achdeva%
2ther =o&rnalsJ
+ Qouth Unemployment, /abour "arket .rogrammes and ealthE along $ith Lane /akey and "ichael &hite% Heport Number ?K=, .olicy -tudies *nstitute, /ondon, U, 5::5%
+ Action .lan for *ndiaE in &T@ and its *mpact on 0onsultancy and 0onstruction *ndustry, seminar proceedings published by 0onsulting ngineers Association of *ndia, 5::5
+ Audio8visual .olicies and *nternational Trade( The 0ase of *ndia> &&A Heport 55F, amburg *nstitute of *nternational conomics, Germany, 5::2
+ *ndia and GAT- 5::: Negotiations( *ssues and -tate of .lay in "ode 3 /iberalisationE, published in Lournal of 0orporate .rofessionals, *nstitute of 0ompany -ecretaries of *ndia, December 5::2
+ 0ultural Diversity and Trade /iberali6ation( The 0ase of *ndiaE, in Trade and 0ulture( *ssues in 5::3, 0onference .aper of 0entre for Trade .olicy and /a$, 0hicago,
+ igher ducation, GAT- and *ndia( *ssues and -tate of .layE, in *ndo8UBusiness, *ndo8American 0hamber of 0ommerce, Luly8August 5::3%
*1
+ Doha Hound of -ervices Negotiations( *ndian .erspectiveE, in Annual -pecial *ssue of 0hartered )inancial Analyst, The *0)A* University .ress, December 5::3%
+ Hetailing *n *ndia( Hecent Trends and Development , -urvey )indingsE jointly $ith Nitisha .atel in Lournal of "arketing and 0ommunication, Ool 9 *ssue 5, -ep8 Dec 5::4 IC$IE$
+ &ith N%Taneja, -% Layanetti and T% Laya$ardane% *ndo8-ri /anka Trade in -ervices( )TA** and BeyondE *0H*H &orking .aper No% 934, November 5::3,
+ Trade in /and Transport -ervices( Hail$ays, *0H*H &orking .aper No% 99=, Lanuary 5::3
+ *ndo8-ingapore Trade in -ervices( nhancing 0o8operation, *0H*H &orking .aper No% =?, "arch 5::2%
+ *ndias Trade .otential in Audio8visual -ervices and the GAT-, *0H*H &orking .aper No% ?9, April, 5::5%
+ Distribution -ervices( *ndia and the GAT- 5::: Negotiations, *0H*H &orking .aper No% ?:, April 5::5%
+ *ndias Trade in "aritime Transport -ervices under the GAT- )rame$ork, *0H*H &orking .aper No%FK, Lanuary 5::5%
+ Trade in 0onstruction and 0onsultancy -ervices( *ndia and the GAT-, *0H*H &orking .aper No%F4, Nov 5::9%
+ Nitisha .atel% *ndia and GAT-( Negotiating -trategies in Distribution -ervicesE in -HTT8*0H*H &T@ Ne$s /etter, &T@ Ne$s and Oie$s, LuneJAugust, 5::4%
'overnment $e5orts:
*2
+ Heport of the fifth and si+th s$eep of D--'.-* cohort study of British /one parent for 9==K and 9==?, Department of -ocial -ecurity, /ondon, 9===%
+ ealth and Qouth Unemployment( A revie$ of /iterature, Department of ealth, /ondon, 9===%
+ "aritime Transport -ervices, Department of 0ommerce, "inistry of 0ommerce and *ndustry, "arch 5::9%
+ Trade in 0onstruction, Architectural, and ngineering -ervices, Department of 0ommerce, "inistry of 0ommerce and *ndustry, -eptember 5::9%
+ Trade in Distribution -ervices, Department of 0ommerce, "inistry of 0ommerce and *ndustry, )ebruary 5::5%
+ Trade in Audio8visual, Hecreational, 0ultural and -porting -ervices, Department of 0ommerce, "inistry of 0ommerce and *ndustry, Lune 5::5%
+ Huchika -achdeva .Trade in Hail Transport -ervices, Department of 0ommerce, "inistry of 0ommerce and *ndustry, December 5::2
+ Nitisha .atel% )oreign Direct *nvestment in Hetail -ector of *ndia, Department of 0onsumer Affairs, "inistry of 0onsumer Affairs, )ood and .ublic Distribution, Lanuary 5::4
+ -ukanya Ghosh )easibility study for *nclusion of services in *ndo8G00 )TA, Department of
0ommerce, "inistry of 0ommerce and *ndustry, -eptember 5::4
*3
,it!en . . and ,. /arrison. 0111. Do Do*estic 3ir*s
ene4t fro* Direct 3orei$n Inest*ent idence fro* Vene%uela.8 ,*erican cono*ic Reie" 91: 6;5-609.
,lfaro <. ,. 'handa =. >ale*li-?%can and =. =aye!.
2;;@. 3DI and cono*ic )ro"th: The Role of
alasu(ra*anaya* V. N. #. =alisu and D. =pasford.
0116. 3orei$n Direct inest*ent and )ro"th in & and I= 'ountries.8 cono*ic ournal 0;6: 12-0;5.
lo*stro* #. and ,. >o!!o. 2;;@. The cono*ics of
3orei$n Direct Inest*ent Incenties.8 NR Aor!in$ &aper 1B91 .
lo*stro* #. and ,. >o!!o. 0116. #ultinational
'orporations and =pilloers.8 ournal of cono*ic =ureys 02: 2B7277.
orens%tein . . De )re$orio and -A.
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