Foreign Direct Investment in India

Contents Page thsis is shit

Executive summary………………………..page 2

Introduction………………………………..page 2

Literary Review……………………………page 3

Country Overview…………………………page 4

Policy Framework…………………………page 5

Economic Determinants…………………...page 11

Trade Facilitation………………………….page 14

Conclusion…………………………………page 18

References………………………………….page 19

Executive Summary

This report reviews the literature of the determinants of foreign direct investment (FDI) in India. Government legislation in India is then reviewed in order evaluate the barriers to entry which exist for Foreign investors, and the regulations in place that are in of control exports. What is also established is the importance of the economic factors that contribute largely in attracting foreign investment or investors. To some extent India has stabilised since Independence and the economic indicators are improving. The raw materials that lie in India have played a significant role in attracting investment resulting in production efficiency. Cheap unskilled labour is another indicator which has caused much controversy outside of India with companies being accused of exploiting India’s workforce. India is still a developing country and has rapidly increasing population, many of which struggle to survive everyday, and because of this we can conclude that foreign investment is encouraged into India.

Introduction

When we discuss economies on a global scale, a frequently mentioned term is Foreign Direct Investment (FDI). FDI is defined as "investment made to acquire lasting interest in enterprises operating outside of the economy of the investor." (www.unctad.org). It is a long-term relationship between the investor and the recipient entity.

The aim of this report is to investigate the inward movement of FDI in India. Firstly, a general country overview of India will be presented, followed by a literary review, and the three main determinants of FDI, namely:

• Policy framework

• Economic determinants

• Trade facilitation.

Literary Review

Policy framework, Economic determinants and Trade facilitation are the key determinants of attracting an inward flow of FDI for any country, and India is no exception. The literature referred to in the report is a testament to this statement.

India has seen a number of key policies and regulations being introduced during a series of economic changes. The East Asian crisis burst onto the world scene almost like a bolt from the blue, affecting many rapidly growing Southeast Asian countries like Thailand, the Rep. of Korea, Malaysia, Indonesia, and the Philippines. Their reverberations have been felt by neighbouring countries, including India in the early 1990s. This jumpstarted various policy initiatives, that progressively changed India from a restrictive regime to a liberal one. The Government of India (2001), Office of Economic Adviser, Ministry of Commerce & Industry, Handbook of Industrial Policy and Statistics, 2000,

New Delhi highlights these key economics reforms in terms of their origins, implementation, objectives as well as impact.

Other literature such as the “The Experience of Foreign Direct Investors in India” (Federation of Indian Chambers of Commerce & Industry (FICCI), 2001, April, 2001, New Delhi) form a genuine