A PROJECT

REPORT ON

“A STUDY OF FOREIGN DIRECT INVESTMENT IN INDIA”.

BY

Nayan S.Kolekar

(BATCH 2020-2022)

Roll No: 24

Under The Guidance of

Ms. Priya Tiwari

Submitted to the

SavitribaiPhule Pune University in

Partial Fulfillment of Requirement

For the Award of Degree of

MASTER OF BUSINESS ADMINISTRATION

Dr. D.Y. Patil Unitech Society’s

Dr. D.Y PATIL INSTITUTE OF MANAGEMENT AND RESEARCH,

Sant Tukaram Nagar, Pimpri.

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2
 ACKNOWLEDGEMENT

“It is not possible to prepare a project report without the assistance and
encouragement of other
People. This one is certainly no
exception.”

On the very outset of this project on “A study on Foreign Direct Investment in

India of Ingress Global Consultancy” I would like to thank all the personages
who have helped me in this project. Without their active guidance, help,
cooperation and encouragement, I would not have made headway in this
project.

First of all I would like to thank Savitribai Phule Pune University for
providing me the opportunity to undertake this project. I would also like to thank
our Director Dr. Meghana Bhilare & MBA HOD Dr. Tejashri Talla for the
guidance provided by him from time to time. No doubt that his contributions for the
successive completion of this project played a vital role.

I am extremely thankful and pay my gratitude to my project guide Ms. Priya

Tiwari for her valuable guidance and support on completion of this project in her
presence.

I would like to thank all the other staff members from DR. D.Y.PATIL
INSTITUTE OF MANAGEMENT AND RESEARCH who have directly or
indirectly helped me throughout this project.
Signature:
Nayan Kolekar

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 DECLERATION

This is to inform that I, Nayan Kolekar, student of Dr.D.Y.Patil

Institute of Management and Research, have given the original data and
information to the best of my knowledge in the project titled as “A study on
Foreign Direct Investment in India of Ingress Global Consultancy”.

I have completed this project under the guidance of Ms. Priya Tiwari
and that no part of this information has been used for any other assignment
but for the partial fulfillment of the MBA course that I am pursuing at
Dr.D.Y.Patil Institute of Management and Research.

I have prepared this report with my own efforts and I have

gathered all the relevant information personally.

Signature

Nayan Kolekar

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 INDEX

SR. NO CHAPTER TITLE Page No.

1. Introduction

2 Objectives of the topic

3 Company Profile

4 Review Literature

5 Research methodology

6 Data analysis and interpretation

7 Finding

8 Suggestion

9 Conclusion

10 Learning from the project

11 Bibliography

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 FIGURE INDEX

SR NO FIGURE NAME PAGE

NO

1 Ingress Global Logo

2 Types of FDI

3 Recent FDI trends

4 Sector wise FDI in INDIA

5 Sector wise FDI in INDIA in Rupee

6 State Wise FDI

7 Global FDI comparison

8 Net FDI flow in INDIA

9 FDI inflow by component

10 FDI inflow by Top 10 Countries

11 Sector wise FDI equity Inflow

12 State wise FDI equity Inflow

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 EXECUTIVE SUMMARY

Foreign Direct investment plays a very important role in the development of the nation.
Sometimes domestically available capital is inadequate for the purpose of overall development
of the country. Foreign capital is seen as a way of filling in gaps between domestic savings and
investment. India can attract much larger foreign investments than it has done in the past. The
present study has focused on the trends of F.D.I Flow in India during April 2019 to April 2020.

The study also highlights country wise approvals of F.D.I inflows to India and the F.D.I
inflows in different sector for the period April 2019 to April 2020. The study based on
Secondary data which have been collected through reports of the Ministry of Commerce and
Industry, Department of Industrial Promotion and Policy, Government of India, Reserve Bank
of India, and World Investment Report.

Foreign direct investment (F.D.I) influences the host country’s economic growth through the
transfer of technologies and know-how, formation of human resources, integration in global
markets, increase of competition, and firms’ development and reorganization. Empirically, a
variety of studies considers that F.D.I generates economic growth in the host country.
However, there is also evidence that F.D.I is a source of negative effects. Given this ambiguity
of results, the present paper makes a review of the existing theoretical and empirical literature
on the subject, intending to shed light on the main explanations for the divergence of results in
different studies.

The main idea that stands out in this review is that the effects of F.D.I on economic growth are
dependent on the existing or subsequently developed internal conditions of the host country
(economic, political, social, cultural or other). Thus, the host countries authorities have a key
role in creating the conditions that allow for the leverage of the positive effects or for the
reduction of the negative effects of F.D.I on the host country’s economic growth. The study
concludes that Mauritius emerged as the most dominant source of F.D.I contributing. It is
7
because the India has Double Taxation Avoidance Agreement (DTAA) with Mauritius and
most of the foreign countries like to invest in service sector.

8
CHAPTER NO- 1
INTRODUCTION

9
 CHAPTER 1: INTRODUCTION

Foreign Direct Investment (F.D.I) is a type of investment in to an enterprises in a country by

another enterprises located in another country by buying a company in the target country or by
expanding operations of an existing business in that country. In the era of globalization F.D.I
takes vital part in the development of both developing and developed countries.

F.D.I has been associated with improved economic growth and development in the host
countries which has led to the emergence of global competition to attract F.D.I. F.D.I offers
number of benefits like overture of new technology, innovative products, and extension of new
markets, opportunities of employment and introduction of new skills etc., which reflect in the
growth of income of any nation.

Foreign direct investment is one of the measures of growing economic globalization.

Investment has always been an issue for the developing economies such as India. The world has
been globalizing and all the countries are liberalizing their policies for welcoming investment
from countries which are abundant in capital resources. The countries which are developed are
focusing on new markets where there is availability of abundant labors, scope for products, and
high profits are achieved. Therefore Foreign Direct Investment (F.D.I) has become a battle
ground in the emerging markets.

Foreign investment plays a significant role in development of any economy as like India. Many
countries provide many incentives for attracting the foreign direct investment (F.D.I). Need of
F.D.I depends on saving and investment rate in any country. Foreign Direct investment acts as a
bridge to fulfill the gap between investment and saving. In the process of economic
development foreign capital helps to cover the domestic saving constraint and provide access to
the superior technology that promote efficiency and productivity of the existing production
capacity and generate new production opportunity.

India’s recorded GDP growth throughout the last decade has lifted millions out of poverty &
made the country a favored destination for foreign direct investment. A recent UNCTAD survey
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projected India as the second most important F.D.I destination after China for transnational
corporations during 2010-2015. Services, telecommunication, construction activities, computer
software & hardware and automobile are major sectors which attracted higher inflows of F.D.I
in India.

Countries like Mauritius, Singapore, US & UK were among the leading sources of F.D.I in
India. Consistent economic growth, de-regulation, liberal investment rules, and operational
flexibility are all the factors that help increase the inflow of foreign direct investment or
F.D.I.F.D.I or Foreign Direct Investment is any form of investment that earns interest in
enterprises which function outside of the domestic territory of the investor.

F.D.Is requires a business relationship between a parent company and its foreign subsidiary.
Foreign direct business relationships give rise to multinational corporations. For an investment
to be regarded as an F.D.I, the parent firm needs to have at least 10% of the ordinary shares of
its foreign affiliates. The investing firm may also qualify for an F.D.I if it owns voting power in
a business enterprise operating in a foreign country.

India now with consistent growth performance and abundant high-skilled affordable manpower
provides enormous opportunity for investment both domestic and foreign. Foreign direct
investment (F.D.I) causes a flow of money into the economies which stimulates economic
activity, increases employment and induces the long run aggregate supply and brings in best
practices. The F.D.I policy was liberalized progressively through review of the policy on an
ongoing basis and allowing F.D.I in more industries under the automatic route.

11
CHAPTER NO- 2
OBJICTIVES

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 2. OBJECTIVE OF THE STUDY:

 To study F.D.I frame work in India

 To study the trend of F.D.I in India

 To analysis the sector wise inflow in India

 To analysis various determinants of F.D.I

 To know the flow of investment in India

 To study the impact of Covid -19 on FDI.

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CHAPTER NO- 3
COMPANY PROFILE

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 3.COMPANY PROFILE

Fig -1

Mission-To solve the challenges of the society by inspiring change and innovation.
Vision -Our goal is to be a valued consulting firm driving the economic and social development
realizations through our in-depth industry & process knowledge, passionate people, and our zeal
to innovate.

IGC LLP is a management consulting firm that offers advisory services to Governments,
Corporate and Startups. We are on a mission of inspiring change and innovation across the
globe through our data-driven approach and passionate people. Our goal is to be a valued
consulting firm driving the economic and social development realizations through our in-depth
industry knowledge and zeal to innovate.

As part of our Economic Development (Trade & Investments) vertical, we help businesses in
India and abroad to scale and expand their reach to newer geographies leveraging our cross-
border strategy suite- FDI 360. Currently, IGC LLP caters to multiple foreign Economic
Development Agencies in their inward and outward missions. We help the agencies to identify
and attract strategic investments and trade opportunities from India.

We offer a comprehensive suite of Investment promotion activities for EDOs/IPAs in their

geography which results in job creations, skilling, innovation, and a better livelihood and
economic growth index. Our expertise lies in tailoring the best investment promotion strategy
for our clients based on the strength & weakness of their geography along with its current
economic and industry trends.
15
We at IGC believe in connecting the world by using our network of various Indian &
International Industry bodies, chamber of commerce & necessary Government organizations.
We provide a gateway to different markets, products & services along with providing assistance
to International companies in finding the right partners & supply chains & Joint ventures in
India.

IGC helps you lay the groundwork to attract investors to your geography by providing deep
dive insights, potential investor conversion feasibility , building knowledge collaterals, multiple
client interactions & eventually onboard the investment.

Industrial cluster development is one of our core forte and we are helping Indian &
International state Governments gain a competitive advantage. We follow a robust framework
to address the needs of existing businesses & build an ecosystem of complementary industries.

IGC’s industry specialists help you understand domestic & international markets in various
sectors. We help you build competitive strategies, market forecasting, sizing and deeper
understanding of customer preferences & price-points.

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 CHAPTER NO- 4
REVIEW OF LITERATURE

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 4. Review of Literature

Singh Kr. Arun and Agarwal P.K., (2020) “Foreign direct investment: The big bang in
Indian retail”. In this article they have studied the relation of foreign investment and Indian
retail business. The study is based on different literatures, case studies and analysis of
organized retail market. The author discusses the policy development for FDI in the two
retail categories: single brand and multi brand. The author concludes that FDI in multi brand
retail should be considered, better technology and employment. The paper also concludes
that openness of FDI in India would help India to integrate into worldwide market.

Dr. Mamata Jain and Mrs. Meenal Lodhana Sukhlecha, (2020), “FDI in multi brand retail: Is
it the need of the hour?” The paper studies the need of the retail community to invite FDI in
retailing. The study is under taken through analysis of positive and negative impacts of
reforms. The study shows various advantages of FDI, which suggests for foreign
participation in retailing, but the author also suggests that the ceiling should not exceed 51%
even for single brands to ensure check and control on business operations.

Rajalakshmi K. and Ramachandran F., (2020), “Impact of FDI in India’s automobile sector
with reference to passenger car segment.” The author has studied the foreign investment
flows through the automobile sector with special reference to passenger cars. The research
methodology used for analysis includes the use of ARIMA, coefficient, linear and
compound model. The period of study is from 1991to 2011. This paper is an empirical study
of FDI flows after post liberalization period. The author has also examined the trend ad
composition of FDI flow and the effect of FDI on economic growth. The author has also
identified the problems faced by India in FDI growth of automobile sector through
suggestions of policy implications.

Dr. S N Babar and Dr. B V Khandare, (2020), “Structure of FDI in India during
globalization period”. The study is mainly focused on changing structure and direction of
India’s FDI during globalization period. The study is done through analysis of benefits of
FDI for economic growth. The study has been done through sect oral analysis of FDI
participation, as well as through study of country wise flow of foreign inflow in India till
2010. Singh (2009) stated in their study that foreign direct investment (FDI) policies play a
major role in the economic growth of developing countries around the world. Attracting FDI
inflows with conductive policies has therefore become a key battleground in the emerging
markets. The paper highlighted the trend of FDI in India after the sector-wise economic
reforms.

18
Devajit (2019) conducted the study to find out the impact of foreign direct investments on
Indian economy and concluded that Foreign Direct Investment (FDI) as a strategic
component of investment is needed by India for its sustained economic growth and
development through creation of jobs, expansion of existing manufacturing industries, short
and long term project in the field of healthcare, education, research and development.

Sharma Reetu and Khurana Nikita (2019) in their study on the sector-wise distribution of
FDI inflow to know about which has concerned with the chief share, used a data from 1991-
92 to 2011- 2012 (post-liberalization period). This paper also discusses the various problems
about the foreign direct investment and suggests the some recommendations for the same. In
this study found that, Indian economy is mostly based on agriculture. So, there is a most
important scope of agriculture services. Therefore, the foreign direct investment in this
sector should be encouraged

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 CHAPTER NO- 5
RESEARCH METHODOLOGY

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 5. RESEARCH METHODOLOGY

TYPE OF RESEARCH:

DESCRIPTIVE RESEACH.

TYPE OF DATA:

Secondary Data- Internet, Books newspapers, journals and books, other reports and
projects, literatures.

FDI:

The study is limited to a sample of investing countries e.g. Manutius, Singapore, USA etc,
and sectors
E.g. service sector. Computer hardware and software, telecommunications etc. Which had
attracted larger? Inflow of FDI from different countries.

FII:

Correlation: We have used the Correlation tool to determine whether two ranges of data
move together - that is, how the Sensex, Bankex, IT, Power and Capital Goods are related
to the FII which may be positive relation, negative relation or no relation.

We will use this model for understanding the relationship between FII and stock indices
returns .FII is taken as independent viable. Stock indices are taken as dependent variable

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Points Details

Type of Research Design Descriptive Research

Nature of Research Quantitative

Type of Data Secondary

Sources of data collection Published annual report

Sampling Method (If Applicable) NA

Sample size (If Applicable) NA

Sample Unit NA

Tools used for Data Analysis MS-Excel, Ratios, Graphs

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 CHAPTER NO- 6
DATA ANALYSIS AND
INTERPRETATION

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MEANING & DEFINITIONS
A foreign direct investment (FDI) is a controlling ownership in a business enterprise in one
country by an entity based in another country. Foreign direct investment is distinguished from
portfolio foreign investment, a passive investment in the securities of another country such as
public stocks and bonds, by the element of "control". According to the Financial Times,
"Standard definitions of control use the internationally agreed 10 percent threshold of voting
shares, but this is a grey area as often a smaller block of shares will give control in widely held
companies. Moreover, control of technology, management, even crucial inputs can confer de
facto control." The origin of the investment does not impact the definition as an FDI, i.e., the
investment may be made either "inorganically" by buying a company in the target country or
"organically" by expanding operations of an existing business in that country. Definitions –
Broadly, foreign direct investment includes "mergers and acquisitions, building new facilities,
reinvesting profits earned from overseas operations and intra company loans". In a narrow
sense, foreign direct investment refers just to building new facilities. The numerical FDI figures
based on varied definitions are not easily comparable. As a part of the national accounts of a
country, and in regard to the GDP equation Y=C+I+G+ (XM) [Consumption + gross
Investment + Government spending + (exports - imports)], where I is domestic investment plus
foreign investment, FDI is defined as the net inflows of investment (inflow minus outflow) to
acquire a lasting management interest (10 percent or more of voting stock) in an enterprise
operating in an economy other than that of the investor. FDI is the sum of equity capital, other
long-term capital, and short-term capital as shown the balance of payments. FDI usually
involves participation in management, joint-venture, transfer of technology and expertise. Stock
of FDI is the net (i.e., inward FDI minus outward FDI) cumulative FDI for any given period.
Direct investment excludes investment through purchase of shares. FDI is one example of
international factor movements.

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TYPES OF FDI –

Fig -2

Horizontal: where the company carries out the same activities abroad as at home (for example,
Toyota assembling cars in both Japan and the UK.

Vertical: when different stages of activities are added abroad. Forward vertical FDI is where the
FDI takes the firm nearer to the market (for example, Toyota acquiring a car distributorship in
America) and Backward Vertical FDI is where international integration moves back towards
raw materials (for example, Toyota acquiring a type manufacturer or a rubber plantation).

Conglomerate: where an unrelated business is added abroad. This is the most unusual form of
FDI as it involves attempting to overcome two barriers simultaneously - entering a foreign
country and a new industry. This leads to the analytical solution that internationalization and
diversification are often alternative strategies, not complements.

25
FDI CAN TAKE THE FORM OF GREENFIELD ENTRY OR TAKEOVER.

Greenfield entry implies assembling all the elements from scratch as Honda did in the UK,
whereas foreign takeover means the acquisition of an existing foreign company - as Tata’s
acquisition of Jaguar Land Rover illustrates. Foreign takeover is often covered by the term
'mergers and acquisitions’ (M&As) but internationally, mergers are vanishingly small,
accounting for less than 1 per cent of all foreign acquisitions. This choice of entry mode
interacts with ownership strategy – the choice of wholly owned subsidiaries versus joint
ventures to give a 2x2 matrix of choices – Greenfield wholly owned ventures, Greenfield joint
ventures, wholly owned takeovers and joint foreign acquisitions - giving foreign investors
choices that they can match to their own capabilities and foreign conditions.

Methods

The foreign direct investor may acquire voting power of an enterprise in an economy through
any of the following methods:

1. by incorporating a wholly owned subsidiary or company anywhere

2. by acquiring shares in an associated enterprise
3. through a merger or an acquisition of an unrelated enterprise
4. Participating in an equity joint venture with another investor or enterprise

Forms of FDI incentives

Foreign direct investment incentives may take the following forms:

1. Low corporate tax and individual income tax rates

2. Tax holidays
3. Other types of tax concessions
4. Preferential tariffs
5. Special economic zones
6. EPZ – export processing zones
7. Bonded warehouses
8. Maquiladoras
9. Investment financial subsidies
10. Free land or land subsidies
26
11. Relocation & expatriation
12. Infrastructure subsidies
13. R&D support
14. Derogation from regulations
15. Governmental investment Promotion Agencies (IPAs) use various marketing strategies
inspired by the private sector to try and attract inward FDI, including Diaspora marketing.
16. By excluding the internal investment to get a profited downstream.

Foreign Investment Policy

Government of India facilitates Foreign Direct Investment (FDI) and investment from
NonResident Indians (NRIs) including Overseas Corporate Bodies (OCBs), predominantly
owned by them, to complement and supplement domestic investment. Foreign technology
induction is encouraged both through FDI and through foreign technology collaboration
agreements. Foreign Direct Investment and Foreign technology collaboration agreements can be
approved either through the automatic route under powers delegated to the Reserve Bank of
India (RBI) or otherwise by the Government.

Automatic Approval

In pursuance of Government's commitment to early implementation of the second phase of the

economic reforms and with a view to further liberalizing the FDI regime, all items/ activities
have been placed under the automatic route for FDI/NR1 and OCB investment, except the
following: All proposals that require an Industrial License which includes the item requiring an
Industrial License under the Industries (Development and Regulation) Act, 1951; foreign
investment being more than 24% in the equity capital of units manufacturing items reserved for
small scale industries; and All items which require an Industrial License in terms of the
vocational policy notified by Government under the New Industrial Policy of 1991. All
proposals in which the foreign collaborator has a previous venture/tie-up in India. All proposals
relating to acquisition of shares in an existing Indian company in favor of a foreign/NRI/OCB
investor All proposals falling outside notified sectoral policy/caps or under sectors in which
FDI is not permitted and /or whenever any investor chooses to make an application to the FIPB
and not to avail of the automatic route

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Foreign Technology Collaboration
Agreements

RBI also gives automatic permission for foreign technology agreement in all
areas of electronics provided: Lump sum payment of the price of the
technology does not exceed USD 2 million and Royalty payments do not
exceed 5% of domestic sales and 8% of exports. (The royalty rates are net of
taxes). The payments are subject to an overall ceiling of 8 percent of total
sales over a period of 10 years from the date of agreement or over 7 years
period from the date of commencement of commercial production,
whichever is earlier? Application for investment under the automatic process
is to be made to the RBI and approval is generally granted within three
weeks. Investment Proposals under Hardware and software Technology
Parks, Export Oriented Units and Export Processing Zones Foreign
investment up to 100 percent is welcome in electronics and software
industries set up exclusively for exports. The units set up under these
programs are bonded factories eligible to import, free of duty.

Procedure for approval

Once the investment in equity has been approved, the import of capital
goods, components and raw materials or the engagement of foreign
technicians for short durations does not require any additional approvals.
Approval of the Ministry of Home Affairs is not needed for hiring of foreign
nationals holding a valid employment visa. Approval for setting up units in
EPZs is given by the Board of Approvals in the Ministry of Commerce.
Approval for setting up EOUs outside the Zones is given by the SIA,
Ministry of Industry. Approval for setting up EHTP and STP units are
cleared by the Inter Ministerial Standing Committee (IMSC) setup under the
Chairmanship of the Secretary, Department of Electronics. Proposals
involving foreign direct investment not covered under automatic route are
considered by the Foreign Investment Promotion Board (FIPB).

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Government approval

The FDI/ Foreign technology collaboration agreement proposals which do

not conform to the guidelines for automatic approval require Government
approval through the Foreign Investment Promotion Board (FIPB). The
Government has set up a special 'Foreign Investment Promotion Board'
(FIPB) as a fast track mechanism to invite and facilitate foreign investments
in large projects in India, which are considered beneficial to the Indian
economy but are not covered by the automatic approval process and norms
under which SIA is authorized to grant investment approvals. Investment
Proposals outside the Purview of the RBI Other proposal including in
services sector which do not conform to the guidelines for automatic
approval or seeking higher foreign equity investment are approved by the
Secretariat for Industrial Assistance (SIA) in the Ministry of Industry. Their
entire requirement of capital goods, raw materials and components, spares
and consumables, office equipments etc. Deemed export benefits are
available to suppliers of these goods from the Domestic Tariff Area (DTA).
A part of the production from such units is permitted to be sold in the DTA
depending upon the level of the value addition achieved.

FDI IS NOT PERMITTED IN THE FOLLOWING INDUSTRIAL SECTORS:

1. Arms and ammunition.
2. Atomic Energy,
3. Railway Transport.
4. Coal and lignite.
5. Mining of iron, manganese, chrome, gypsum, sculpture, gold, diamonds, copper,
zinc.
6. Lottery Business
7. Gambling and Betting
8. Business of Chit Fund
9. Agricultural (excluding Floriculture, Horticulture, Development of seeds, Animal
Husbandry, Pisciculture and cultivation of vegetables, mushrooms, etc. under
controlled conditions and services related to agro and allied sectors) and
Plantations activities (other than Tea Plantations)

29
 10.Housing and Real Estate business.
11.Trading in Transferable Development Rights (TDRs).
12.Manufacture of cigars, cheroots, cigarillos and cigarettes,
13.Tobacco or of tobacco substitutes.

SECTOR SPECIFIC FOREIGN DIRECT INVESTMENT IN INDIA

CURRENT STATUS OF FDI IN INDIA RETAIL SECTOR:-

As of December 2017, the Government of India allowed FDI in single and multi brand
retailing along with the following conditions:-

1) Up to 100% FDI in single brand retail trading.

 By only one non-resident entity whether owner or the brand or otherwise

 30% domestic sourcing requirement eased to preferable sourcing rather than
 Compulsory. Further clarification on FDI companies that cannot engage in B2C e-
commerce.
 Products to be sold should be of a “single brand”. Product should be sold under
the
 Same brand internationally. “Single brand” product retailing would cover only
products, which are branded during
 Manufacturing.

2) Up to 51% FDI in multi brand retail trading.

 At least 100 million US$ must be invested into Indian company.

 At least 50% of the total FDI is to be invested in back end infrastructure within 3 
years. At least 30% of the value of procurement of processed product shall be
sourced from
 Indian small industry. Fresh agriculture produce is permitted to be sold unbranded
 Indian states have been given the discretion to accept of refuse the implementation
of FDI. Retail outlets can be set up in cities having population of at least 1 million.
 Application needs to be approved by two levels at Department of Industrial Policy
and
 Promotion and Foreign Investment Promotion Board.

30
RECENT TRENDS IN FDI -

Fig -3

31
 SECTOR WISE FDI IN INDIA -

Fig -4

The Infrastructure activities* & Pharmaceutical Sector also saw tremendous growth due
to an increase in FDI inflows to USD 7.85 billion and USD 1.79 billion in FY21 from
USD 2.04 billion and USD 0.518 billion in FY20, respectively. The Construction
development sector* faced a downfall in FDI equity inflow from USD 0.62 billion in
FY20 to USD 0.42 billion in FY21. On the other hand, the service sectors namely
Financial, Banking, Insurance, Non-Financial or Business, Outsourcing, Research &
Development, Courier, Tech, Testing and Analysis have seen a downside from USD 7.85
billion to USD 5.06 billion.
32
Telecommunication sector FDI inflows reduced from USD 4.45 billion to USD 0.39
billion in FY21. The Covid-19 pandemic hit the Tourism and Hospitality sector the most,
due to the global lockdown and discontinued flight services. As a result, the sectoral FDI
dipped from USD 2.94 billion in FY20 to USD 0.37 billion in FY21. The Trading sector
received an FDI of USD 2.61 billion in FY21 compared to USD 4.57 billion in FY20.
The COVID- 19 also severely affected the sales of the automobile industry. As a result,
the FDI of the Automobile industry in FY21 was USD 1.64 billion down from USD 2.82
billion in FY20. The top ten Indian sectors received an FDI of 82%, and other
miscellaneous sectors (53) contributed to the remaining 18%.

33
SECTORWISE FDI IN RUPEE -

Fig -5

The IT sector in India received the highest share in FDIs amounting to over 1.8 trillion
Indian rupees in fiscal year 2021, as of December 2020. The infrastructure sector came
sector amounting for over 500 billion rupees. The services sector witnessed a significant
decrease and lost its leading position.

34
Service Sector Founds to be in a limelight

All in all, the business services sector in the country seemed to be faring very well in
terms of attention from foreign investors. One possible reason for this could be because
almost 56 percent of the registered foreign companies in India were under this sector.
Out of this, most companies were registered in the state of Maharashtra, followed by the
capital city of Delhi indicating a good business trajectory.

State Wise FDI in INDIA –

Fig -6

Gujarat is the leading state in India which attained the highest inflow of USD 21.9
billion in FY21. Gujarat has managed to secure the top spot for the fourth consecutive
year in a row. In FY21, Almost 94% of the Investment that came in Gujarat was in the IT
(computer hardware and software) sector. Overall, Gujarat contributed to 37% of the
inward FDI received by India in FY21 followed by Maharashtra (27%), Karnataka
(13%), Delhi (9%), and Tamil Nadu with (2%).

35
 As a result, the top nine states (Gujarat, Maharashtra, Karnataka, Delhi, Tamil Nadu,
Telangana, Haryana, Punjab & Uttar Pradesh) provided 88% of India's total equity
inflows in FY21. Karnataka, Delhi & Maharashtra also received the highest investments
in the startup ecosystem of India. Gujarat and Maharashtra are considered as champion
states of New India. Karnataka accounted 8.5% share of the national Automobile output
and the fourth-largest contributor to electronic industrial output. Madhya Pradesh came
to light as a blooming state of floriculture production in India in 2021.

GLOBAL INFLOW COMPARISION –

India is one of the best emerging economies across the globe. In the COVID situation,
every country across the globe has struggled to increase their Foreign Direct Investment
into their countries. The growth of the Global economy has substantially come down in
the year 2020. But, some countries managed to increase their Foreign
Direct Investment despite the COVID-19 Situation. India is the top country globally to
increase the Foreign Direct Investment by 13% in 2020 compared to the previous year
despite the tragic situation. Countries like China, Japan, and Saudi Arabia also increased
their FDI inflows into their countries respectively.
Some countries like UK and Italy faced a severe downturn in generating the FDI inflows
to their country. The growth percentage nearly declined by 100% for these two countries
in 2020 compared to the previous year. Despite the pandemic situation, "Developing
Asia" FDI inflow has been increased from USD 473.9 billion to USD
535.3 billion in 2020 nearly a 3.8% increase in the growth rate which is about 53.6%
share of FDI inflows across the globe.
In contrast, the value of Greenfield investments fell 36% to USD 170 billion, while the
number of foreign project financing transactions remained stable. "Developing Asia’s"
GLOBAL FDI INFLOW
FDI growth has been primarily driven by consistent inflows. There was a strong
comeback in FDI inflows to Hong Kong, comparatively to the previous year as a result
of business reorganizations and transactions by MNEs based there. Overall development
was boosted by the resumption of FDI in Hong Kong, China, in 2020. In Hong Kong,
FDI increased by 62% to USD 119 billion, owing mostly to an increase in intra-company
loans and reinvested earnings being the two most important components of FDI for the
economy. In 2020 (January to December), FDI grew by 6% (to USD 149 billion) and
36
27% (to USD 64 billion) in China and India, respectively. Because of durable intra-
regional value chains and greater economic development prospects, "Developing Asia’s"
FDI prospects are more optimistic than those of other emerging areas. Manufacturing, a
key FDI industry for India, has already begun to rebound in FY21. India raised the
growth percentage of the FDI Inflows tremendously in spite of COVID-19 impacts. The
United Arab Emirates surpassed Indonesia in receiving FDI and became one of the top
host economics in Asia in 2020 with an increase of 11.2% which nearly accounts for
USD 19.9 billion. China and India are the largest markets in "developing Asia". India is
tremendously increasing its FDI inflow growth rate year on year.

Fig -7

37
COVID IMPACT ON FDI AND BEFORE, AFTER RESULTS

Covid – 19 has battered the World economy causing the worst recession than the Great
Depression of the 1930’s. By the end of the year 2020, the World’s GDP about 7.5%
lower than it would have been without the pandemic. Globally more than 15% of the
middle age people who were in work before the Covid-19 have lost their jobs.
Worldwide lockdowns have caused changes that were affected the World economy in
technology, finance and trade. With great deal of uncertainty in the transactional space,
investors are now more cautious before making any important transactions. World FDI
inflows fell by more than 49% in the first half of 2020 and even under the most
optimistic scenario after the economic support policy measures by the governments, the
numbers don’t seem to be getting better. The developing countries are hit even worse
because the sectors attracting the largest shares of FDI such as primary and
manufacturing sectors are hit the worst. FDI being a critical driver of the economic
growth could play an important role in supporting the economies during and after the
crisis.

The world is facing humanity’s biggest crisis since World War II. Almost every country
has been affected by the devastating Coronavirus disease (COVID-19). The world is
passing through a great uncertainty. Undoubtedly, the Coronavirus has put the world
economy at a major risk. Coronavirus ravages the economic foundations of world trade.
According to the WTO, the world trade is expected to fall by between 13 per cent and 32
per cent in 2020, thereby indicating the world economy is expected to face recession.
Trade cannot flourish without commensurate policies to revive the economy. A
combination of fiscal, monetary and trade policy measures is, thus, required to revive the
economy and trade in these uncertain times. Foreign Direct Investment (FDI) is a major
driver of economic growth and an important source of non-debt finance for the economic
development of India. Covid – 19 causes chaos across the World, and shocks financial
markets. The Government has taken actions to protect Indian firms in the form of a
revised FDI policy:
 New rules for entities form countries sharing land border with India, any
investment from such an entity will require Government of India’s nod.
 Government has also added a clause to prevent routing of funds via other nations.
 Government nod also required for transfer of ownership benefiting
aforementioned entities. The reasons for the revised FDI policy are mainly:
38
  Revision in view of the economic impact of Covid-19 pandemic.
 Move to curb ‘Opportunistic takeovers/Acquisitions’ of Indian Firms.
 Firms whose market value has taken a hit are vulnerable.
 Although India has named all its neighbors in the new rules, the main target is
believed to be China. Chinese investors have pumped $4 BN into Indian startups
and raised stakes in some major Indian companies including HDFC. Due to the
robust business environment and favorable policy regime, India’s government has
ensured that foreign capital keeps flowing in the country. Some of the major
companies which saw investments during this time include Byju’s, Reliance,
Cashaa, Unacademy, Phoenix Mills etc. These investments were driven by some
of the biggest companies in the world like Google, Foxconn, Amazon, Facebook,
Silver Lake, SoftBank Group and many more.

Impact of Covid – 19 on Foreign Direct Investment (FDI) in India Recent Developments

FDI inflows saw a gradual decline from the outset of pandemic in April which continued
till June. Figure 1 shows monthly trends of Net FDI inflows fell by 60% to $6,562
million during April – June 2020 compared to the same quarter of previous year which
stood at $ 16,329 million. Second quarter of FY-20 saw a steep increase in FDI mainly
because of the $ 10 Billion investment by Google. FDI inflows surged from $6,562
million between April and June to $23,442 million by the end of September. FDI inflows
increased to $21,467 million during October – December 2020 compared to the same
quarter of previous year which was $10,674 million only due to the measures taken by
the Indian Government on the fronts of FDI policy reforms, investment facilitation, and
ease of doing business.

Net inflow in India during Covid 19- (amount in $million) Table 1.

Month FDI Inflows in 2020 FDI Inflows in 2019

April 2772 5252

May 2240 3795
June 1550 7282
July 3049 4472
August 17484 2553
September 2906 2741

39
 October 5331 3211
November 7621 4659

Fig -8

FDI Equity Inflows by Components There was slight increase in the Equity inflows from
the period 2016-17. But in Reinvestment earnings there was a 20% decrease in the year
2020-21 than the previous year 2019-20. Also there was a 72% decrease in other capital
in the year 2020-21 than the previous year 2019-20.

40
 Fig -9

FDI Equity inflows by top ten Countries in India Singapore invested the highest
amount of $15,717FDI inflows in India during the pandemic period. Singapore
contributed around 31% in total FDI inflows in India during the period of April –
December 2020. The Second highest investing Country is USA with the percentage
of 25%. Singapore emerged as the largest contribution of FDI in India followed by
USA, UAE, Mauritius and Cayman Island.

FDI Equity Inflows by Top ten Countries (amount in $million)

Rank Countries FDI Equity Inflows

1 Singapore 15717

2 USA 12828

3 UAE 3915

4 Mauritius 3475

5 Cayman Islands 2533

6 Netherlands 2435

7 UK 1832

8 Japan 1027
41
9 Germany 489

Fig -10

42
Sector –wise FDI Equity Inflows

Computer software & hardware attracted the largest FDI of $24,385 million
followed by Construction (Infrastructure activity) ($3857million), Services sector
($3857 million), and Trading ($2141 million). Computer hardware & software were
increased by 217% due to lockdown; all the Indians were depending on computer
hardware & software for their entertainment. Telecommunication sector which
received the largest amount of FDI during the previous year was the worst hit and
saw a decline about 92%. Other sector also huge contractions with Trading sector
falling by 53%, Services sector by 51%.

SECTOR 2020-21 2019-20

43
 Fig -11

State-wise FDI Equity Inflows

In India there are 28 states and 8 union territories. Some of the states have only
attracted high FDI inflow because of their licensing strategy, availability of skilled
labor, and availability of resources.

44
Fig -12

45
The top five states are Gujarat, Maharashtra, Karnataka, Delhi, and Tamil Nadu for
attracting FDI equity inflows in India during the period of study from April 2020 to
December 2020. From the Figure – 6, Gujarat has received highest FDI inflows of $21, 239
during this period of study, contributing 42% of total FDI equity inflows of top ten
countries. The whole analysis of state wise breakup of FDI inflows makes it clear that there
are three categories of states with respect to FDI receipt in India. i. Front Runners: Gujarat,
Maharashtra, Karnataka, Delhi, and Tamil Nadu. ii. Intermediate State: Jharkhand,
Haryana, Telangana, West Bengal, Uttar Pradesh iii. Laggard Performers: Rajasthan,
Andhra Pradesh, Madhya Pradesh, Kerala, Punjab Difference in size, location, reform
interests, infra-structural level and development level of industry in different states are the
various reasons provide in different studies to account for the regional disparities in the FDI
inflows to that are various states and regions of India.

FDI Inflows in India

India brought about a number of changes in its economic policies with view to attract more
of the FDI inflows into its country.

46
The FDI investment in pandemic period was decreased to 9.21%. Due to Corona the
Government announced lock down from March 26, 2020 and still it is continuing in
some states. The business is entirely affected and there are many job losses in the
country. Because of Covid-19 there may be a sharp decline in the FDI inflow into
India in the current year. FDI is expected to remain low and below precrisis levels
throughout 2021. The outlook beyond 2021 is highly uncertain and dependent on
the duration of the crisis, the effectiveness of policy interventions to stimulate
investment and navigate the economic effects of the pandemic, as well as geo-
economic tensions. FDI recovery rates are challenging to predict at this stage
because they are dependent on the rate of overall socio-economic recovery, and
consequently investment levels, within the region and socio-economic rate of
recovery from countries outside of the region. On the bright side, the recent signing
of the Regional Comprehensive Economic Partnership is expected to strengthen
flows and lift investment prospects, especially for smaller and least developed
countries in the group.

47
CHAPTER NO- 7
FINDINGS

48
Foreign Direct Investment (FDI) has been a significant non-debt financial resource for
India's economic growth. Foreign firms invest in Greenfield* as well as Brownfield*
projects to take advantage of the thriving economic climate, tax incentives, adequate
availability of human resources, easy international trade access, refined Ease of doing
business (EODB) policies, and more importantly, a plethora of growth opportunities in
India. For a country that attracts international investment, it also implies readiness in
terms of technological know- how and availability of skilled and semi-skilled resources.
India is one of the emerging economies globally and has an enormous growth in the
Foreign Direct Investment inflow year on year.

As per the United Nations, In FY20, when the global COVID-19 pandemic emerged,
many countries like the UK, US, Ireland, Italy, Russia, Germany, Brazil had shown a
severe decline in their FDI inflows. Despite COVID- 19, the Asian developing
economies like India, China, and Japan & Saudi Arabia performed better than developed
economies in terms of FDI inflows in FY21. India’s FDI inflows showed an impressive
growth of 10% in FY21, as compared to the previous fiscal year, while China remained
the world's largest FDI recipient, with its flows rising by 4% to USD 163 billion. India
had its highest-ever FDI inflow in FY21 despite a severe downturn in global inbound
investments. As per the Ministry of Finance, India’s real GDP will record a growth of
11% in FY22 and nominal GDP by 15.4%, the highest since independence. Now, India
inc is accelerating at its maximum potential towards achieving its goals of industrial self-
sufficiency, involvement in global value chains, and trade reliance. In recent years, the
Government of India has adopted varied and enriching efforts by relaxing possible FDI
tweaks across sectors.

India received USD 81.72 billion (includes FDI Equity, Re-invested earnings & Other
Capital) in foreign direct investment in FY21. The total FDI equity inflows accounted for
USD 59.636 billion. Total FDI inflows into India rose at a compound annual growth rate
(CAGR) of 6% between FY16 and FY20. Singapore was India's top foreign investor in
FY21, contributing to USD 17.41 billion in FDI equity and accounted for 29% of India's
FDI equity inflows. The United States was India's second- largest foreign investor,
accounting for 23% of total FDI equity, which equates to USD 13.82 billion. With a 9%
stake, Mauritius became India's third-largest investor, investing USD 5.639 billion in
India in FY21.

Saudi Arabia surpassed the United States as the top investor in terms of % growth in FDI
received in FY21 over the previous year, with USD 2.816 billion compared to USD
0.089 billion in FY20. The United Arab Emirates (UAE) and the Netherlands ranked
fourth and fifth position in FDI investments in India, which amounted to USD 4.023

49
billion and USD 2.861 billion respectively. Compared to the last fiscal year, the UK
increased its FDI equity contribution to India by 44% to USD
2.04 billion. Cayman Islands, Japan, and Germany are also amongst the top ten major
contributors towards FDI investments in India with nearly USD 2.854 billion, USD 1.950
billion, and USD 0.667 billion respectively.

FDI GROWTH DRIVERS IN INDIA -

1. POLICY & REFORMS BOOST

Chasing its dream of entering into the top 50 rankers in the World Bank`s bi-annual Ease
of Doing Business (EoDB) index, India has significantly performed well in rolling out its
Investor friendly policies and reforms implemented by both the Central Government as
well as Investment Promotion Boards of the State Governments, improving overall
economic development climate in the country. As a result, India outperformed in global
EoDB rankings attaining 63rd rank in World Bank’s Doing Business ranking for 2020
from its earlier ranking of 77th in 2019.
The Government of India is already set to introduce a single-window clearance program
for foreign investors. The first leg of the rollout of the envisaged National portal is
expected to encompass Central Government departments and 14 State Governments. In
2021, the number of states which have successfully implemented the “Ease of Doing
Business" (EoDB) reforms has increased to 20 with the new addition of Arunachal
Pradesh, Chhattisgarh, Goa, Meghalaya, and Tripura.

2. SECTORAL PRODUCTION LINKED INCENTIVES

In the Union Budget 2021-22, presented on 1st February 2021, the Finance Minister of
India had promulgated an outlay of USD 26.85 billion for the Production-Linked
Incentive (PLI) Schemes for 13 key sectors of importance, to create and promote national
manufacturing champions and generate maximum employment opportunities for the
country’s youth. It is estimated that the minimum production in India as a result of the
introduction of varied PLI Schemes is expected to be over USD 500 billion in the next 5
years.

PLI scheme also includes solar PV modules, Electronics (laptop, server, IoT
devices, specified computer hardware), Automobile and auto components,
Telecom and networking products, Textiles, Food Processing, Specialty steel, and
White goods (air conditioners and LED). Apart from these, large-scale Electronic
manufacturing (mobile phones), Pharmaceutical drugs, and Medical Devices
50
(which already have an approved PLI scheme) would be provided with full
budgetary allocation for the next five years for enhancing India’s Manufacturing
Capabilities and enhancing Exports. Recently, the Central Government has also
approved the PLI scheme for promoting battery storage at an estimated outlay of
USD 2.47 billion and attracting huge investments in the Electric vehicle (EV
sector) in the next 5 years. PLI Schemes have been truly orchestrated as the
cornerstone of the Government of India’s push for achieving the true Atmanirbhar
Bharat imperative. In August 2021, India has surpassed the United States to
become the world's second-most sought-after manufacturing destination, owing
mostly to cost competitiveness.

3. Population Growth
As per the National Commission on Population, Ministry of Health & Family Welfare,
Government of India, the population of India is expected to rise from
1.21 billion to 1.52 billion during 2011-36, an increase of nearly 25% in twenty-five
years. As a result, around 2031, India is expected to overtake China as the world's most
populous country. India is the world's youngest country, with 600 million young people,
accounting for at least half of the country's 1.2 billion inhabitants. According to the India
Skills Report, nearly 12 million youngsters between the ages of 15 and 29 will enter the
Indian labor force each year over the next two decades. India's youngsters are critical to
the country's overall progress and are expected to have the world's largest workforce by
2027. According to the Human Development Report (HDR) 2020, one in every five
Indians in the workforce is “skilled.” The proportion of the working population,
including the young, is growing, and as a result, more individuals have the capacity to be
productive and contribute to national income, savings, per-capita income, and economic
growth.

4. TECHNOLOGY GARAGE OF THE WORLD

The It Industry In India Is The Most Significant Contributor To The Indian Economy
Accounting For 8% Of India’s Gdp In Fy21 And Expected To Contribute Around 10%
By 2025. The It Exports Are Estimated To Reach Usd 150 Billion In Fy22 At A Growth
Rate Of 1.9%. The Domestic Market Is Estimated To Reach Usd 45 Billion In Fy22 At A
Growth Rate Of 3.4% In The Indian It Industry. India Brand Equity Foundation (Ibef)
Also Reported That The Indian Software Product Sector Is Estimated To Reach Usd 100
Billion By 2025. Due To The Demand For Ai, The Data Automation Market Is Expected
To Reach Approximately Usd 7 Billion By 2030. Industries Such As Automotive, Health
Care, Bfsi, Retail, Media, and Entertainment Drive Data Automation. In The Union

51
Budget 2021, The Government Has Allocated Usd 7.31 Billion To The It And Telecom
Sectors.
5. URBANIZATION

The structural changes in the Indian economy have accelerated the process of
urbanization and also a change in employment patterns from the primary to secondary
and tertiary sectors by generating forces shift of the “pull” or “push” variety. Because of
structural changes in the rural economy, such as increased demand on agricultural land
and a falling man-land ratio, push forces have become increasingly prevalent. Indian
cities will serve as economic development drivers accelerating inward Foreign Direct
Investment growth. The urban population is expected to grow rapidly, with metropolitan
regions accounting for up to 70% of the growth.

6.INFRASTRUCTURE DEVELOPMENT

Infrastructure is essential for the development of livable cities and has to be developed
along with planned urban centers. To increase public and private investment in
infrastructure, India spends 7-8% of its GDP on infrastructure each year. As of Q1 FY22,
the Indian Construction sector GVA grew by 68.3 % accelerating the sartorial growth
after a lump in the period during FY21. A few of the recent and major infrastructure
development project highlights include:

The Mumbai Metropolitan Region Development Authority (MMRDA) has set aside USD
1747.08 million of its FY21 budget for the development of 12 metro lines in 2021– 2025.

With additional 20 metro rail projects planned and under development in Delhi, Noida,
and Haryana, metro rail connectivity would be expanded even more in 2023-2030 in the
northern belt of the country.

The Greenfield airport Project's (Navi Mumbai International Airport) initial phase-1 will
be able to accommodate 10 million passengers per year. When fully operational, it will
be capable of handling more than 60 million passengers each year. The timeline of the
project is slated to be completed within 2021-2025.

An international airport (Jewar International Airport) with a capacity of 30-50 million

people per year would be built in the year 2023-2025, near Jewar, Greater Noida, and is
intended to relieve pressure on Delhi's IGI airport. In addition, an aviation hub will be
built in the area, primarily to serve business and leisure travelers

The Delhi-Mumbai Industrial Corridor is one of the world's largest infrastructure

projects planned to be developed by 2030. The Government intends to build it as a
52
“Global Manufacturing and Trading Hub,” with multiple links to smart cities, mega
power projects, airports, and logistics hubs.
7. EVOLVING START-UP ECOSYSTEM

According to the Department for Promotion of Industry and Internal Trade, more than
55,000 startups have been recognized in India as of September 2021. India's development
narrative and potential remain strong bets, with a robust innovation-led entrepreneurial
ecosystem positioned to play a big role in the country's transition to a self- sufficient
India. This was also evident in the realm of startups, which saw investments continue to
flood in despite COVID-19.

53
CHAPTER NO- 8
SUGGESTIONS

54
To regain their foothold, IPAs need to be innovative and adopt differentiated strategies to
transform themselves into next-gen IPAs. Some strategies are outlined below:

 Customization – Every investor is different. So IPAs should be careful while

designing pitches and incentive structures.

 Target Start-ups / Fastest Growing Companies – IPAs should ideally look  beyond
the Fortune 500 or Forbes 2000 companies. Start-ups seeking international
expansion or companies with high growth prospects from emerging economies
should ideally be the new target companies.

 Leverage Social Media – Social media enables greater outreach and enhanced 
access to a target audience. So social media platforms like LinkedIn, Facebook,
Twitter, and YouTube should be fully leveraged.

 Utilizing Mobile App Platforms – IPAs must possess a mobile app. Mobile apps 
are particularly relevant given the time constraints of top executives who conduct a
fair amount of work on their smart phones.

 Thought Leadership – Companies seek IPAs that have comprehensive knowledge

of disruptive changes happening across industries and that can effectively guide
them on ways to benefit from these emerging trends.

 Intra Collaboration - IPAs can collaborate amongst themselves and also with 
private sector organizations to showcase a stronger value proposition, by
combining their complementary advantages at a lower cost.

 Showcasing Brand Ambassadors – IPAs can also use social media tools to
showcase short videos of CEOs talking about why a particular location was chosen
as a preferred investment destination and their experience so far. In this way, it will
be easier for IPAs to promote a particular location and also earn credibility.

 Charge for Value Added Services (VAS) – Everything cannot be free. So charging
fees for VAS such as providing linkages with local suppliers / customers and
manpower related services will be acceptable to the industry. This will also
improve the overall quality of the services offered by the IPAs.

 Monitoring and Evaluation with External Communication – Any investment

campaign becomes more robust only when Key Performance Indicator (KPI)

55
 performance dashboards and investment value forecasts are incorporated into it.
Inclusion of these parameters allows IPAs to communicate more effectively with
relevant government departments, NGOs, the media and citizens.

 Relationship Building – New investment is also likely to come from existing

investors. So, IPAs should typically be careful in managing their existing client
base and periodically interacting with the top management to discuss growth
strategy and future goals.

56
CHAPTER NO- 9
CONCLUSION

57
Conclusion-

The Covid-19 pandemic brought turmoil on the whole world and India was no exception.
The first quarter of FY-20 saw a contraction in GDP by 22.6%. This decline had adverse
effects on all economic areas including FDI which saw a contraction of 59% in the first
quarter FY-20. But due to government’s favorable business environment and revision of
FDI policies, FDI inflows saw a 16% surge in the coming months driven mostly by tech
and telecommunication investments. Also, India’s self-reliance scheme (Atmanirbhar
Bharat) has attracted investments from players such as Foxconn to setup manufacturing
plants in the country. China’s feud with the US has also proved to beneficial for India as
many big manufacturing companies have shifted their production and operations to India
which will boost India’s growth and image as a global player. In the coming years, India
is going to be one of the most attractive emerging markets for World investments. Annual
FDI inflow in the country is expected to rise to $75 billion over the next five years
according to a report by the UBS. Also India’s goal of becoming a $5 Trillion economy
by 2025 will surely boost the investments in coming years.

58
 CHAPTER NO- 10
LEARNING FROM THE PROJECT

59
Learning of the project-

1. Covid-19 has rehashed the extent to which India needs to diversify foreign investment
across its economy. While the value of FDI to the country has almost consistently
grown since 2012 (see the above chart), foreign investment as a percentage of GDP
has been stagnant or negative over the past five years, according to data from
the World Bank. 

2. Although India has received a large and fairly consistent number of Greenfield
FDI projects in recent years (as per the below chart), figures have not significantly
increased for almost a decade. This would certainly change if the country did a better
job of attracting more FDI in manufacturing. 

3. The US-China trade war has proved beneficial for India since many big manufacturing
companies have shifted their production and operations to the country. However, India
will need more than good luck to attract consistent and substantive FDI in the sector. To
improve this and help diversify investment, the country is likely to decrease corporate
income tax rates, remove FDI caps in different sectors, and step up the production-linked
incentive scheme. 

60
CHAPTER NO- 11
BIBLIOGRAPHY

61
BIBLOGRAPHY-

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2/amp
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