Page 1 of 9

Journal for Studies in Management and Planning

Available at https://pen2print.org/index.php/jsmap/

ISSN: 2395-0463

Volume 04 Issue 09

September 2018

Available online: https://pen2print.org/index.php/jsmap/ P a g e | 159

Research Paper on Foreign Direct Investment Trends

& Dimensions

Ramandeep kaur

Abstract:-

FDI is an engine in bringing the financial sector at a fast speed. FDI was encouraged by

financial liberalization and market-based reforms in many Emergent Market Economies

(EMEs). Now, FDI has become a key feature of national development strategies for all most

all the countries over the globe. FDI has boosted the economy of India and on the other hand

there are critics who have blamed the government for ousting the domestic inflows. After

liberalization of Trade policies in India, there has been a positive GDP growth rate in Indian

economy. The paper tries to study the trends of FDI in India. The paper focuses on the trends

of FDI inflows by categorize them into sector-wise and country wise FDI inflow in India. The

result depicts that among the sectors Service sector, and among the countries Mauritius are at

the top. It also shows that there has been a remarkable increase in FDI inflow in India during

the year 2000 to 2012.

Introduction:-Foreign Direct Investment (FDI) plays a very important role in the

development of the nation. It is very much vital in the case of underdeveloped and

developing countries. It serves as a link between investment and saving. Many

developing countries like India are facing the deficit of savings and capital formation.

This problem can be solved with the help of Foreign Direct Investment. 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. India needs a massive investment to

achieve the goals of vision 20-20.This paper is a general analysis of the trends and

patterns (state-wise, sector –wise, country-wise) distribution of FDI Inflows the post

liberalization era. The purpose of this paper is to provide an examination of foreign

Page 2 of 9

Journal for Studies in Management and Planning

Available at https://pen2print.org/index.php/jsmap/

ISSN: 2395-0463

Volume 04 Issue 09

September 2018

Available online: https://pen2print.org/index.php/jsmap/ P a g e | 160

direct investment in various sectors and government policy regarding foreign

investment.

FDI means investment by non-resident entity/person resident outside India in the

capital of an Indian company under Schedule 1 of Foreign Exchange Management

(Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000

(Original notification is available at

http://rbi.org.in/Scripts/BS_FemaNotifications.aspx?Id=174 Subsequent amendment

notifications are available at http://rbi.org.in/Scripts/BS_FemaNotifications.aspx).

There has been a sea change in India’s approach to foreign investment from the early

1990s when it began structural economic reforms encompassing almost all the sectors

of the economy.

Pre-Liberalization Period

Historically, India had followed an extremely cautious and selective approach while

formulating FDI policy in view of the dominance of ‘import-substitution strategy’ of

industrialization. With the objective of becoming ‘self reliant’, there was a dual nature

of policy intention – FDI through foreign collaboration was welcomed in the areas of

high technology and high priorities to build national capability and discouraged in low

technology areas to protect and nurture domestic industries. The regulatory framework

was consolidated through the enactment of Foreign Exchange Regulation Act

(FERA), 1973 wherein foreign equity holding in a joint venture was allowed only up

to 40 per cent. Subsequently, various exemptions were extended to foreign companies

engaged in export oriented businesses and high technology and high priority areas

including allowing equity holdings of over 40 per cent. Moreover, drawing from

successes of other country experiences in Asia, Government not only established

special economic zones (SEZs) but also designed liberal policy and provided

incentives for promoting FDI in these zones with a view to promote exports. As India

continued to be highly protective, these measures did not add substantially to export

competitiveness. Recognizing these limitations, partial liberalization in the trade and

investment policy was introduced in the 1980s with the objective of enhancing export

competitiveness, modernization and marketing of exports through Trans-national

Corporations (TNCs). The announcements of Industrial Policy (1980 and 1982) and