Effect of Foreign Direct Investment in Indian economy

Submitted in partial fulfillment of the requirements for the

award of the degree of

Master of Business Administration (MBA)

To

Guru Gobind Singh Indraprastha University, Delhi

Guide: Submitted by:

Dr. Nishu Sharma Neha Kumari
Roll No.:35215603922

Dr. Akhilesh Das Gupta Institute Of Technology & Management

New Delhi – 110053

Batch (2022-2024)

1
I, Ms. Neha kumari, Roll No. 35215603922 certify that the Project Dissertation (MS-106) entitled
“Effect of Foreign Direct Investment in Indian economy ” is an authentic work done by me. The matter embodied
in this report has not been submitted earlier for the award of any degree or diploma to the best of my
knowledge and belief.

Signature of the Student Date:

Certified that the Project Dissertation (MS-106) entitled “Effect of Foreign Direct Investment in Indian economy ”
Done by Ms.Neha kumari, Roll No.35215603922 is completed under my guidance.

Signature of the Guide

Date:
Name of the Guide: Dr. Nishu Sharma
Address:
Dr. Akhilesh Das Gupta Institute Technology &
Management, New Delhi-110053

Countersigned
Project Coordinator/Director

2
The project entitled “effect of Foreign Direct Investment in Indian economy” was a challenging assignment for
me and required an improved environment extensive endeavor guidance and support. I take this opportunity to
express our gratitude to Dr. Nishu Sharma, Project guide for her guidance and co-operation and for assisting us
in various tough situations while working on this project.

Neha kumari
35215603922

3
 T

S No Topic Page No

4
International Economic Integration plays a vital role in Economic Development of any country. Foreign Direct
Investment is one and only major instrument of attracting International Economic Integration in any economy. It
serves as a link between investment and saving. Many developing countries like India, are facing the deficit of
savings. This problem can be solved with the help of Foreign Direct Investment. Foreign investment helps in
reducing the defect of BOP. The flow of foreign investment is a profit making industry like insurance, real estate
and business services and serving as a catalyst for the growth of economy in India. This study is based on the
objectives like 1. To study the FDI policy framework of India and discuss its issue areas.
2. To analysis the FDI flows as to identify country wise approvals of FDI inflows to India.

3. To make analysis of the growth and trends and patterns of FDI inflow in India.

4. To study impact of FDI on economic indicators in India.

To analyze all these objectives data has been gathered through primary(questionnaire on polices and
determinants of FDI) and secondary sources(reports and publication of Govt. and RBI relating to foreign
Investment). After analyzing all the facts it may be concluded that maximum global foreign investment’s flows
are attracted by the developed countries rather than developing and under developing countries. Foreign
investment flows are supplementing the scare domestic investments in developing countries particularly in
India. Further this paper recommends that we should welcome the inflow of foreign investment because it
enable us to achieve our cherished goal like making favorable the balance of payment, rapid economic
development, removal of poverty, and internal personal disparity in the development and also it is very much
convenient and favorable for Indian economy.

5
6
FDI is Fund flow between the countries in the form of Inflow or outflow by which one can able to gain some
benefit from their investment. The potential advantages of the FDI on the host economy are it facilitates the use
and exploitation of local raw materials; it introduces modern techniques of management and marketing, it eases
the access to new Technologies. During the past years, the importance of FDI in the world economy has
increased rapidly. The total stock of FDI increased from 8% of world GDP in 1990 to26% in 2006. Although the
bulk of FDI continues to take place between OECD countries, the increase in FDI
In developing countries, largely reflecting the integration of large emerging economies, the so-called BRICs
(Brazil, Russia, India and China), into the world economy .The increase of FDI into developing countries has been
spectacular. The share of non-OECD countries in the global stock of inward FDI has risen from 22% in 1990 to
32%.China is by far the most important non-OECD country as a recipient of FDI, accounting for about one third
of FDI in non-OECD countries. However, FDI inflows also tend to be sizable in many other emerging countries.
Indeed, since the mid-1990s, inward FDI has become the main source of external finance for developing
countries and is more than twice as large as official development aid. MNEs tend to have various advantages
compared to purely domestic firms that allow them to compete successfully in foreign markets, despite the
additional cost of having to coordinate across different countries. Since 1980, foreign direct investment in the
United States has grown at a much faster rate than was typical for the preceding 50 years. Foreign investors have
become much more visible throughout this country.

A foreign direct investor may be classified in any sector of the economy and could be any one of the following,A
group of related individuals; An incorporated or unincorporated entity; public company or private company;a
group of related Enterprises; a government body; aestate (law), Trustors other Social Institution; or any
combination of the above.

Trends in Global Foreign Direct Investment: Flow of Foreign Direct Investment has grown faster over recent past.
Higher flow of Foreign Direct Investment over the world always reflects a better economic environment in the
presence of economic reforms and investment-oriented policies. Global flow of foreign direct investment
reached at a record level of $ 1,306 billions. Increase in FDI was largely fuelled by cross boarder mergers and
acquisitions.
Capital formation is an important determinant of economic growth. While domestic investments add to the
capital stock in an economy, foreign direct investment (FDI) plays a complementary role in overall capital
formation by filling the gap between domestic savings and investment. Foreign direct investment (FDI) is a
direct investment into production or business in a country by a company in another country, either by buying a
company in the target country or by expanding operations of an existing business in that country.FDI provides a
win - win situation to the host and the home countries. Both countries are directly interested in inviting FDI,

7
because they benefit a lot from such type of investment. India is perceived to be one of the most lucrative
grounds for investing, in the eyes of the wealthy European as well as American investors. The historical
background of FDI in India can be traced back with the establishment of East India. Further, after Independence
issues relating to foreign capital, operations of MNCs, gained attention of the policy makers. Prior to 1991, the
FDI policy framework in India was highly regulated. The government aimed at exercising control over foreign
exchange transactions. All dealings in foreign exchange were regulated under the Foreign Exchange Regulation
Act (FERA), 1973, the violation of which was a criminal offence.Through this Act, the government tried to
conserve foreign exchange resources for the economic development of the nation. Consequently the investment
process was plagued with many hurdles including unethical practices that became part of bureaucratic
procedures. Under the deregulated regime, FERA was consolidated and amended to introduce the Foreign
Exchange Management Act (FEMA), 1999. The new Act was less stringent and aimed at improving the capital
account management of foreign exchange in India.
The Act sought to facilitate external trade and payments and to promote orderly development and maintenance
of the foreign exchange market in India. It resulted in improved access to foreign exchange. In 2012, UNCTAD
survey projected India as the second most important FDI destination (after China) for transnational corporations
during 2010–2012. With its consistent growth performance and abundant high-skilled manpower, India provides
enormous opportunities for investment also provides a liberal, attractive, and investor friendly investment
climate. FDI in sectors/activities to the extent permitted under automatic route does not require any prior
approval either by the Government or RBI.
FDI in activities not covered under the automatic route requires prior Government approval. Such proposals are
considered by the Foreign Investment Promotion Board (FIPB). An increase in FDI may be associated with
improved economic growth due to the influx of capital and increased tax revenues for the host country. Host
countries often try to channel FDI investment into new infrastructure and other projects to boost development.
Greater competition from new companies can lead to productivity gains and greater efficiency in the host
country and it has been suggested that the application of a foreign entity’s policies to a domestic subsidiary may
improve corporate governance standards. Furthermore, foreign investment can result in the transfer of soft skills
through training and job creation, the availability of more advanced technology for the domestic markets.

8
 Direct investment in new facilities or the expansion of existing facilities.
Greenfield investments are the primary target of a host nation’s promotional efforts because they create
new production capacity and jobs, transfer technology and know-how, and can lead to linkages to the global
marketplace. However, it often does this by crowding out local industry; multinationals are able to produce
goods more cheaply (because of advanced technology and efficient processes) and uses up resources (labor,
intermediate goods, etc). Another downside of greenfield investment is that profits from production do not
feed back into the local economy, but instead to the multinational's home economy. This is in contrast to
local industries whose profits flow back into the domestic economy to promote growth.

1.2.2 Mergers and Acquisitions: Mergers and acquisitions occur when a transfer of existing assets from local
firms to foreign firms takes place, this is the primary type of FDI. Cross-border mergers occur when the
assets and operation of firms from different countries are combined to establish a new legal entity. Cross-
border acquisitions occur when the control of assets and operations is transferred from a local to a
foreign company, with the local company becoming an affiliate of the foreign company. Unlike greenfield
investment, acquisitions provide no long term benefits to the local economy-- even in most deals the
owners of the local firm are paid in stock from the acquiring firm, meaning that the money from the sale
could never reach the local economy. Nevertheless, mergers and acquisitions are a significant form of FDI
and until around 1997, accounted for nearly 90% of the FDI flow into the United States.
1.2.3 Horizontal Foreign Direct Investment: Horizontal foreign direct investment is investment in the same
industry abroad as a firm operates in at home. Horizontal FDI help to create economies of scale because
the size of the firm become large to reap the advantage and gains.
1.2.4 Vertical Foreign Direct Investment: the vertical integration occurs among the firm involved in different
stage of the production of a single final product. for example if oil exploration firm and refinery firm
merges together. It will be called vertical direct investment. Vertical investment reduces transportation
cost, and of communication and coordinating production. Vertical direct investment takes in two forms:

1) Backward vertical FDI: where an industry abroad provides inputs for a firm's domestic production
process

2) Forward vertical FDI: in which an industry abroad sells the outputs of a firm's domestic production processes.

1.3 Capital flows and growth in India:

Capital flows into India have been predominantly influenced by the policy environment, recognizing the
availability constraint and reflecting the emphasis of self reliance, planned levels of dependence on foreign
9
capital in successive Plans were achieved through import substitution industrialization in the initial years of
planned development. The possibility of export replacing foreign capital was generally not explored until the
1980s. it is only in the 1990s that elements of an export led growth strategy became clearly evident alongside
compositional shifts in the capital flows in favour of commercial debt capital in the 1980s and in favour of non
debt flows in the 1990s. The approach to liberalization of restriction on specific capital account transaction
however, has all along been against any big-bang.
A large part of the net capital flows to India in the capital account is being offset by the debit servicing burden.
As a consequence, net resource transfer have fluctuated quite significantly in the 1990s turning negative in
1995-96. Till the early 1980s, the capital account of the balance of payment had essentially a financing function.
Nearly 80 percent of the financing requirement was met through external assistance. Aid financed import were
both largely.
Ineffectual in increasing the rate of growth and were responsible for bloating the inefficient public sector. Due to
the tied nature of bilateral aid, India has to pay 20 to 30 percent higher prices in selection to what it could have
got through international. The real resource transfer associated with aid to India, therefore, was mush lower.
There were occasions “when India accepted bilateral aid almost reluctantly and without enthusiasm because of
the combination of low priority of the project and the inflated process of goofs” The environment for enhancing
aid effectiveness has been highlighted as one of the key factor in the assessments of aid by donors, i.e. :open
trade secured private property rights, the absence of corruption, respect for the rile of law social safety nets, aid
sound macroeconomic and financial policy” the report pf the High Level committee on Balance of Payments
1993 identified a number of factors constraining effective aid utilization on India and underscored the need to
initial urgent action on both redacting the overhang of unutilized aid and according priority to externally sided
projects in terms pf plan allocations and budgetary previsions. Net resource transfer under aid to India, however
turned negative in the second half of the 1990s.
In the 1980s, India increased its reliance on commercial loans as external assistance increasingly fell short of the
growing financing needs. The significant pressures on the balance of payments as the international oil prices
more than doubled in 1979-80 and the world trade volume growth decelerated sharply during 19980-82,
triggered an expansion in India’s portfolio of capital inflows to include IMF
facilities, grater reliance on the two deposit schemes for non resident Indian the Non- Resident External Rupee
Accounts (NRERA) (that started in 1970) and foreign currency Non Resident Account (FCNR) (that started in
1975) and commercial borrowings on a modest scale. A few select banks all Indian financial institutions leading
public sector undertakings and certain private corporate were allowed to raise commercial capital from, the
international market in the form of loan, bonds and euro notes. Indian borrowed received final terms in the
1980s Spreads over LIBOR for loan to India improved gradually from about 100 basis points in the early 1980s to
about 25 basis points for PSUs (50 basis points for private entitles) towards end of 1980s. Maturities were

10
elongated from seven year to ten year during this period. Debt sustainability indicators, particularly debt/GDP
ration and debt service ratio, however, deteriorated significantly during this period.
The policy approach to ECB has undergone fundamental shift sine then with the institution of reformer and
external sector consolidation in the 1990s. Ceilings are operated on commitment of ECB with sub ceilings for
short term debt. The ceiling on annual approvals has been raised gradually. The force of ECB policy continuous to
place emphases on low borrowing cost (by specifying the spread on LIBOR or US TB rates), lengthened maturity
profited (liberal norms for above 8 years of maturity) and end use restrictions.
Given the projected need for financing infrastructure project, 15 percent of the total infrastructure financing
may have to come from foreign sources. Since the ratio of infrastructure investment to GDP is projected to
increase from 5.5 percent in 1995-96 to about 8 percent, with a foreign financing of about 15 percent foreign
capital of about 1.2 percent of GDP has to be earmarked only for he infrastructure sector to achieve a GDP
growth rate of bout 8 percent.
NRI deposits represent an importance avenue to access foreign capital. The policy framework for NRI deposit
during 1990s has offered increased options to the NRIs through different deposit schemes and by modulation
rate of return maturities and the application of cash reserve ratio (CRR) in the 190s FCNR (B) deposit rates have
been linked to LIBOR and short term deposits are discouraged. For NRERA, the interest rate are determined by
banks themselves. The non resident Rupee deposit (NR (NR) RD) introduced in June 1992 is non reparable
although interest earned is fully reparable under the obligation of current account convertibility subscribed to in
1994. in the 1990s NRI deposit remained an important sources of foreign capital with outstanding balances
under various schemes taken together rising from about US $10 billion at the close of 1980s to US $ 23 billion at
the close of 2001. capital flows from NRIs have occasionally taken the form of large investment in specific bonds,
i.e. the Indian Development Bond (IDB) in 1991, the Resurgent Indian Bond RIB) in 1998 and Indian Millennium
Deposit (IMD) in 2000.
The need for supplementing data capital with non debt capital with a clear prioritization in favor of the

latter has characters the government policy framework from capital flows in the 1990s. the high level committee
on balance of payments recommended the need for achievement this composition shift. A major shift in the
policy stance occurred in 1991-92 with the liberalization of norms for foreign direct a portfolio investment in
India.
The liberalization process started with automatic approval up to 51 percent for investment in select areas.
Subsequently the areas covered under the automatic route and the limits of investment were raised gradually
culminating in permission for 100 percent participation in certain areas (particularly oil refining
telecommunications, and manufacturing activities in special economic zone). The requirement of balancing the
dividend payments with export earnings which was earlier limited to a short list of 22 consumer goods items

11
was completely withdrawn. Limit for FDI in projects relating to electricity generation, transmission and
distribution has been removed. FDI in non bank financial activities and insurance is also permitted. Restriction
on portfolio investment through purchased of both traded primary and secondary market Indian securities are
also liberalized. As opposed to the earlier restriction permitting non- resident Indian (MRIs) overseas corporate
bodies (OCBs) to acquire up to 1 percent for foreign institutional investor (FIIs)/NRIs/OCBs while allowing
investment by FIIs in September 1992. Subsequently the aggregate limit was raised gradually and presently for
FDI investment in different sector provided the general body of the respective firms takes a decision to that
effect. Portfolio investment in Global Depository Receipts (GDRs) /American Depository Reseats (ADRs) /Foreign
currency convertible bonds (FCCBs) floated by Indian companies in international markets is also permitted.

It is difficult to asses the direct contribution of these flows particularly FDI to the growth process. Anecdotal
evidence suggests that foreign controlled firms often use third party export to meet their export obligations.
Another factor that contributes to widening the technology gap in FDI in India is the inappropriate intellectual
property (IP) regime of India. Survey results for 100US multinationals indicate that about 44 percent of the firms
highlighted the weak IP protection in India as a constraining factor for transfer of new technology to Indian
subsidiaries. For investment in sector like chemicals and pharmaceuticals almost 80 percent of the firms review
Indian IP regime as the key constraining factor for technology transfer. Information collected from annual
surveys of select foreign controlled rupee companies (FCRCs)/FDI companies on the export intensity of FCRC/FDI
firms during the 1980 and 1990 shows that these firms export only about 10 percent of their domestic sales and
the export intensity has increased only modestly in the 1990. it appears that the lure of the large size of the
domestic market continues to be on of the primary factor causing FDI flows into India.
Spillover of positive externalities associate with FDI in the form of transfer of technology is also highlighted as
another factor that could contribute to growth. The relationship between technology imports comprising impost
of capital goods and payment for royalty and technical know how fees) and domestic technology efforts in terms
of R & D expenditure does not exhibit any complementarily foreign exchange spent on technology import as
percentage of domestic expenses on R & D rather increased significantly in the 1990 in relation to 1980
suggesting the use of transfer patterns of resource transfer. The share of imported raw materials in total raw
materials used by FDI firms however, outperformed the overall growth in industrial production in the 1990.

1.4 Foreign direct investment

Foreign direct investment (FDI) is defined as a long term investment by a foreign direct investor in an enterprise
resident in an economy other than that in which the foreign direct investor is based. The FDI relationship,
consists of a parent enterprise and a foreign affiliate which together form a transnational corporation (TNC) .In

12
order to qualify as FDI the investment must afford the parent enterprise controlover its foreign affiliate. The UN
defines control in this case as owning 10% or more of the ordinary shares or voting power of an incorporated
firm or its equivalent for an unincorporated firm.

In the years after the Second World War global FDI was dominated by the United States, as much of the world
recovered from the destruction wrought by the conflict. The U.S. accounted for around three -quarters of new
FDI (including reinvested profits) between 1945 and 1960. Since that time FDI has spread to become a truly
global phenomenon, no longer the exclusive preserve of OECD countries. FDI has grown in importance in the
global economy with FDI stocks now constituting over 20% of global GDP. In the last few years, the emerging
market countries such as China and India have become the most favoured destinations for FDI and investor
confidence in these countries has soared. As per the FDI Confidence Index compiled by A.T. Kearney for 2005,
China and India hold the first and second position respectively, whereas United States has slipped to the third
position.

1.5 Flow of FDI in India

In the year 1991, the government of India was sanctioned in its new Industrial Policy, large number of
concessions and incentives, to attract the flow of the foreign capital to India. Factors like prospect opportunities
in industries, favorite government policy, political stability in the country etc., were ranked India at second
favorite country in the world, following China, in terms of attractiveness of FDI.
AT Kearney‟s 2007 Global Services Location Index ranked India as the most preferred destination in terms of
financial attractiveness, people and skills availability and business environment. The positive perceptions as a
result of strong economic fundamentals driven by 19 years of reforms has helped FDI inflows grow at about 20
times since the opening up of the economy to foreign investment since 1991.

1.6 Foreign Direct Investment in India

India has continually sought to attract FDI from the world‟s major investors. In 1998 and 1999, the Indian
government announced a number of reforms designed to encourage FDI and present a favorable scenario for
investors. In India, Foreign Direct Investment Policy allows for investment only in case of the following form of
investments:
• Through financial collaboration

• Through joint schemes and technical collaboration

• Through capital markets, via Euro issues

13
Foreign Direct Investment in India is not allowed under the following industrial sectors:

• Arms and ammunition

• Atomic Energy

• Coal and lignite

• Rail Transport

• Mining of metals like iron, manganese, chrome, gypsum, sulfur, gold, diamonds, copper, zinc
• Lottery Business

• Gambling and Betting

• Business of Chit Fund

• Agricultural (excluding Floriculture, Horticulture, Development of seeds, Animal Husbandry, Pisci culture
and cultivation of vegetables, mushrooms, etc. under controlled conditions and services related to agro
and allied sectors) and Plantations activities (other than Tea Plantations) .
• Housing and Real Estate business.
• Trading in Transferable Development Rights (TDRs).
• Manufacture of cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco substitutes.
A number of projects have been announced in areas such as electricity generation, distribution and
transmission, as well as the development of roads and highways, with opportunities for foreign investors.
The Indian government also provided permission to FDIs to provide up to 100% of the financing
required for the construction of bridges and tunnels. Currently, FDI is allowed
in financial services, including the growing credit card business. These services include the nonbanking financial
services sector. Foreign investors can buy up to 40% of the equity in private banks, although there is condition
that stipulates that these banks must be multilateral financial organizations. Up to 45% of the shares of
companies in the global mobile personal communication by satellite services (GMPCSS) sector can also be
purchased.
FDI in major sectors in India
The major sectors of the Indian economy that have benefited from FDI in India are as 
Financial sector (Banking and Non-Banking).

• Insurance

14
 • Telecommunication

• Hospitality and tourism

• Pharmaceuticals

• Software and Information Technology.

The Indian government made several reforms in the economic policy of the country in the early 1990s.
As a result of this, huge amounts of foreign direct investment came into India through non- resident Indians,
international companies, and various other foreign investors. This helped in the liberalization and deregulation
of the Indian economy and also opened the country's markets to foreign direct investment.
1.7 Advantages of FDI
The growth of FDI in India boosted the economic growth of the country. Major advantages of FDI in India have
been in terms of –  Increased capital flow.

• Improved technology.

• Management expertise.

• Access to international markets

Foreign Direct Investment plays a pivotal role in the development of India's economy. It is an integral part of the
global economic system. Advantages of FDI can be enjoyed to full extent through various national policies and
international investment architecture. Both the factors contribute enormously to the maximum FDI inflows in
India, which stimulates the economic development of the country. FDI inflow helps the developing countries to
develop a transparent, broad, and effective policy environment for investment issues as well as, builds human
and institutional capacities to execute the same. Attracting foreign direct investment has become an integral
part of the economic development strategies for India. FDI ensures a huge amount of domestic capital,
production level, and employment opportunities in the developing countries, which is a major step towards the
economic growth of the country. FDI has been a booming factor that has bolstered the economic life of India,
but on the other hand it is also being blamed for ousting domestic inflows. FDI is also
claimed to have lowered few regulatory standards in terms of investment patterns. The affects of FDI are by and
large transformative. The incorporation of a range of well-composed and relevant policies will boost up the
profit ratio from Foreign Direct Investment higher. Some of the biggest advantages of FDI enjoyed by India have
been listed as under:
15
Economic growth: -This is one of the major sectors, which is enormously benefited from foreign direct
investment. A remarkable inflow of FDI in various industrial units in India has boosted the economic life of
country.
Foreign Trade:-Foreign Direct Investments have opened a wide spectrum of opportunities in the trading of
goods and services in India both in terms of import and
export production. Products of superior quality are manufactured by various industries in India due to greater
amount of FDI inflows in the country
Employment and Skill Levels: - DI has also ensured a number of employment opportunities by aiding the setting
up of industrial units in various corners of India
Technology Diffusion and Knowledge Transfer: - FDI apparently helps in the outsourcing of knowledge from India
especially in the Information Technology sector. It helps in developing the know -how process in India in terms of
enhancing the technological advancement in India.

Linkages and Spillover to Domestic Firms: - Various foreign firms are now occupying a position in the Indian
market through Joint Ventures and collaboration concerns. The maximum amount of the profits gained by the
foreign firms through these joint ventures is spent on the Indian market.
FDI Inflows Raise the Capital for Investment: - Foreign capital has taken over the domestic capital in terms of
purchasing issue. Domestic capital is usually used or invested in other sectors of the Indian market.
Foreign Direct Investment in green field ventures has introduced technological advancement and contemporary
techniques for management in India, which the country lacked badly before FDI made its entry.The inflow of
foreign capital in India has opened up a surfeit of options in the Indian market by ensuring foreign capital shares
which stabilizes the country's economy

16
 CHAPTER 2
LITERATURE REVIEW

17
LITERATURE REVIEW
Singer1950; Griffin, 1970; Weisskof, 1972,: The main argument of these studies was that FDI flows to Less
Developing Countries (LDCs) were mainly directed towards the primary sector, which basically promoted the
less market value of this sector.Since these primary products are exported to the developed countries and are
processed for import,it receives a lower price for its primary product. This could create a base for the negative
impact of FDI flows in the economy.

Rodan (1961), Chenery and Strout (1966): in the early 1960s argued that foreign capital inflows have a favorable
effect on the economic efficiency and growth towards the developing countries. It has been explained that FDI
could have a favorable short-term effect on growth as it expands the economic activity.

Caves, 1974; Kokko, 1994; Markusen, 1995; Carves, 1996; Sahoo, Mathiyazhagan and

Parida2001,: Foreign Direct Investment (FDI) inflow into the core sectors is assumed to play a vital role as a
source of capital,management, and technology in countries of transition economie. It implies that FDI can have
positive effects on a host economy’s development effort.

Barro and Martin:- 1999; Help man and Grossman, 1991:-The studies that used the endogenous growth theory
challenged this view in explaining the long run growth rate of the economy by using endogenous variables like
technology and human capital.

Bhagwati,1994:- The local enterprises are able to learn by watching FDI initiative, if the economic frame work is
appropriate.

Feenstra and Markusen, 1994,:- FDI is an important vehicle for the transfer of technology and knowledge and it
demonstrates that it can have a long run effect on growth by

generating increasing return in production via positive externalities and productive spill overs. Thus, FDI can lead
to a higher growth by incorporating new inputs and techniques.

18
Alam (2000):- in his comparative study of FDI and economic growth for Indian and Bangladesh economy stressed
that though the impact of FDI on growth is more in case of Indian economy .

Kumar and pradhan (2001): Foreign Direct Investment (FDI) has emerged as the most
Important source of external financial resource for developing countries and has become a significant part of
economy in the developing.

Hanson (2001): argues that evidence that FDI generates positive spil lovers for host countries is weak.

Lipsey (2002): Takes a more favorable view from reviewing the micro literature which argues that there is
evidence of positive effect. He also argues that there is need for more consideration of the different
circumstances that obstruct or promote positive spil lovers

Basu (2002),: tried to find the short run dynamics of FDI and growth. The study reveals that GDP in India is not
Granger caused by FDI; the causality runs more from GDP to FDI and the trade liberalization policy of the Indian
government had some positive short run impact on the FDI flow.

Calvo and Robles, 2003: FDI increases the stock of human capital, it stimulates the investment in R&D. foreign
inflows could be used for financing current account deficits, finance flows in form of FDI do not generate
repayment of principal and interests (as opposed to external debt).

Sahoo and Mathiyazhagan, 2003: There were also few evidences demonstrate that there is along -run
relationship between Gross Domestic Product, FDI and export in India

19
 CHAPTER 3
RESEARCH METHODOLOGY

STATEMENT OF THE PROBLEM

• Policies get changes every year to consolidate the frame work of FDI.
• Determinant like economic and host countries trade polices affects the FDI.

RESEARCH OBJECTIVES
• To study the FDI policy framework of India and discuss its issue areas.
• To identify the various determinants of FDI.
• To Study the trends of FDI Flow in India year of 2011-16
• To analysis the FDI flows as to identify country wise approvals of FDI inflows to India TYPE OF RESEARCH
•
• Quantitative & Analytical Research
• Secondary data from different web sites & reports of RBI,www.rbi.org.in,journals,
• The secondary data was collected from various journals, magazines, and websites particularly from the
Department of Industrial Policy & Promotion, Ministry of Commerce and Industry, India stat etc. Simple

20
 percentages have been used to detect the growth rate of India. Graphs and tables have also been used
where ever required to depict statistical data of FDI

DATA COLLECTION, ANALYSIS AND INTERPRETATION

• The researcher will collect the data by using the tools and the data will be coded, tabulated, analyzed
and interpreted using appropriate statistical techniques. Suggestions for the improvement of this
problem will be identified through the study

TO SHOW OF RELATIONSHIP BETWEEN

• FDI-GDP at factor cost

• FDI- total trade

• FDI- foreign exchange reserves

STATISTICAL TOOL
Excel

21
 CHAPTER 4
DATA ANALYSIS AND
INTERPRETATION

4.1 FDI INFLOWS AND GDP AT FACTOR COST

GDP has experienced substantial growth in their economies, with even faster growth international transactions,
especially in the form of foreign direct investment (FDI). The GDP of the country has been increasing year by
year. This has been presented in the table. The table furnishes the positive correlation between the FDI and
GDP of the country.
It refers to the growth rate of gross domestic product. Economic growth rate have an effect on the domestic
market, such that countries with expanding domestic markets should attract higher levels of FDI. India is the 2nd
fastest growing economy among the emerging nations of the world. It has the third largest GDP in the continent
of Asia. Since 1991 India has emerged as one of the wealthiest economies in the developing world. During this
period, the economy has grown constantly and this has been accompanied by increase in life expectancy,
literacy rates, and food security. It is also the world most populous democracy. The Indian middle class is large

22
and growing; wages are low; many workers are well educated and speak English. All these factors lure foreign
investors to India. India is also a major exporter of highly – skilled workers in software and financial services and
provide an important „back office destination‟ for global outsourcing of customer services and technical
support. The Indian market is widely diverse. The country has 17 official languages, 6 major religion and ethnic
diversity. Thus, tastes and preferences differ greatly among sections of consumers. In the last two decade world
has witnessed unprecedented growth of FDI. This growth of FDI provides new avenues of economic expansion
especially, to the developing countries. India due to its huge market size, diversity, cheap labour and large
human capital received substantial amount of FDI inflows during as mentioned above. This increased level of FDI
contributes towards increased foreign reserves. The steady increase in foreign reserves provides a shield against
external debt. The growth in FDI also provides adequate security against any possible currency crisis or
monetary instability. It also helps in boosting the exports of the country. It enhances economic growth by
increasing the financial position of the country. The growth in FDI contributes toward the sound performance of
each sector (especially, services, industry, manufacturing etc.) which ultimately leads to the overall robust
performance of the Indian economy.

FDI INFLOWS AND TOTAL TRADE

It refers to the total trade as percentage of GDP. Total trade implies sum of total exports and total imports.
Trade, another explanatory variable in the study also affects the economic growth of the country. Exports and
imports values are taken at constant prices. The relationship between trade, FDI and growth is well known. FDI
and trade are engines of growth as technological diffusion through international trade and inward FDI stimulates
economic growth. Knowledge and technological spill overs (between firms, within industries and between
industries etc.) contributes to growth via increase in the productivity level. Export promotion or import
substituting strategy both growth strategies, can considerably affect the trade flows of the country. The strategy
called Export led growth leads to expansion of exports which in turn encourage economic growth by expanding
the market size for emerging and developing countries like India. In India the most preferred theory of economic
growth is export based, this nullifies the demand of export in the international market are preferred by the
country as it nullifies and it bridges the gap between exports and imports. Since liberalization, the value of
India‟s international trade has risen . As exports from the country have increased manifolds after the initiation
of economic reforms since 1991 India‟s major trading partners are China, United States of America, United Arab
Emirates, United Kingdom, Japan, and European Union. Since 1991, India’s exports have been consistently rising
although India is still a net importer. India accounted for 1.45 per cent of global merchandise trade and 2.8 per
cent of global commercial services export with a further rise in exports . Economic growth and FDI are closely
linked with international trade. Countries that are more open are more likely to attract FDI inflows in many

23
ways: Foreign investor brings machines and equipment from outside the host country in order to reduce their
cost of production. This can increase exports of the host country. Growth and trade are mutually dependent on
another. Trade is a complement to FDI, such that countries tending to be more open to trade attract higher
levels of FDI.

FDI INFLOWS AND FOREIGN EXCHANGE RESERVES

FOREIGN EXCHANGE RSERVES (RESGDP): RESGDP represents Foreign Exchange Reserves as percentage of GDP.
India‟s foreign exchange reserves comprise foreign currency assets (FCA), gold, special drawing rights (SDR) and
Reserve Tranche Position (RTP) in the International Monetary Fund. The emerging economic giants, the BRIC
(Brazil, Russian Federation, India, and China) countries, hold the largest foreign exchange reserves globally and
India is among the top 10 nations in the world in terms of foreign exchange reserves. India is also the world‟s
10th largest gold holding country in 2017. Stock of foreign exchange reserves shows a country‟s financial
strength. India‟s foreign exchange reserves have grown significantly since 1991 The statistics shown above is a
clear indication of increasing strength of the economy with increased level of reserves.
FDI helps in filling in bridging the important gap between targeted foreign exchange requirements and those
derived from net export earnings plus net public foreign aid. The basic argument behind this gap is that most
developing countries face either a shortage of domestic savings to match investment opportunities or a
shortage of foreign exchange reserves to finance needed imports of capital and intermediate goods.

24
 Years FDI inflows GDP at cost factor Total Foreign Ex.
Trade Reserve s

2000-01 409 1099072 91892 23850

2001-02 1094 1158025 117063 30744
2002-03 2018 1223816 142852 60420
2003-04 4312 1302076 172645 79781
2004-05 6916 1396974 229031 74384
2005-06 9654 1508378 257737 94932
2006-07 13548 1573263 284276 115905
2007-08 12343 1678410 318084 138005
2008-09 10311 1786525 374797 165913
2009-10 10368 1864301 434444 197204
2011-12 18486 1972606 454218 264036
2012-13 13711 2048286 552343 361470
2013-14 11789 2222758 652475 490129
2014-15 14653 2388768 876405 619116
2015-16 24613 2616101 1116827 676387
2016-17 70630 2871120 1412285 68222
2017-18 98664 3129717 1668176 1237985
2018-19 123025 3339375 2072438 1283865

Source: Various issues of SIA Bulletins and RBI Bulletin , Shinde & Herekar.

25
CALCULATION OF KARL PEARSON’S COEFFICIENT OF CORRELATION

(X-MEAN OF X) (Y-MEAN OF Y) / WHOLE SQUARE ROOT DEVIATION OF X AND SQUARE OF DEVIATION OF Y

Variables Karl Pearson’s Correlation Coefficient

(r)
FDI Inflows and GDP at factor cost 0.8663
FDI inflows and Total Trade 0.9411
FDI inflows and Foreign Exch. 0.9243
Reserves

26
 Karl Pearson’s Correlation
Coefficient ( r )
0.96

Karl Pearso n ’s
C o rrelatio n C o effi cien t
0.82 (r)
F D I INfl o w s F D I iNfl o w s F D I in fl o w s
an d G D P at an d To tal an d F o reig n
facto r co st Trad e E xch .
Reserves

Table only establishes the relation between FDI inflows and other economic indicators during the period
from 2000-01 to 2018-19. The figures are incorporated from various issues of SIA bulletin sand RBI
bulletins to see the correlation between FDI inflows and other indicators.
The base year to find out annual compound growth rate is 2000-01.
Interpretation- Table indicate that there is a very high correlation between the FDI inflows and the other
related performance indicators.

FDI TOTAL INFLOWS

The total FDI inflows is nothing but the direct foreign investment added to foreign portfolio investment.
 2006-07 3557 1824 5385
2007-08 2462 -61 2401
2008-09 2155 3026 5181
2009-10 4029 2760 6789
2010-11 6130 2021 8151
2011-2012 5035 979 6014
2012-13 4322 11377 15699
2013-14 6051 9291 15342
2014-15 8961 12492 21453
2015-16 22826 6947 29773
2016-17 34843 27434 62277
2017-18 41873 -14032 27841
2018-19 37745 32396 70141
TOTAL
%

Table depicts gross inflows of FDI in India from 2000 to 2019. Foreign direct investment was only 129 US $ million in
the year 2000-2001, which raised to 3557 US $million in the year 2001-2002, but declined gradually to 2155 US $
million in 2002-2003. FDI inflows during 2003-2004 have been encouraging. The FDI inflows raised from 6130 US$
million in the year2004-05 to 37745 US $ Million in 2018-19. The significant increase in FDI inflows to India reflected
the impact of liberalization of the economy, and gradual opening up of the capital account. FDI inflows include the
share of investment in equity through SIA/FIPB,RBI, NRI, acquisition of shares of Indian companies by NRI sunder
FEMA, equity capital of unincorporated bodies and other capital ,which stooda 63% of the total inflows.

28
 In the table the total FDI inflows is nothing but the direct foreign investment added to foreign
portfolio investment. As per Table, the portfolio investment was only 4 US $ million in 2000-01 raised to
3824 $ million in 2003-04 but declined in the year 2007-08 showing -61 US $ million. Further it rose to
3026 US $ Million in 2008-09. This investment increased and again declined in 2017-18.
Total FDI inflow rose from 133 US $ million in 2000-01 but declined in between due to global crisis,
though again it moderated and raised to 70141 $ million in 2018-19.
Net portfolio investment’s share in total inflows stood at 37% . It is observed that the definition of FDI
has been enlarged, to make it internationally comparable. Because of this, the FDI has boosted after
words.

Table Showing projections of Foreign Investment in India.

Year Direct Foreign Total

Foreign portfolio Foreign
investment
Investment Investment
Inflows
2015-16 36940 18930 55870

2016-17 39135 19968

59103
2017-18 41330 21007

62337
2018-19 43525 22045

29
 70000

60000

50000
D irect F o reig n
40000 In vestm en t
F o reig n p o rtfo lio
30000 in vestm en t
To tal F o reig n
20000 In vestm en t In fl o w s

10000

0
2015-16 2016-17 2017-18 2018-19

FDI flow in india

Overseas FDI by Indian Corporations
Increasing Competitiveness of Indian industry due to globalization of Indian Economy has led to emergence and
growth of Indian multinationals. This is evident from the FDI overseas from India, which increased by 13.5 times
during the last 7 years. The year 2009-2010 witnessed large overseas acquisition deals by Indian corporate to
gain market shares and reap economies of scale, supported by progressive liberalization of the external
payments regime. Overseas investment that started off initially with the acquisition of foreign companies in the
IT and related services sector has now spread to other areas such as manufacturing including auto components
and drugs and pharmaceuticals.

Ranks Country % of total

inflow

1 Service sector 20

30
 2 Telecom communications 8
3 Construction activities 7
4 Computer software and 7
Hardware
5 Housing and real estate 7
6 Drugs and Pharma 6
7 Power 4
8 Automobile Inustries. 4
9 Metallurgical Industries 4
10 Petroleum & natural gas 2
Table shows that service sector tops in attracting highest FDI equity inflows, followed by
telecommunications and other sectors.

% of total inflow
25

20

15

% of total inflow
10

0
1 2 3 4 5 6 7 8 9 10

31
32
Interpretation

PATTER NOF FDI IN INDIA

India's post-independence economic policy combined a vigorous private sector with state planning and control,
treating foreign investment as a necessary evil. Prior to 1991, foreign firms were allowed
to enter the Indian market only if they possessed technology unavailable in India. Almost every aspect of
production and marketing was tightly controlled and many of the foreign companies that came to India
eventually abandoned their projects. The industrial policy announced in July 1991 was vastly simpler, more
liberal and more transparent than its predecessors, and it actively promoted foreign investment as indispensable
to India's international competitiveness. The new policy permits
automatic approval for foreign equity investments of up to 51 percent, so long as these investments are made in
any of "high priority" industries that account for the lion's share of industrial

33
activity. Identifying the growth-augmenting role of foreign capital flows has assumed critical importance in India
in recent years. The overall shift in the policy stance in India from export pessimism and foreign exchange
conservation to one that assigns an important role to export of

goods and services in the growth process has primarily been guided by the perception that an open
trade regime could offer a dynamic vehicle for attaining higher economic growth. The absence of any strong and
unanimous empirical evidence justifying the universal relevance of an export led growth strategy as also the
continued reliance and targets for sustainable current accounts has motivated grater focus on the growth
augmenting capacity of foreign capital .
Structural reforms and external financial liberalization measures introduced in the 1990s in India brought in their
wake surges un capital flows as well as episodes of volatility associated with the capital account dictating the
balance of payment outcome. Large capital inflows enables an easing of resource constraints and an acceleration
of growth in the mid-1990s. in the second half, the foreign exchange market development as well as the rapid
transmission of international sell offs facilitated by cross border integration of equity markets via capital flows
have as a level provoked a reassessment of the benefits and costs of employing capital flows as a level of growth.
Throughout the 1990s, the role assigned to foreign capital in India has been guided by the consistent with the
absorptive capacity of the economy. In the aftermath of South-East-Asia crisis, however, the need for further
strengthening the capacity to withstand vulnerabilities has necessitated a shift in policy that assigns greater
weight age to stability in view of the growing importance of capital flows in relation to trade flows in influencing
the course of the exchange rate and the potentially large volatility and self fulfilling expectations that often
characterize capital flows, reserve adequacy has also emerged as an additional requirement for ensuring stable
growth in the context of capital flows. Given the trade off between growth and instability associated with capital
flows, the emphasis of the debate relating to capital flows in India has centered around sustainability a country
specific approach to liberalization of the capital account a desirable composition and maturity profit of capital
flows, and appropriate reserve management and exchange rate policies in the context of capital flows, with only
occasional reference to the growth enhancing role of foreign capital in India.

Firms undertake foreign investment rather than export to overseas markets but it is equally important to
understand where these investments flow or what determine foreign investment flows to a particular region.
The determinants of FDI can be grouped under two categories (i) Economic conditions
(ii) Host country policies
Market size, rate of urbanization and industrialization, labor cost, infrastructure both physical and economic and
underlying fundamentals of economy like inflation, tax regime, external debt are economic conditions.
Host country policy framework includes trade policies, country risk, legal framework including property rights,
quality of bureaucracy, attitude of the government towards FDI and FDI policies and status of financial markets.

34
Is India capable of attracting much larger volumes of FDI than she does at present? Should India throw all doors
wide open to FDI as advocated by the Harvard economists? Is China's experience a role model for India? Host
countries with sizeable domestic markets, measured by GDP per capita and sustained growth of these markets,
measured by growth rates of GDP, attract relatively large volumes of FDI

Resource endowments of host countries including natural resources and human resources are a factor of
importance in the investment decision process of foreign firms. Infrastructure facilities including transportation
and communication net works are an important determinant of FDI.

Macro economic stability, signified by stable exchange rates and low rates of inflation is a significant factor in
attracting foreign investors.

1. Political stability in the host countries is an important factor in the investment decision process of foreign
firms.
2. A stable and transparent policy framework towards FDI is attractive to potential investors.
3. Foreign firms place a premium on a distortion free economic and business environment. An allied
proposition here is that a distortion free foreign trade regime, which is neutral in terms of the incentives
it provides for import substituting (IS) and export industries (EP), attracts relatively large volumes of FDI
than either an IS or an EP regime.
4. Fiscal and monetary incentives in the form of tax concessions do play a role in attracting FDI, but these
are of little significance in the absence of a stable economic environment.

How does India fare on these attributes? She does possess a large domestic market, she has achieved growth
rates of around 8.5 to 9 percent per annum in recent years, her overall record on macroeconomic stability, save
for the crisis years of the late eighties, is superior to that of most other developing countries. And judged by he
criterion of the stability of policies she has displayed a relatively high degree of political stability. It is, however,
India’s trade and FDI regimes which are seen as major impediments to increased inflows of FDI. The product and
factor market distortions generated by the inward looking import substitution industrial policies India pursued
until recently have been widely discussed. So too her complex and cumbersome FDI regime in place until the
nineties.

FDI FLOW THROUGH AUTOMATIC AS WELL AS GOVT APPROVAL ROUTE

FDI AND ITS IMPACT ON INDIAN ECONOMY

35
India is emerging as fast growing nation, contributing in world trade by bringing reforms in its trade practices.
The world's largest democracy, India, has emerged as a new player on the international arena. From 3.5% growth
at the time independence till average growth of 9% in 2008, long closed to foreign competition, India has now
opened up its market to foreign companies. The major changes brought in by the Indian government in
International trade sweep away many archaic and burdensome regulations and create a business-friendly
environment for domestic and international business.

The Indian Economy

India is today one of the six fastest growing economies of the world. The country ranked fourth in terms of
Purchasing Power Parity (PPP) in 2001. The business and regulatory environment is evolving and moving towards
constant improvement. A highly talented, skilled and English-speaking human resource base forms its backbone.

The Indian economy has transformed into a vibrant, rapidly growing consumer market, comprising over 300
million strong middle class with increasing purchasing power. India provides a large market for consumer goods
on the one hand and imports capital goods and technology to modernize its manufacturing base on the other.

An abundant and diversified natural resource base, sound economic, industrial and market fundamentals and
highly skilled and talented human resources, make India a destination for business and investment opportunities
with an assured potential for attractive returns.

Far-reaching measures introduced by the government over the past few years to liberalise the Indian market and
integrate it with the global economy are widely acknowledged.

The tenth five year plan document targets a healthy growth rate of 8% for the Indian economy during the plan
period 2002 – 07.

Selected Economic Indicators :

India remained relatively unscathed from the 1997-98 Asian financial sector crisis and has maintained a healthy
growth rate of over 5 per cent despite recession in major world economies over the past two years. This
demonstrates the size, strength and resilience of the Indian economy.

India’s real GDP growth varied between 6 to 8 per cent per annum Were it not for the resilience of China and
India, the world economy would have been in deep recession in 2002.

36
The sectoral composition of GDP reflects a transition. While the agricultural and industrial sectors have
continued to grow, the services sector has grown at a significantly higher pace - it currently contributes nearly
half of India’s GDP.

On the external front, cumulative foreign investment inflows have been US$ 50 billion since 1991. This includes
over US$ 28 billion of Foreign Direct Investment (FDI) and about US$ 22.6 billion in portfolio investment.

Licensing has been removed from all but six sectors. The Indian government is determined to remove any
remaining road blocks, real or perceived. India has one of the most transparent and liberal FDI regimes among
the emerging developing economies. The Union government has been continuously opening up new sectors to
foreign investment, while enhancing FDI limits in others. The year 2002 saw the opening up of the defence, print
media, housing and real estate and urban mass transportation sectors. Some of the key aspects of FDI in the
country include:

• 100 per cent FDI is allowed in most sectors except telecommunications (49 per cent), insurance (26 per
cent), banking (49 per cent), aviation (40 per cent) and small scale industries (24 per cent). FDI in excess
of 24% is permitted in SSI sector on 50% export obligation.

External sector :

India’s external sector posted significant gains during 2004-05, despite the deepening of the global slowdown
and uncertainties owing to September 11, 2001 terrorist attacks. The current account registered a surplus after a
period of more than two decades. The buoyancy in capital flows bolstered the foreign exchange. Indicators of
liquidity and sustainability of external debt improved further. The exchange rate of the rupee remained broadly
stable during the year.

FDI flows to India will go up: UNCTAD

‘’Worldwide FDI flows will decline this year - 25 per cent in developing and 31 per cent in developed countries -
but India is one of the few countries where it will go up,’’ Karl Sauvant, Director, UNCTAD told UNI.

According to a recent report on global foreign direct investment inflows, India has been rated the seventh most
attractive destination in the world for FDI for 2001.

Weak external demand adversely affected India’s export performance . This was counterbalanced by the listless
domestic demand for imports and the softness in international oil prices for a greater part of the year. As a
result, the trade deficit, on balance of payments basis, declined.

37
MNCs happy operating in India, 61% in black

"…A survey on FDI conducted by FICCI shows that the performance of 385 foreign investors operating in India
was satisfactory, with 61 per cent reporting profits or break-even. And around 51 percent of the respondents
have expansion plans on the cards. Despite the overall conditions of slowdown, over 71 per cent respondents
reported a capacity utilization of 50-75 per cent.

As many as 93 per cent of the respondents find the handling of approvals and applications at the Centre to be
good to average. The simplification of the approval procedure at the Centre can be gauged by the fact that the
number of applications going through the automatic route has risen
.Around 63 percent find the overall policy framework to be good to average. "The apparent increase in the FDI
inflow shows that the improved policy environment is having a positive impact," says a senior official at FICCI.
Besides 70 per cent feel that bringing funds into the country is relatively easy and 69 per cent say that funds
repatriation can be carried out fairly easily…"

India’s foreign exchange reserves have risen significantly to over US$ 68 billion by the end of December 2002.
This has provided the much needed stability to the exchange rate and strengthening of the rupee.

The external debt to GDP ratio of the country has improved significantly. Among developing countries, India has
one of the lowest external debt to GDP ratios.

The value of foreign trade has increased substantially. Both exports from and imports into India are increasing. In
order to boost exports and attract foreign investments, the government had announced in April 2000 the
establishment of Special Economic Zones (SEZs) policy. The SEZs would offer world class infrastructure, attractive
financial and tax incentives and procedural ease of a duty-free trading area. For all practical purposes, units
located in the SEZs are given deemed foreign territory treatment.

A unique feature of the transition of the Indian economy has been an element of high growth with stability. Both
at the central and state levels and across political affiliations of the Indian federal and state polity, there is
consensus on further economic liberalisation. The reforms programme and the market oriented policies of the
government are irreversible.

Sectoral overview

Agriculture

38
Two thirds of India’s population lives in rural areas. Agriculture and related activities are the main source of
livelihood for them. The performance of the agricultural sector has continuously been improving (over many
decades), helping the country achieve a surplus in food grains production. This has been facilitated through new
agricultural techniques and tools acquired by Indian farmers, mechanisation, use of high yielding varieties of
seeds, increasing use of fertilizers and irrigation facilities, on-going operational research in the country’s
numerous agricultural universities and colleges, etc. With liberalisation of trade in agricultural commodities,
India enjoys a competitive advantage in a number of agricultural and processed food products exports.

While the share of agriculture in GDP is declining because of faster growth of the services sector, production in
absolute terms has been steadily rising. Agriculture accounts for 62 per cent of total employment. Some other
key highlights include:

• India had a buffer stock of foodgrains (wheat and rice) of nearly 50 million tonnes (Dec. 02) as against
the target of 20 million tonnes at any given point in time. This has helped India enter the foodgrains
export market in a significant way.

• India is the largest producer and consumer of tea in the world and accounts for 28 per cent of world
production and 15 per cent of world trade.

• Agri-exports account for 13-18 per cent of total annual exports of the country.

• The value of agricultural imports of inputs like fertilizers, etc. are approximately one-fourth the value of
exports.

Manufacturing :-

India has moved from an agrarian to a manufacturing and services led economy. The manufacturing sector
contributes around one-fourth of the total GDP. The country has built a diversified industrial base comprising
traditional handicrafts, small, medium and large manufacturing companies and high technology-oriented
products. The industrial output has grown to approx US$ 65 billion.

The country has emerged as an important global manufacturing hub - many multinational corporations (MNCs)
like Pepsi, General Electric (GE), General Motors (GM), Ford, Suzuki, Hyundai, Gillette, LG, etc. have followed
India’s economic liberalisation process from close quarters and set up successful operations in the country in
recent years. They have been able to leverage cost advantages while adhering to global manufacturing facilities.

39
Companies in the manufacturing sector have consolidated around their area of core competence by tying up
with foreign companies to acquire new technologies, management expertise and access to foreign markets. The
cost benefits associated with manufacturing in India, have positioned India as a preferred destination for
manufacturing and sourcing for global markets.

Services :-

The services sector currently accounts for almost half of the country’s GDP. Expanding at a rate of 810 per cent
per annum, services is the fastest growing sector in the Indian economy. In fact, the growth in India’s GDP,
despite the global slowdown, is attributed largely to its strong performance.

Availability of highly skilled workers has encouraged many international companies to carry out their research
and development activities in India. IT, biotech, tourism, health, financial services and education hold the
promise of sustainable high growth. To give a perspective:

• Domestic software has grown at 46 per cent while software exports have grown at 62 per cent
over the last years.

• The last decade has seen the Indian entertainment industry grow exponentially. The key drivers
for this have been technology and the government’s recognition of the importance of the sector. The
industry is expected to grow at a compound annual growth rate (CAGR) of 27 per cent. Revenues are
projected to increase.

• Information Technology enabled Services (ITeS) with elements like call centres, back office
processing, content development and medical transcription are key to rapid growth.

Infrastructure :-

The infrastructure sector in India, traditionally reserved for the government, is progressively being opened up for
private sector participation.

Ports :-

The country has a 7500 km long coastline dotted with numerous major and minor ports. The areas that have
been identified for participation and investment by the private sector include leasing out existing assets of the
ports, construction of additional assets such as container terminals, cargo berths, handling equipment, repair
facility, captive power plants and captive facilities for port based industries. Foreign investment up to 100 per

40
cent equity participation is permitted in ports through the automatic route for construction and maintenance of
ports and harbours.

A number of private companies have already set up port facilities in the country. Two greenfield ports
i.e. Pipavav and Mundra in Gujarat have been set up through private participation and these have been able to
compete with existing major ports. Many multinational and domestic players have taken over existing port
facilities and are operating them. Recently the container terminal at Chennai port has been taken over by an
Australian port major.

Roads:-

India has the second largest road network in the world, spanning 3.3 million kilometres. Most of the private
investment in this sector has traditionally been through the build-operate-transfer schemes. However, now
many new projects are being bid out on toll collection mechanism.

Currently, the National Highways Authority of India (NHAI) is implementing the National Highways Development
Project (NHDP). NHDP is the largest ever highway development project to be undertaken in the country. The
project involves widening of over 13,000 km of highways in the country. The investment for this project is
estimated at US$ 13.2 billion at 1999 prices. The project has been broken up into a large number of smaller
segments, many of which have been commissioned. Currently work has been completed on 1976 kilometers and
another 5222 kilometers of length is under construction.

Airports:

India has 122 airports, controlled by the Airports Authority of India (AAI). The government is in the process of
leasing out the four major international airports at Delhi, Mumbai, Chennai and Kolkata to private operators.

Power

Power Sector, hitherto, had been funded mainly through budgetary support and external borrowings. But given
the budgetary support limitation due to growing demands from other sectors, particularly social sector and the
severe borrowing constraints, a new financing strategy was enunciated in 1991 allowing private enterprise a
larger role in the power sector.

41
Presently, restructuring and regulatory reforms include bringing about reforms in the State Electricity Boards
(SEBs) through establishment of the State Electricity Regulatory Commissions. Reforms are progressing steadily
in the sector and privatisation of SEBs have already begun. The government is also planning a massive
restructuring of the finances of SEBs and is looking at a one-time settlement of dues of SEBs. In effect, a large
amount of liquidity will be injected in the sector.

The Ministry of Power has also formulated a Blue Print to provide reliable, affordable and quality power to all
users in the country i.e. power on demand by 2012. This requires huge increase in generation capacity,
upgradation of existing generation facilities and also the transmission and distribution network.

Telecommunications

India’s telecommunications network ranks among the top ten countries in the world. One of the world’s largest
and fastest growing telecom markets.

Despite a strong base of a billion people, the country has a low telephone density. The government had allowed
private participation in cellular services in 1992. The sector witnessed partial deregulation between 1994 and
1999. The government announced the New Telecom Policy (NTP) in 1999 to further de-regulate the sector with
respect to services like basic, international long distance (ILD), national long distance (NLD) and Wireless in Local
Loop (WLL) among others.

Financial sector:

The Indian financial sector reforms aim at improving the productivity and efficiency of the economy. It remained
stable, even when other markets in the Asian region were facing a crisis. The opening of the Indian financial
market to foreign and private Indian players, has resulted in increased competition and better product offerings
to consumers. The financial sector has kept pace with the growing needs of corporates and other borrowers.
Banks, capital market participants and insurers have developed a wide range of products and services to suit
varied customer requirements. A trend towards mergers and acquisitions is expected in the near future due to
the compulsions of size and limitations of growth of business on its own vis-à-vis growth through acquisitions.
The recent favourable government policies for enhancing limits of foreign investments in the banking sector
have generated interest from global banking majors.

42
The Reserve Bank of India (RBI) has ushered in a regime where interest rates are more in line with market forces.
This has increased the credit disbursements in the economy which, in turn, will boost industry. Banks and trade
financiers have also played an important role in promoting foreign trade of the country.

The potential of the sector is evident from existing and projected estimates:

• Presently the total asset size of the Indian banking sector is US$ 270 billion while the total deposits
amount to US$ 220 billion in a banking network of over 66,000 branches across the country.

• The size of the insurance market with only 20 per cent of the insurable population currently insured,
presents an immense opportunity to new players. Foreign insurance majors have entered the country in a big
way and started joint ventures in both life and non-life areas.

Policy Initiatives :

• There has been a paradigm shift in the government’s approach to selling its stake since 31 March, 2000.
From selling minority stakes, the government has started divesting majority holdings and transferring
management control to strategic investors in profitable undertakings.

• The government had set up a separate ministry in late 1999 to facilitate the divestment process. It has
also set up a cabinet committee and an inter-ministerial group to consider and facilitate specific divestment
proposals.

Some of the key highlights of the disinvestment policy are:

The 1991-92 budget considered divestment of 20 per cent government equity in select PSUs in favor of public
sector institutional investors, mutual funds and workers.

The Disinvestment Commission (1997-99) made specific recommendations on 58 specific PSUs with
respect to disinvestment feasibility and the methodology to be adopted.

43
The second phase of disinvestment started in 1998-99. Each year since 1999, the government is pushing ahead
with reforms and disinvestments. The government has now declared its willingness to reduce its stake below 26
per cent in non-strategic PSUs.

Regulatory Framework for FDI in India

Indian companies can receive FDI under two routes-

1. Automatic Route – It does not require prior approval either of Reserve Bank of India (RBI) or
government. It is allowed in all activities / sectors except where the provisions of consolidated FDI policy
paragraph as ―Entry route for investment‖ issued by government of India from time to time is attracted.

2. Government Route :–‗Government route„ means that investment in the capital of resident entities by non-
resident entities can be made only with the prior approval from FIPB, Ministry of Finance or SIA, DIPP as the
case may be. FDI in sectors, not covered under automatic route requires prior approval of the government
which is considered by Foreign Investment Promotion Board (FIPB), Department of Economic Affairs, and
Ministry of Finance. Following sectors require prior approval of Government of India

Opportunities:-

The successfully privatized projects during 2002-03 include the long-distance international telecom carrier –
Videsh Sanchar Nigam Limited (VSNL); petroleum marketing company – IBP; petrochemical company – Indian
Petrochemicals Limited (IPCL); metal manufacturing companies – Hindustan Zinc Limited and Bharat Aluminium
Company; hotels belonging to India Tourism Development Corporation (ITDC) and the country’s largest small
and medium car manufacturing company – Maruti.

The government is now considering disinvestments of the Shipping Corporation of India and two state trading
corporations (STC and MMTC) among others. One of the biggest privatization projects that the government has
initiated is the leasing of international airports at the four metropolitan cities of Delhi, Mumbai, Chennai and
Kolkata. The privatization mandates will provide a good opportunity to both domestic and foreign investors to
pick up stakes in well-performing assets.

44
 CHAPTER-5
CONCLUSION SUGGESTIONS AND RECOMMENDATION

45
Conclusion

India, among the European investors, is believed to be a good investment despite political uncertainty,
bureaucratic hassles, shortages of power and infrastructural deficiencies. India presents a vast potential for
overseas investment and is actively encouraging the entrance of foreign players into the market. No company, of
any size, aspiring to be a global player can, for long ignore this country which is expected to become one of the
top three emerging economies. Success in India will depend on the correct estimation of the country's potential,
underestimation of its complexity or overestimation of its possibilities can lead to failure. While calculating, due
consideration should be given to the factor of the inherent difficulties and uncertainties of functioning in the
Indian system. Entering India's marketplace requires a well-designed plan backed by serious thought and careful
research.
It is found that FDI inflows in India show positive trend over the period under study. Gross inflows of
FDI include 63% share of direct investment in equity and 37% share of portfolio investment. FDI
increased due to adoption of more liberal foreign policy and series of measures are undertaken by GOI. It
is observed that Mauritius and Singapur had 48% cumulative inflows of FDI. While, studying sectoral
perspective, it is found that service sector tops in attracting highest FDI in equity inflows ,followed by
manufacturing sector. Even in recent global crisis, FDI inflows showed increasing trend. FDI is expected to
grow in coming years. It was hypothecated that , the FDI inflows show positive growth trend. From the
above data analysis and discussion this hypothesis has to be accepted. Correlation analysis results
indicated that there is a very high correlation between the FDI inflows and the other related economic
indicators as it was hypothecated. Opening FDI in multi-brand retailing has mixed consequences on retail
inIndia.

Suggestions

FDI in India will bring various benefits like advancement of knowledge, skill, technology, exports,
employment and management. But MNCs may create forex drain from India. Indian companies will face
stiff competition from foreign companies. Thus, while allowing different sectors like multi-brand retailing,
GOI should have to take a cautious steps.FDI in retail would expose the retail traders in domestic markets
to unfair competition and thereby eventually leading to job losses. A balanced and objective view needs
to be taken in this regard, Foreign investment in portfolio may be withdrawn at any time. Therefore GOI
should stress to attract more equity investments. Further the regulatory policies should be made
favorable and policymakers should avoid uncertainties for boosting FDI in India and ultimately to increase
GDP, Trade and Foreign reserves. Retailers in India can fight against foreign retailers and survive in the

46
 competition due to their own merits like- local market, low price, close customer relations, credit facility,
intimacy with customer and personalizedservices.

India has emerged as one of the potential Market and is ranked as the fifth largest economy in the world (ranking
above France, Italy, the United Kingdom, and Russia) and has the third largest GDP in the entire continent of
Asia. It is also the second largest among emerging nations. (These indicators are based on purchasing power
parity.) India is also one of the few markets in the world which offers high prospects for growth and earning
potential in practically all areas of business. Yet, despite the practically unlimited possibilities in India for
overseas businesses, the world's most populous democracy has, until fairly recently, failed to get the kind of
enthusiastic attention generated by other emerging economies such as China.

The some of the important reasons of lack of the higher FDI can be highlighted as:

Lack of enthusiasm among investors:

The reason being, after independence from Britain 50 years ago, India developed a highly protected, semi-
socialist autarkic economy. Structural and bureaucratic impediments were vigorously fostered, along with a
distrust of foreign business. Even as today the climate in India has seen a seachange, smashing barriers and
actively seeking foreign investment, many companies still see it as a difficult market. India is rightfully quoted to
be an incomparable country and is both frustrating and challenging at the same time. Foreign investors should
be prepared to take India as it is with all of its difficulties, contradictions and challenges. The Indian middle class
is large and growing; wages are low; many workers are well educated and speak English; investors are optimistic
and local stocks are up; despite political turmoil, the country presses on with economic reforms.But there is still
cause for worriesInfrastructure

The rapid economic growth of the last few years has put heavy stress on India's infrastructural facilities. The
projections of further expansion in key areas could snap the already strained lines of transportation unless
massive programs of expansion and modernization are put in place. Problems include power demand shortfall,
port traffic capacity mismatch, poor road conditions (only half of the country's roads are surfaced), low
telephone penetration (1.4% of population).

Indian Bureaucracy:

Although the Indian government is well aware of the need for reform and is pushing ahead in this area, business
still has to deal with an inefficient and sometimes still slow-moving bureaucracy.

47
Diverse Market:

The Indian market is widely diverse. The country has 17 official languages, 6 major religions, and ethnic diversity
as wide as all of Europe. Thus, tastes and preferences differ greatly among sections of consumers.Therefore, it is
advisable to develop a good understanding of the Indian market and overall economy before taking the plunge.
Research firms in India can provide the information to determine how, when and where to enter the market.
There are also companies which can guide the foreign firm through the entry process from beginning to end --
performing the requisite research, assisting with configuration of the project, helping develop Indian partners
and financing, finding the land or ready premises, and pushing through the paperwork required.

Market Study:-Is there a need for the products/services/technology? What is the probable market for the
product/service? Where is the market located? Which mix of products and services will find the most
acceptability and be the most likely to generate sales? What distribution and sales channels are available? What
costs will be involved? Who is the competitor

Check on Economic Policies:-The general economic direction in India is toward liberalization and globalization.
But the process is slow. Before jumping into the market, it is necessary to discover whether government policies
exist relating to the particular area of business and if there are political concerns which should be taken into
account. In sum, Indian government is trying very aggressively to attract foreign direct investment (FDI) and FDI
is coming into India these days in a satisfactory way the argument that India should attract large volumes of FDI
if only because other countries has done so may be misconceived. The structure, stage of development, sources
of FDI and historical factors set India apart from other countries. The optimum level of FDI a country should
harbor is a function of the structure, stage of development, sources of FDI it has access to and the volume of co-
operant factors it possess. And so too would be the contractual forms of foreign enterprise participation the
country should opt for. None of these factors underlie the recent exhortations such as "in terms of foreign
investment, it is the direct investment that should be actively sought for and doors should be thrown wide open
for foreign direct investment. FDI brings huge advantages (new capital, technology, managerial expertise, and
access to foreign markets) with little or no downside “. The open door policies advocated include relaxation of
limits on foreign equity participation, reduction of corporate tax rates, relaxation of labour laws which at present
do not allow retrenchment of workers or closure of loss making enterprises, and promotion of export processing
zones (EPZs).

The empirical research and finding on the basis of various studies indicates that there are many economic and
non economic factors directing the amount of FDI , Export and Import situation and inturn Balance of Payment
of the country. However FDI and Balance of payment trend of last 15 year shows a healthy sign and need to be
strengthen further to improve the balance of payment situation of the country.

48
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 (R & D)
etc.Government should design the FDI policy such a way where FDI inflow can be utilized as means of enhancing
domestic production, savings and exports through the equitable distribution among states by providing much
freedom to states, so that they can attract FDI inflows at their own level. FDI can help to raise the output,
productivity and export at the sectoral level of the Indian economy. However, it can observed the result of
sectoral level output, productivity and export is minimal due to the low flow of FDI into India both at the macro
level as well as at the sectoral level. Therefore for further opening up of the Indian economy, it is advisable to
open up the export oriented sectors and higher growth of the economy could be achieved through the growth of
these sectors.

On the other hand, FDI in multi-brand retailing must be dealt cautiously as it has direct impact on a large chunk
of population. Foreign capital, if unchecked, may widen the gap between the rich and the poor. Thus, the entry
of foreign capital into multi-brand retailing needs to be anchored in such a way that it results in a win-win
situation both for India and global players. For example FDI in multi –brand retailing can be allowed in a
calibrated manner with social safeguards so that the effect of possible labor dislocation can be analyzed at
regular intervals and policy fine tuned accordingly. To ensure that the foreign investors make a genuine
contribution to the development of India„s infrastructure and logistics, it can be stipulated that a percentage of
FDI should be spent towards building up of back end infrastructure, logistics or agro processing units and the
claims must be critically evaluated. It can also be stipulated that at least 50% of the jobs in the retail outlet
should be reserved for rural youth. Developing countries, emerging economies and countries in transition have
come increasingly to see FDI as a source of economic development and modernization, income growth and
employment. Countries have liberalized their FDI regimes and pursued other policies to attract investment. They
have addressed the issue of how best to pursue domestic policies to maximize the benefits of foreign presence
in the domestic economy.

The study Foreign Direct Investment for Development attempts primarily to shed light on the second issue, by
focusing on the overall effect of FDI on macroeconomic growth and other welfare-enhancing processes, and on
the channels through which these benefits take effect. The overall benefits of FDI for developing country
economies are well documented. Given the appropriate host-country policies and a basic level of development,
a preponderance of studies shows that FDI triggers technology spillovers, assists human capital formation,
contributes to international trade integration, helps create a more competitive business environment and
enhances enterprise development. All of these contribute to higher economic growth, which is the most potent
tool for alleviating poverty in developing countries. Moreover, beyond the strictly economic benefits, FDI may

49
help improve environmental and social conditions in the host country by, for example, transferring “cleaner”
technologies and leading to more socially responsible corporate policies. The report does not focus solely on the
positive effects of FDI for development. It also addresses concerns about potential drawbacks for host
economies, economic as well as non-economic. While many of the drawbacks, referred to as “costs” in this
report, arguably reflect shortcomings in the domestic policies of host countries, important challenges may
nevertheless arise when these shortcomings cannot easily be addressed. Potential drawbacks include a
deterioration of the balance of payments as profits are repatriated (albeit often offset by incoming FDI), a lack of
positive linkages with local communities, the potentially harmful environmental impact of FDI, especially in the
extractive and heavy industries, social disruptions of accelerated commercialization in less developed countries,
and the effects on competition in national markets. Moreover, some host country authorities perceive an
increasing dependence on internationally operating enterprises as representing a loss of political sovereignty.
Even some expected benefits may prove elusive if, for example, the host economy, in its current state of
economic development, is not able to take advantage of the technologies or know-how transferred through FDI.

As evidenced by analysis and data the concept and material significance of FDI has evolved from the shadows of
shallow understanding to a proud show of force. The government while serious in its efforts to induce growth in
the economy and country started with foreign investment in a haphazard manner. While it is accepted that the
government was under compulsion to liberalize cautiously, the understanding of foreign investment was lacking.
A sectoral analysis reveals that while FDI shows a gradual increase and has become a staple for success for India.
The Telecommunications and power sector are the reasons for the success of Infrastructure. This is a throwback
to 2007 when Infrastructure reforms were not attempted as the sector was performing in the positive. FDI has
become a game of numbers where the justification for growth and progress is the money that flows in and not
the specific problems plaguing the individual sub sectors. Political parties (Congress, BJP, CPI (M)) have changed
their stance when in power and when in opposition and opposition (as well as public debate) is driven by
partisan considerations rather that and effort to assess the merit of the policies. This is evident is the public
posturing of Hindu right, left and centrist political parties like the Congress. The growing recognition of the
importance of FDI resulted in a substantive policy package but and also the delegation of the same to a set of
eminently dispensable bodies. This is indicative of a mood of promotion counterbalanced by a clear deference of
responsibility. In the comparative studies the notion of Infrastructure as a sector has undergone a definitional
change. FDI in the sector is held up primarily by two sub sectors (telecommunications and Power) and is not
evenly distributed. This appreciation in the value of Indian Rupee provides an opportunity to the policy makers
to attract FDI inflows in Greenfield projects rather than attracting FDI inflows in Brownfield projects. Further, the
above analysis helps in identifying the major determinants of FDI in the country. FDI plays a significant role in
enhancing the level of economic growth of the country. This analysis also helps the future aspirants of research

50
scholars to identify the main determinants of FDI at sectoral level because FDI is also a sector – specific activity
of foreign firms‟ vis-à-vis an aggregate activity at national level. Finally, the study observes that FDI is a
significant factor influencing the level of economic growth in India. It provides a sound base for economic
growth and development by enhancing the financial position of the country. It also contributes to the GDP and
foreign exchange reserves of the country.

The government has taken significant steps to make foreign direct investment simpler, and render caps on FDI
redundant.

In a recent move, the government has announced that equity investments coming through companies with
Indians having majority ownership and control would be taken as fully domestic equity. With the changes in the
FDI policy, sectors like retail, telecom and media amongst others would benefit greatly.

The change in FDI norms will bring much respite to retailers who can now raise funds through stake sale in
subsidiaries, and also build closer alliances with their foreign partners.Furthermore, with the revised FDI norms,
extensive re-organisation of company finances across many sectors would be seen and companies would now be
subject to further dividend distribution tax of 15 per cent, including surcharges.

Additionally, the government has made new amendments to these revised norms. Even indirect foreign
investment would not be allowed in sectors where foreign investment is barred, like multibrand retail,
agriculture, lottery and atomic energy.

• The Department of Industrial Policy and Promotion (DIPP) and the Finance Ministry are planning to
remove the cap on FDI in single-brand retail and permit up to 100 per cent foreign investments as against
the 51 per cent currently.
• The government is also considering the removal of the incentive cap in wind energy which is restricted to
projects up to 49 MW, presently.
• The Reserve Bank of India (RBI) will now permit FDI up to 49 per cent in credit information companies
with voting rights up to 10 per cent.

The government is now planning to permit FDI in investment companies as well. The government has
also proposed wide-ranging modifications in the guidelines FDI over various sectors.

• Investment by Indian companies in which foreign firms have beneficial investment will account as direct
FDI.
• Direct investments made by NRIs to account as FDI.

51
Looking ahead:-With the government planning more liberalisation measures across a broad range of sectors
and continued investor interest, the inflow of FDI into India is likely to further accelerate.

The Union Commerce and Industry Minister in India, Mr Kamal Nath, has assured that India will not be greatly
affected by the current global meltdown and has expressed confidence about achieving the FDI target set for this
year.

LIMITATION OF THE RESEARCH

• The data is collected on secondary basis.

• The time was short to cover the whole information.

• FDI is not only source that impact on Indian economy.

52
 CHAPTER 6
BIBLIOGRAPHY AND REFERENCES

BIBLIOGRAPHY AND REFRENCES

1.Ministry of Finance, Report of the economic survey, Government of India, New

Delhi(2003-2004).
2. Weisskof T E (1972), “The Impact of Foreign Capital Inflow on Domestic Savings in Underdeveloped
Countries”, JournalofInternationalEconomics,Vol. 2, pp. 25-38.
3. Sahoo D Mathiyazhagan M K and Parida P (2002), “Is Foreign Direct Investment an
Engine of Growth?”, EvidencefromtheChineseEconomy,SavingsandDevelopment,
4.Datt and Sundaram, ( 2011), ‘IndianEconomy,’S. Chand and Co, New Delhi, 62nd Ed. 2011 pp.
349-357.
5.Johnson Andreas (2004):“ The Effects of FDI Inflows on Host Country Economic
Growth”, http://www.infra.kth.se\cesis\research\publications\working
6.Mithani D. M. (2005), ‘InternationalEconomics’,HPH, 4th ed. Pp. 149 to167.
7.P. Subba Rao, (2009), ‘InternationalBusiness,’HPH, Second Ed., pp. 124 to 138.
8.Sapna Hooda, (2011), ‘A study on FDI and Indian Economy’, Doctoral thesis, National Institute of Technology,
Kurukshetra, Haryana.

53
9.V. K. Bhalla and S. Shiva Ramu, (2003), ‘InternationalBusiness’, 7th Ed. Anmol, New Delhi, pp. 475-482.
10.Papers presented in NationalWorkshop( 2006), on ‘Foreign investment in India, - Opportunities and
Challenges’ held at S.U. Kolhapur.
11.Papers presented in NationalWorkshop(2012), on ‘Recent Trends in Commerce &
Management.’, held at G.A. College Sangli. ( Dandage&Phalatankar, Shinde&Herekar.)

54