Page 1 of 7
European Journal of Business &
Social Sciences
Available at https://ejbss.org/
ISSN: 2235-767X
Volume 07 Issue 01
January 2019
Available online: https://ejbss.org/ P a g e | 206
Roll of Foreign Direct Investment in Development of Haryana
Khushnandan
MA, UGC NET/JRF
M D University Rohtak
Email: khushnandangiroh@gmail.com
M. 9991427002
Abstract:
Investment or creation of capital is an important determinant of economic growth. In general,
investment may lead to creation of physical capital, financial capital and human capital. In
combination with other factors of production and technology, investment determines the
levels and growth through changes in production and consumption of goods and services.
Investment is not only a process of increasing growth rate but also a process of improving
quality of all aspects of human life such as infrastructure, per capita income, industries
growth leaving standard and Health facilities. Foreign Direct Investment has played a vital
role in the process of an economy. Haryana is one of the progressive states of India .FDI has
increased in Haryana from last few years in various ways. This paper analysed from various
aspects of FDI in Haryana.
Key words- FDI, Development, Haryana and Issues
Introduction:
Foreign Direct Investment (FDI) is considered the lifeblood of economic development
especially for the developing and underdeveloped countries. Multinational companies
(MNCs) capitalise on foreign business opportunities by engaging in FDI, which is investment
in real assets (such as land, buildings, or existing plants) in foreign countries. MNCs engage
in joint ventures with foreign firms, acquire foreign firms, and form new foreign subsidiaries.
It plays an important role in the long-term development of a country not only as a source of
capital but also for enhancing competitiveness of the domestic economy through transfer of
technology, strengthening infrastructure, raising productivity and generating new
employment opportunities (Deutsche Bundesbank, 2003). MNCs are interested in boosting
revenues through FDI by attracting new sources of demand, entering into profitable markets
and exploiting monopolistic advantages. Currently these corporations are increasingly
establishing overseas plants or acquiring existing overseas plants to learn the technology of
foreign countries. In India, FDI is considered as a developmental tool, which can help in
Page 2 of 7
European Journal of Business &
Social Sciences
Available at https://ejbss.org/
ISSN: 2235-767X
Volume 07 Issue 01
January 2019
Available online: https://ejbss.org/ P a g e | 207
achieving self-reliance in various sectors of the economy. With the announcement of
Industrial Policy in 1991, huge incentives and concessions were granted for the flow of
foreign capital to India. India is a growing country which has large space for consumer as
well as capital goods. India’s abundant and diversified natural resources, its sound economic
policy, good market conditions and highly skilled human resources, make it a proper
destination for foreign direct investments. As per the recent survey done by the United
National Conference on Trade and Development (UNCTAD), India will emerge as the third
largest recipient of foreign direct investment (FDI) for the three-year period ending 2012
(World Investment Report 2010). As per the study, the sectors which attracted highest FDI
were services, telecommunications, construction activities, and computer software and
hardware. In 1991, India liberalised its highly regulated FDI regime. Along with the virtual
abolition of the industrial licensing system, controls over foreign trade and FDI were
considerably relaxed. The reforms did result in increased inflows of FDI during the post
reform period. The volume of FDI in India is relatively low compared with that in most other
developing countries. FDI play an important role in economy development of a nation.
Haryana has emerged as at a very impressive rate Impact of FDI on Haryana economy has
proved to be beneficial for the state’s economy. It has grown at a very impressive rate.
Haryana has emerged as one of the most important state in the country for foreign direct
investment and this has given a major boost to the country. Haryana has become the largest
manufacturer in the terms of number of tractor, passenger cars, scientific instruments and
motor cycle in the country. Employment has increased significantly due to FDI. FDI has
increased in Haryana from last few years and this state has taken to attract invest. Nothing
that there are „immense opportunities‟ for business in Haryana The Haryana state has a
strategic location and its proximity to New Delhi makes it an attractive FDI destination. The
present study analysed emerging issues of FDI in Haryana the and we show the other factor
that attracts the foreign direct investment in Haryana. The purpose of the study is to analyses
the trend of FDI equity inflows in different sector in Haryana. And this paper also helps to
know the share of top investing foreign companies in Haryana and what the future plans for
increasing FDI in Haryana
Review of Literature:
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European Journal of Business &
Social Sciences
Available at https://ejbss.org/
ISSN: 2235-767X
Volume 07 Issue 01
January 2019
Available online: https://ejbss.org/ P a g e | 208
Many theoretical as well as empirical studies are conducted on determinants of FDI inflow
e.g. theoretical studies include: (Kohlhagen, 1977); (Cushman, 1985); and (Froot & Strein,
1991), and empirical studies include: (Klein, 1994); (Goldberf & Kolstad, 1995); and Kiyota
& Urata, 2004). The previous studies on the determinants of inward FDI to China identified
high GDP growth rate, large population that provide huge market, economic labor and many
other economic factors such as infrastructure, taxes and depreciation of Yuan against other
country’s currency as important determinants of FDI. Many studies identified Political
stability, economical labor, large market size, prejudiced and discriminatory policies, and
geographical propinquity as important factors attracting FDI in China (e.g. Lardy (1995),
Henley et al. (1999), and Zhang (2001)). Greaney (2003) conducted a study on Japan and
China and identified that Japan targeted China for FDI because of depreciation of Yuan
against Yen for reverse import. Additionally, the adoration of made in china can be attributed
to the devaluation of its currency in early 1990s with other factors (Xing & Zhao, 2008).
Ekholm et al. (2003) and Dyeople (2003) identified three factors in host country that attract
FDI i.e. cost of trade, cost of transportation and technology. Branstetter and Feenstra (2002)
explained that it is the political openness that attracted FDI in china. Cheng & Kwan (2000)
described that large market size and good infrastructure are the attractive factors to FDI in
china. Moore (1993) concluded that large market size and growth in GDP were among the
most important determinants of FDI by German firms from 1980 to 1990. Wheeler (1992)
identified the market size of the host country is one of the major determinants of FDI by the
US firms. China made dramatic progress in FDI inflow that induced many researchers to
explore the determinants of this rising FDI inflow.
Factors attracting FDI in Haryana are:
1. The state provides excellent infrastructure facilities such as well developed roads, railways,
Industrial.
2. The state provides a well developed system of banking.
3. The state has adopted policies that are investors friendly.
4. The state has a very efficient administrative system which tried to make it easy for the
investors to make investment in the state.
