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Managing Global Dynamics (MGD)

June 2015 Examination

Post Graduate Diploma in Marketing

Sri Lanka Institute of Marketing

Assignment

Topic

UN reports foreign direct investment hit $1.4 trillion in 2013,

upward trend to continue

Student name A. Mohamed Azhar

Reg. No. 0000016630

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Table of Contents 1. Executive summary .......................................................................................................... 3

2. Introduction ...................................................................................................................... 4

3. Identifying Of Any Growth, Decline, Fluctuations or Trends of Foreign Direct

Investment in India .............................................................................................................. 5

3.1 Foreign direct investment (FDI) ................................................................................ 5

3.2 India shows fluctuations trend ................................................................................... 6

4. Analyzing Reasons for Any of the Above Trends ........................................................... 7

4.1 Lack of policy was followed by government ............................................................. 7

4.2 Tariff .......................................................................................................................... 7

4.3 Government intervention ........................................................................................... 7

4.3.1 Inappropriateexporting procedure ....................................................................... 7

4.4 Other factors............................................................................................................... 8

5. Present Indian Government Policy towards FDI ............................................................. 9

5.1 Foreign Direct Investment - Concept and Policy ....................................................... 9

5.1.1 General Conditions on FDI ................................................................................. 9

6. Has FDI Helped Certain Sectors In The Indian Economy Or Business? ...................... 12

7. Future Economic Growth and FDI in the Indian .......................................................... 13

7.1 Future Economic Growth ......................................................................................... 13

7.2 India Foreign Direct Investment Forecasts .............................................................. 14

8. Conclusion ..................................................................................................................... 15

9. Recommendation ........................................................................................................... 16

10. Reference ..................................................................................................................... 17

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1. Executive summary

The assignment was done about the Indian foreign direct investment. India is an emerging

country in Asian where It faces competition with a China due to the having cheaper

economies of scale and cheaper labor forces.

In the first task, according to the 10 years, FDI analyses, the growth were fluctuated in

India but in recent four years it had possible growing manner. There were so many

reasons for this fluctuation of FDI because Indian government had followed luck of the

policy with Foreign inverters, inundate government was loved too much tax on importing

product, machinery and raw retail, the government intervention, inappropriate exporting

producers and etc.

n the task three, Pakistan can be an owner of investing amount bur Bangladesh cannot be

the owner of their investment, direct and indirect foreign investment in an Indian

company, some sectors were prohibited and some sectors were allowed.

In the fourth task, Indian FDI was helped certain sectors such as electrical equipments,

transportation industries, telecommunication, fuels, food processing industries, and

services as well as lower support on the gypsum products, metallurgical industries,

chemicals, and drugs and pharmaceuticals.

In the fifth task, the India was expected to future economic growth and FDI growth due to

the growth sectors like physical, growth drivers social and agricultural infrastructure as

well as lower growth on the technological progress, improvement on productivity and

Indias young demography

The FDI policy was not appropriate for foreign customer so, I have recommended

Allow the ownership of foreign investment

Reduce the levy on importing

Indian government should take a responsibility on the liability.

The assignment was faced some limitation because all the data was collected from

websites where the information doesnt same So, then I have done some areas via

www.tradingeconomics.com.

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2. Introduction

Foreign direct investment (FDI) is an investment that made by a foreign person or foreign

company in the productive capacity of another country. There is the greatest moment of

capital across national boundaries in a way that contributions the investor control over the

picked up asset.

Indian is divided 29 states and 7 regions. It is a second lager population country in the

world as more than 1.23 Billion. According to the social predicting, India will become a

no 1 country in the world in 2025. There are different religions, people are living

independently where they used more than 30 languages such as Telugu, Hindi, Tamil,

Urdu, Punjabi, and Bengali. However the Hindi and English are used as official

languages. India faces a burgeoning population and its challenge of reducing social and

economic inequality. The culture changes as equal to western way of life. Even though

Poverty is a seriously challenging to country growth.

The economy is the 3rd largest country in the world where it was measured by Purchasing

power parity, with a gross domestic product of US $3.611 trillion. When measuring in

USD exchange-rate terms, India is the 10th largest country in the world, the current GDP

growth rate is 6.4% to 8.2% in the first year to the last quarter in2014 then GDP was

sampled down to 7.2% in the first quarter in 2015.

Services sector is increased an important role in the Indian economy. The country has so

many advents by the digital age, a large number of young and educated populace fluently

in English. India is a key exporter of highly talented workforce in software and financial

sectors and software engineering.

India adopted a socialist-inspired approach for most of its independent country, with

strength government control on private organization, global trade, and foreign investment.

However, in 1990, India step by step expanded its markets via economic improvements

by reducing government controls on foreign investment. The privatization of publicly

owned commerce and the opening some sectors to private and foreign investors has kept

slowly amid political debate. FDI up to 100% is allowed under the automatic route in all

activities/sectors which approval of the Government

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3. Identifying Of Any Growth, Decline, Fluctuations or Trends of

Foreign Direct Investment in India

3.1 Foreign direct investment (FDI)

Foreign direct investment (FDI) is an investment that made by a foreign person or foreign

company in the productive capacity of another country. There is the greatest moment of

capital across national boundaries in a way that contributions the investor control over the

picked up asset.

Foreign direct investment shows an expected growing role in international business. It

delivers a firm with new markets and marketing channels, economical production

facilities, access to new technology, goods, skills and funding. For a host country or the

foreign firm this receives the investment. FDI is allowed and prohibited in some sector,

according to their policy.

I have selected India due to following reasons

FDI is allowed routines (up to 100%) in all activities/sectors with approval of the

Government

Demographic are divided

Stable government and

Goveremnt by rule of law

2/3rd of population below 25 age of age

in 2015, there could be more than 200 million additional peoples earning income

about $15,000 per annum

Huge and growing milled class purchasing power

Faster growing economy

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3.2 India shows fluctuations trend

(Source- http://www.tradingeconomics.com/india/foreign-direct-investment)

In India, the foreign direct investment was established in 1991 under Foreign Exchange

Management Act (FEMA), when Manmohan Singh was finance minister. Actually India

already disallowed to overseas corporate bodies, after India decided to allow overseas

corporate bodies several sectors.

FDI was started with a less than $1 billion in 1990 as well three sector was grown by

higher inflows were in the services, telecommunication, construction activities and

computer software and hardware.

According to the trading economics, the Foreign Direct Investment (FDI) is fluctuations

in India, where they are larger inves