Recent Trends and Inflows of Foreign Direct Investment in India: With a Specific Reference to the Insurance Sector

The globalization and liberalization of the economy gave an opportunity to the foreign entities to invest their surplus funds in other countries. In the recent past, India has witnessed a substantial rise in the foreign direct investment inflows and with this, India emerged as one of the most preferred destinations for foreign direct investment in the world in 2015. Although the foreign direct investment has been increasing, but the period after 2008 witnessed fluctuations and diminishing growth. Hence, the present study attempted to empirically analyze the trends and patterns of yearly inflow of foreign direct investment in the country (2001 - 2016) and forecasted the inflows of foreign direct investment in India in the next 5 years and also appraised the progress of flow of FDI in terms of entry route - wise, investing country - wise, and sector - wise (2006 - 2016). It is apparent from the study that though foreign direct investment showed an increasing trend, but its growth rate over previous years fluctuated vigorously. The trend analysis revealed that there will be an increasing trend of foreign direct investment inflows in India in the future. There has been a rise in the share of Singapore, Japan, and U.S.A in the total foreign direct investment in India during the past decade, while the share of Mauritius and UK in the total foreign direct investment in India declined. Among the top five sectors, the contribution of the service sector and the construction development sector in the total foreign direct investment declined, while the contribution of the automobile industry increased considerably.

The study can help identify the key factors that impact foreign direct investment (FDI) inflows into India. Political stability and a favourable regulatory environment are the most significant determinants of FDI inflows into India. Experts highlighted the importance of a stable political environment that fosters investor confidence and predictability. The liberalization of FDI policy has increased the sectors eligible for FDI and raised the FDI limit in various sectors. Similarly, ease of doing business measures such as digitization of procedures and streamlining of regulatory processes have improved the investment climate in the country. Overall, the study provides important insights into the factors that impact FDI inflows into India and offers suggestions for policymakers to further improve the investment climate in the country. The findings suggest that political stability, a favorable regulatory environment, better infrastructure, and flexible labor laws are crucial for attracting FDI into the country. Policymakers should continue to focus on these areas to attract greater FDI inflows into India and foster sustained economic growth. Sample of 130 respondents that includes economic experts were surveyed to know the factors that affects Foreign Direct Investment in India and it is found that Political stability, Favourable regulatory environment and better infrastructure the factors that affects Foreign Direct Investment in India.

This paper examines the trends in foreign direct investment (FDI) in India during 1980-2018 and the emerging patterns of the FDI inflows in the country during the last two decades (i.e., 2000 - 2019). Our analysis, based on the secondary data collected from UNCTAD and DPIIT, reveals that the ongoing FDI liberalization measures started in India since 1991 have resulted in a dramatic upsurge in the FDI inflows as well as a stock of FDI in the country. The share of India in the global FDI inflows has increased in the post-liberalization period. Still, there was no perceptible increase in India’s share in the global FDI stock during this period. Detailed examination of the patterns of the FDI inflows in India revealed that the equity capital had been the largest component of the FDI in India.Moreover, its share in the total FDI inflows has been increasing during 2000 and 2019. Mauritius and Singapore have been the two important sources of FDI inflows into India, contributing more than half of the FDI flows during the last two decades; this was mainly because these countries were considered as tax heavens for investors from other counties for routing their investments to India. Sector-wise distribution of FDI in India during the last two decades of the post-liberalization period (i.e., during 2000 - 2019) has shown that the service sector has emerged the largest recipient of FDI replacing the manufacturing sector. Our analysis has clearly shown the impact of liberalization on enhancing the FDI flows as well as stock in India and also in changing patterns of FDI distribution in the country.

The paper has made an empirical investigation into some of the macroeconomic determinants of Foreign Direct Investment (FDI) inflows into India. Time series data over the period 1991 to 2012 has been used for the purpose and Gross Domestic Product (GDP), Consumer Price Index (CPI), Trade Openness (TO), Exchange Rate (ER), Foreign Exchange Reserve (FOREX) and Gross Domestic Capital Formation (GCF) are considered as the determinant variables of Foreign Direct Investment (FDI) inflows into the country. Multivariate linear regression has been used as an analytical model for studying the relationships between the explained and the explanatory variables. The Ordinary Least Squares (OLS) results suggest that Foreign Exchange Reserves (FOREX), Inflation (CPI) and Gross Capital Formation (GCF) are the significant explanatory variables of FDI inflows in to India over the years. Further, it is revealed that FOREX and CPI contribute positively to FDI inflows and the relative importance of the former is higher than the later. The variable GCF was found to have a negative bearing on FDI inflows into the country. Though the variables Gross Domestic Product, Trade Openness and Exchange Rates have positive impacts on FDI inflow, they did not appear to be significant in the regression model.

The main object of this paper is to study the changing structure and direction of Foreign Direct Investment of India and China comparatively. It is well known that FDI can complement local development efforts in a number of ways, including boosting export competitiveness; generating employment and strengthening the skills base; enhancing technological capabilities and increasing financial resources for development. Global Foreign Direct Investment (FDI) inflows rose modestly by 5 percent, to reach $1.24 trillion in 2010. While global industrial output and world trade are already back to their pre-crisis levels, FDI flows in 2010 remained some 15 percent below their pre-crisis average, and nearly 37 percent below their 2007 peak. UNCTAD predicts FDI flows will continue their recovery to reach $1.4-1.6 trillion, or the pre-crisis level, in 2011. They are expected to rise further to $1.7 trillion in 2012 and reach $1.9 trillion in 2013, the peak achieved in 2007.The service sector has attracted highest (21 percent) FDI inflows; then computer software, and hardware (9 percent), telecommunication sector (8 percent) and Housing and Real estate (7 percent) during 2008 to August 2010. Mauritius (42 percent to total inflows of FDI) has been largest investor in India, followed by Singapore (9 percent) during 2008 to August 2010 among top ten countries. China’s highest FDI inflows in leasing and business service 30280.70 million USD in 2010. Second sector is Banking (8627.39) followed by wholesale and retail trade, mining, transport, storage and post etc. during the same period.In short, comparatively the global FDI inflow in China is highest than India in 2010. The sector wise FDI inflow show that, a highest FDI inflow to India is in housing and real estate. But China’s FDI inflow is Business service and Banking in study period.

The study covers several aspects of FDI in the country, ranging from FDI patterns and FDI drivers to FDI relations, growth and exports, taking into account several factors such as the formation of raw equities, macroeconomic stability, institutional capital and human capital. In recent years, the FDI has increased so greatly that it has surpassed all other metrics of economic transactions. Countries are bidding for the highest levels of FDI, as they are the cheapest foreign funding. The FDI rate has increased to the developed countries in the last two decades, compared to the previous trend. There may have been a surprising rise of Asia as big FDI recipients. In the 2014 industry review, the highest FDI for the service sector was found. In the fields of training, accounting, infrastructure and telecoms, most of the FDI inflows are generated. The self-employed industries authorize government investments in chemical, metallurgical, automobile, Pharmaceutical and tourism sectors. The main recipient is FDI, but FDI flows are subject to policy constraints. Despite the lack of restrictions on FDI inflows in metallurgical, chemical, automotive, pharmaceutical and tourism industries, FDI growth in those sectors was much lower than in the FDI markets for utilities and telecoms.The study focuses on Foreign Direct investment (FDI) flows impact on select sectoral growth in India.

The tremendous rise in Foreign Direct Investment (FDI) inflows following the economic reforms in 1991, has been one of the most prominent features shaping the behavior of the Indian economy in the past three decades. The present study is based on secondary data and the objective is to examine the trends in FDI inflows to India following the global financial crisis, for the period 2009-2010 to 2021-2022. Additionally, the distributional pattern of FDI among the regions and states of India is also analyzed, using the data for 30 states/territories. The results reveal that total FDI inflows have increased in substantial amounts over the period from US$ 37,745 million in 2009-2010 to US$ 84,835 million in 2021-2022. Maharashtra and Karnataka have surpassed all other states in FDI equity inflows over the period from October 2019 to September 2022. These two states have commanded 50 percent of the total FDI, whereas the regions in central, eastern, and northeast India have received less than 3 percent of the total FDI equity inflows. Thus, the regional disparities in the distribution of FDI are quite visible post-analysis. It is suggested that government should focus on making investor-friendly policies to tap the potential of regions neglected by foreign investors.

Indian economy is one of the fastest emerging economies of the world. The FDI attracts a remarkable amount of foreign direct investments from the past decade . However, there have been reports for the past few years showing inconsistency in inflows of foreign direct investment in India. FDI is a device for financial development through its reinforcing of household capital, efficiency and business. FDI additionally assumes a key part in the up degree of innovation, abilities and administrative capacities in different segments of the economy. Foreign Direct Investment as observed as an imperative wellspring of non-obligation inflows and is expanding being looked for as a vehicle for innovation streams and as a methods for accomplishing focused proficiency by making an important system of worldwide interconnections. The GDP of India is observed to be in decreasing trend. This gives rise to the need of studying multiple facets of such investments. This paper aims at studying the Growth of FDI inflows in India and ascertaining the countrywide FDI inflows and sector-wise distribution of such investments in the country. The study aims to understand the flow of FDI growth in different sectors in India

With the initiation of new economic policy in 1991 and subsequent reforms process, India has witnessed a change in the flow and direction of foreign direct investment (FDI) into the country. This is mainly due to the removal of restrictive and regulated practices. Foreign direct investment in India increased from US $ 129 millions in 1991-92 to US $ 40,885 million in March, 2005, an increase of about 316.9 times. However, the country is far behind in comparison to some of the developing countries like China. In so far as growth trend of FDI is concerned, there has been quite impressive growth of FDI inflow into the country during this period. However, negative growth rate is noticed during the period 1998-2000 primarily due to falling share of major investor countries, steep fall of approval by 55.7% in 1998 compared to 1997 and slackening of fresh equity. However, traditional industrial sectors like food processing industries, textiles, etc. which were once important sectors attracting larger FDI, have given way to modern industrial sectors like electronics and electrical equipments, etc. In this paper analysis on the factors affecting potentiality and challenges of FDI in the country is discussed and open a room for future discussion.

1. Investment Strategies in Emerging Markets: An Introduction 2. Foreign Direct Investment in Egypt, India, South Africa and Vietnam: Comparative Empirical Results 3. Foreign Direct Investment in Egypt 4. Egyptian Case Studies 5. Foreign Direct Investment in India 6. Indian Case Studies 7. Foreign Direct Investment in South Africa 8. South African Case Studies 9. Foreign Direct Investment in Vietnam 10. Vietnam Case Studies 11. Conclusions for Management Research 12. Conclusions for Economic Policy Bibliography Index

India is one of the largest producer and consumer of electricity in the world owing to being one of the most populous country in the world signifying the demand for electricity is only set to grow further. World has witnessed an era of economic growth aided pertinently by electricity consumption and growing demand. With FDI indorsed downright to this vital utilities sector, it becomes imperative to cognize the relationship of Electricity Consumption, Economic Growth and FDI in India. In this study we investigate the causal direction of relationship among Foreign Direct Investment, Electricity Consumption and Economic Growth in India by using time-series data for the period 1986–2021 and employing econometric models. We find two uni-directional causalities running from Electricity Consumption to Economic Growth and Economic Growth to FDI and a bi-directional causality between Electricity Consumption and FDI. The results of the study provide a novel perspective for policy makers while formulating policies related to the power sector and foreign direct investments in India. The focus of Policy makers should be on enabling electricity service providers to offer best services to commercial and non-commercial participants as it aids in Economic growth of the country. For enhanced economic growth a country like India must have good and world-class infrastructure, efficient and effective regulatory mechanism equitable for all stakeholders, an improved living standard for people of all economic strata and a stable, healthy business friendly environment coupled with policy stability through stable government.

The paper describes Regression, ARIMA and ARIMAX analyses on GDP, inflation, exchange rate, export, import, energy generation and trade balance to estimate the foreign direct investment (FDI) in India. Specifically, we compared the results achieved from the fitted models viz., ARIMA and ARIMA with explanatory variable(s). The main emphasis was to see whether the ARIMA model including other time series as input variables helps in improving the forecasting performance. For this empirical study, we found that ARIMA(1, 1, 0) model with GDP as explanatory variable outperformed the Regression/ARIMA models for estimating the value of FDI in india.

PurposeThe purpose of this paper is to examine the determinants of foreign direct investment (FDI) in India.Design/methodology/approachUsing macroeconomic variables – GDP, inflation rate, interest rate, patents, money growth and foreign trade – the authors tried to find the best fit model (ARIMA (p,d,q)) to explain variation in FDI inflows into India. The authors tested for various assumptions taken before applying autoregressive integrated moving average (ARIMA) such as heteroscedasticity, autocorrelations, etc. using standard tests and quantified FDI policy changes using dummy variables.FindingsIt was found that of all macroeconomic variables taken, only GDP, inflation rate and scientific research are significant and that FDI Policy changes during years 1995‐1997 have had a significant impact on FDI inflows into India.Research limitations/implicationsThe authors' econometric model explains 63 percent variation in FDI inflows into India. Implicitly, the balance 37 percent variation in FDI inflows is still unexplained and so further study should be undertaken with even wider scope in terms of macroeconomic variables such as exchange rate, etc.Practical implicationsAs a recommendation for future FDI policy planning and implementation, the authors suggest the Government of India gives resources towards variables that have been classified as significant in this paper, namely GDP growth and inflation rate and should open the economy further. Sectors not yet open to FDI investments should be opened and although inflation rate should be controlled but some inflation is beneficial.Originality/valueThere has been no authoritative study until now to find “Determinants of FDI inflow to India” and this paper also goes a step forward and presents accurate models that can be used to forecast FDI inflows based on the macroeconomic variables considered.

This article charts the history of Japanese corporate engagement with India. While there has been a profound historic relationship between the two nations, economic interaction is commonly portrayed in the context of geographical and psychic distance. As institutions set the rules of corporate engagement, we analyse the evolving regulatory and policy regime for foreign direct investment (FDI) in post-independence India and the corporate strategies of Japanese multinational enterprises (MNEs) in response to this institutional change. Using a firm-level dataset we show that the trajectory of Japanese investment in India broadly follows that of other nationalities of foreign firms. Differentiated responses to institutional changes are detected by industry. Our analysis reveals important instances of Japanese firm flexibility and pragmatism vis-a-vis the rapidly growing Indian market.

This article charts the history of Japanese corporate engagement with India. While there has been a profound historic relationship between the two nations, economic interaction is commonly portrayed in the context of geographical and psychic distance. As institutions set the rules of corporate engagement, we analyse the evolving regulatory and policy regime for foreign direct investment (FDI) in post-independence India and the corporate strategies of Japanese multinational enterprises (MNEs) in response to this institutional change. Using a firm-level dataset we show that the trajectory of Japanese investment in India broadly follows that of other nationalities of foreign firms. Differentiated responses to institutional changes are detected by industry. Our analysis reveals important instances of Japanese firm flexibility and pragmatism vis-à-vis the rapidly growing Indian market.