FDI IN INDIA – AN ANALYSISBY

K.Periasamy, Chennai

0 1000 1500 1600 1 700 1820 1870 1913 1950 1973 1998 2005

0

5

1

0

15

2

0

25

3

0

35

4

0 MAJOR ECONOMIES SHARE OF WORLD GDP

Western Europe

China

India

Japan

United States

India

Year

Perc

enta

ge

DEVELOPED COUNTRIES HAVE RECEIVED MAXIMUM FDI

NOTE : 1) Only in the last 10 years, Developing countries have received higher FDI.2) China has been consistently receiving higher FDI for the past 20 years.

Economic Growth

Trade

Employment and skill levels

Technology diffusion and knowledge

transfer

Linkages and spillover to

domestic firms

• Log of GDP = 4.12 + 0.466 Log of FDI

5.25.35.45.55.65.75.85.9

66.16.2

2 2.5 3 3.5 4

Log

of G

DP

Log of FDI

INDIA – YEARLY NET FDI INFLOWS

0

1000

2000

3000

4000

5000

6000

US

$ m

illio

n

INDIA – MAJOR INVESTING COUNTRIES

NOTE : 1) Mauritius is only the Route

INDIA – FDI INVESTMENT BY USA

NOTE : 1) USA INVESTMENT IS NOT GREAT. BUT WE ALWAYS TALK ABOUT USA MNCs !

INDIA – SECTORWISE FDI

31%

13%12%

11%

10%

6%

6% 4% 4%3%

Services Sector

Computer Software & hardwareTelecommunications

Housing & real Estate

Construction Activities

Power

Automobile Industry

Metallurgical Industries

Petroleum & Natural Gas

NOTE : 1) REASONABLY GOOD DISTRIBUTION.2) MORE FDI SAHLL BE ATTRACTED IN MANUFACTURING SECTOR

INDIA – CUMULATIVE INFLOW OF FDI UPTO 08-09

NOTE : 1) THE TOTAL AS ON 2009 WAS JUST 24.6 Bn USD

INDIA – CUMULATIVE INFLOW OF FDI 07-08 to 10-11

CHINA – CUMULATIVE INFLOW OF FDI

NOTE : 1) THE TOTAL AS ON 2009 WAS CLOSE TO 100 Bn USD COMPARED TO JUST 24.6 Bn USD IN INDIA

CHINA – REGIONWISE FLOW OF FDI

INDIA – REGIONWISE FLOW OF FDI

NOTE : 1) PROGRESSIVE STATES RECEIVE MORE FDI AND GROW MORE !2) THIS IS THE REALITY.

INDIA – GDP GROWTH

NOTE : 1) DRAMATIC INCREASE AFTER 1992. IT COINCIDES WITH LIBERALISATION AND FLOW OF FDI.

INDIA – CHINA COMPARISON

INDIA – CHINA COMPARISON

FDI TREND – OUTLOWS WORLDWIDE

FDI TREND – INFLOWS WORLDWIDE

NOTE : 1) STILL THE DEVELPED COUNTRIES RECEIVE THE MAXIMUM FDI2) THERE IS NET OUTFLOW FROM G203) WE NEED TO REALISE THE IMPORTANCE OF FDI

THIS IS THE REALITY !

NOTE : 1) EVERY COUNTRY HAS GROWN AFTER OPENING UP OF THE ECONOMY2) FDI FLOWS AFTER OPENING UP ONLY3) IF WE HAD OPENED UP OUR ECONOMY IN THE SAME MANNER AS CHINA DID IN THE

90s, BY NOW, WE WOULD HAVE BEEN BETTER OFF THAN CHINA

THANK YOU