A STUDY ON FOREIGN DIRECT INVESTMENT INFLOWS INTO INDIA

Transcription

1 A STUDY ON FOREIGN DIRECT INVESTMENT INFLOWS INTO INDIA A thesis submitted to BHARATHIDASAN UNIVERSITY for the award of the degree of DOCTOR OF PHILOSOPHY IN ECONOMICS By G. PANNEERSELVAM [Reg. No /Ph.D.2/Economics/Part-Time/July 2008] Research Supervisor: Dr. P. NATARAJAN Assistant Professor POST GRADUATE AND RESEARCH DEPARTMENT OF ECONOMICS RAJAH SERFOJI GOVERNMENT COLLEGE (Autonomous) [Affiliated to Bharathidasan University, Tiruchirapalli] THANJAVUR TAMIL NADU - INDIA AUGUST 2011

2 Dr.P. NATARAJAN, M.A., M.Phil., M.Ed., Ph.D., M.B.A., P.G. and Research Dept. of Economics, Assistant Professor, Rajah Serfoji Govt. College (Autonomous), Thanjavur Date: CERTIFICATE This is to certify that the thesis entitled A STUDY ON FOREIGN DIRECT INVESTMENT INFLOWS INTO INDIA submitted to Bharathidasan University, Tiruchirapalli, for the award of the degree of DOCTOR OF PHILOSOPHY IN ECONOMICS is a bonafide record of research work carried out by Thiru G. PANNEERSELVAM, under my guidance and supervision in the P.G. and Research Department of Economics, Rajah Serfoji Government College (Autonomous), Thanjavur, Tamil Nadu, India. I further certify that no part of the thesis has been submitted anywhere else for the award of any degree, diploma, associateship, fellowship or other similar titles to any candidate. (P. NATARAJAN) Research Adviser

3 DECLARATION I hereby declare that the work embodied in this thesis has been originally carried out by me under the supervision of Dr. P. NATARAJAN, Assistant Professor, P.G. and Research Department of Economics, Rajah Serfoji Government College (Autonomous), Thanjavur and this work has not been submitted either whole or in part for any other degree or diploma at any university. Date: (G. PANNEERSELVAM) Research Scholar

4 ACKNOWLEDGEMENTS At the outset, I wish to express my gratitude to Dr. P. Natarajan, M.A., M.Phil., M.Ed., Ph.D., M.B.A., Assistant Professor of Economics, Rajah Serfoji Government College (Autonomous), Thanjavur, for his excellent guidance and invaluable help throughout the study. Mere words would not sufficient to explain his persistent encouragement, advice and help to complete this research. It is a great pleasure and excellent experience to work under his guidance. I thank Prof. C. Ramakrishnan, M.Sc., M.Phil., Principal, Rajah Serfoji Government College (Autonomous), Thanjavur, for having granted permission to me to do Ph.D. programme. I sincerely thank Ms. A.C. Vijayakumari, M.A., M.Phil., H.O.D., and Mr.V.Durairaj, M.A., M.Phil., M.B.A., Associate Professor, P.G. and Research Department of Economics, Rajah Serfoji Government College (Autonomous), Thanjavur, for their timely help and moral support. I sincerely thank Dr. R. Rajendran, Associate Professor of Economics, Government Arts College (Men), Kumbakonam, for acted as Doctoral Committee Member and help me for my research work. I thank Mr. P. Nadimuthu, Assistant Professor of Economics, A.V.V.M. Sri Pushpam College (Autonomous), Poondi, Mr. G. Santhakumar and Mr. S. Thennarasu, Research Scholars in Economics, P.G. and Research Department of Economics, for their help for the successful completion of this work. I thank Mr. C. Ravindran, Research Scholars, P.G. and Research Department of Economics, R.S.G. College (Autonomous), Thanjavur, for his continuous effort and help for the successful completion of this research work.

5 I express my sincere thanks to Mr. V. Murugesan, Assistant Professor of Statistics, R.S.G. College (Autonomous), Thanjavur, for his help in Statistical application in my research work. I am thankful to the Librarian and staff members of libraries of Rajah Serfoji Government College, Bharathidasan University, IFMR, Chennai, M.K. University, Madurai, for their timely help to collect theories and review of literature. Last but not least I owe a great deal to my parents, my wife, daughter and son, sister and brother, for their selfless and constant help. And I express my heartfelt thanks to all the colleagues and friends for their valuable help. My sincere thanks are due to M/s. Nagu Computers, Thanjavur, for neat execution and perfect preparation of the thesis. G. Panneerselvam

6 LIST OF TABLES Table No. Title Page 5.1. Foreign investments in India Foreign Direct Investments Foreign Portfolio Investments a. Correlation Analysis Share of Top Investing countries FDI Inflows Sectors Attracting Highest FDI inflow Foreign Direct Investments (Including Advances and Loan) Monthly FDI inflows During the Financial year Month wise FDI Inflows for the year Foreign Technology Transfer Approvals Foreign Technological Transfer Approvals (State-wise) Foreign Technological Transfer Approvals (Sectors-wise) Revised FDI Inflows (Equity + additional components of FDI) Foreigner s Foreign Direct Investment Foreign Direct Investment a. Correlation Analysis RBI S regional offices-wise FDI inflows Foreign Investment in Insurance Companies in India Distribution of FDI by Region for the years Summary of survey result (concluded) (Per cent of responses to UNCTAD survey) Distribution of FDI inflows among economics by range, 2010 Asia 212

7 Table No. Title Page 6.9. Top 15 countries FDI, by factors favouring investment, (Per cent of all responses for a given country) FDI inflows of select Asian countries FDI inflows into Asia Distribution of FDI inflows into Developing countries Global Distribution of Global FDI inflows 223

8 LIST OF FIGURES Figure No. Title Page 1. Foreign investment in India Foreign Direct Investment Foreign Portfolio Investment Share of Top Investing Countries FDI inflows Sectors Attracting Highest FDI inflow Foreign Direct Investment (including Advances and Loans) Monthly FDI inflows during the financial year Monthly FDI inflows Foreign Technology Transfer Approvals Foreign Technology Transfer Approvals (State-wise) Foreign Technological Transfer Approvals (Sector-wise) Revised FDI Inflows Foreigner s Foreign Direct Investment Foreign Direct Investment Decadal Distribution of FDI by Region FDI Inflows into Asia 219

9 LIST OF ABBREVIATIONS AIIP BITS BOP CAD CIS CMIE CSO DCA DEA DIPP DIPP ECBS ECD EMES EPZ EXIM FDI FEMA FERA FII FIPB FPI FTC GDP GDRs ICRIER IEM IIMS - Annual Incremental Increase in Percentage - Bilateral Investment Treaties - Balance of payments - Current account deficit - Commonwealth of Independent States - Centre for Monetary Indian Economy - Control Statistical Organisation - Department of Company Affairs - Department of Economic Affairs - Department of Industrial Policy and Promotion - Department of Industrial Promotion and Policy - External commercial borrowings - Exchange Control Department - Emerging market economics - Export Processing Zones - Export-Import - Foreign Direct Investment - Foreign Exchange Management Act - Foreign Exchange Regulation Act - Foreign investment in India - Foreign Investment Promotion Board - Foreign Portfolio Investment - Foreign Technical Collaboration - Gross domestic product - Global Depository Receipts - Indian Council for Research on International Economic Relations - Industrial Entrepreneur s Memorandum - Indian Institutes of Management

10 IITS - Indian Institutes of Technology IT - Information Technology ITES - Information technology enabled services MIGA - Multilateral Investment Guarantee Agency MNCs - Multinational Companies MNES - Multinational enterprises NIC - National Information Centre NIES - Newly Industrialized Economics NRI - Non-Resident Indian OCB - Overseas Corporate Body OGL - Open General License QIP - Qualified institutional placement RBI - Reserve Bank of India REER - Real effective exchange rates RIB - Resurgent India Bond SEBI - Security Exchange Board of India SEE - South East Europe SEZs - Special Economic Zones SIA - Secretarial for Industrial Assistance TMG - Technical Monetary Group TNCs - Transnational Corporations UKTI - United Kingdom Trade and Investment UNCTAD - United Nation Conference Trade and Development US - United States WIR - World Investment Report

11 CONTENTS CHAPTER PAGE I INTRODUCTION 1 II REVIEW OF LITERATURE 20 III ECONOMICS OF FOREIGN DIRECT INVESTMENT 80 IV THEORIES AND POLICY OF FDI IN INDIA 111 V DATA ANALYSIS 154 VI DATA ANALYSIS CONTINUATION 189 VII FINDINGS, SUGGESTIONS AND CONCLUSIONS 226 BIBLIOGRAPHY i APPENDIX Contributions by the Research Scholar

12 Chapter - I Introduction

13 Chapter - II Review of Literature

14 Chapter - III Economics of Foreign Direct Investment

15 Chapter - IV Theories and Policy of FDI in India

16 Chapter - V Data Analysis

17 Chapter - VI Data Analysis - Continuation

18 Chapter - VII Findings, Suggestions and Conclusions

19 Bibliography

20 Appendix Contributions By the Research Scholar