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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
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