Page 142 - DMGT545_INTERNATIONAL_BUSINESS

Unit 7: Foreign Direct Investment

notes
Table 7.4: Sector Specific FDI Policy

Source: http://www.indiabiznews.com/sites/default/files/fdi5.png

7.6 foreign Direct investment in india

India has retained its position as the second most-preferred global location for foreign investment
in 2008 and will continue to do so till 2010, lagging only behind China, the United Nations
Conference on Trade and Development (UNCTAD) has said in World Investment Report 2008.
In the schema of classification of capital flows based on duration, FDI has been the most attractive
type of capital flows for emerging market economies because of its lasting nature and also because
it is considered a vehicle for transformation of the domestic production process through bridging
the technological gap. Concerted efforts towards attracting FDI through an emphasis on policies
of promoting non-debt creating capital inflows during the reform period did not yield results on
the expected lines initially.
FDI in India has increased over the years due to the efforts that have been made by the Indian
government. The increased flow of FDI in India has given a major boost to the country’s economy
and so measures must be taken in order to ensure that the flow of FDI in India continues to grow.

The total amount of FDI in India came to around US$ 42.3 billion in 2001, in 2002 this figure stood
at US$ 54.1 billion, in 2003 this figure came to US$ 75.4 billion, and in 2004 this figure increased
to US$ 113 billion.
With reform in policies, better infrastructure and a more vibrant financial sector, FDI inflows into
India accelerated in 2006-07. On a gross basis, FDI inflows into India, after rising to a level of US$
6.2 billion in 2001-02, fell to US$ 4.5 billion in 2003-04. After a recovery, the proportion has risen
to reach US$ 23.0 billion in 2006-07. The trend continued in the current financial year with gross

lovely Professional university 137