India China FDI

8/2/2019 India China FDI

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PRESENTATION ON

COMPARISON OF FDI TRENDS

IN INDIA AND CHINARaman Manehani (MBA-II sem.)

CT-IEMT Shahpur

Jalandhar


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Meaning of FDIMeaning of FDI

A form of long-terminternational capital movement,

made for the purpose of productive activity andaccompanied by the attention ofmanagerial control orparticipation in the

management of foreign firm.


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Growth perspective of

India and China


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INDIA The annual growth rate ofGDP was 6% during 1980-2000.

In 1996-97 GDP of Indiawas 7.8%

GDP of India in 2007 wasUS $800.8 billion and itwas the 10th largesteconomy in the world.

Per Capita GDP of India in2007 was US $3,800 and itwas ranked 115 in theworld.

CHIAN The annual growth rate ofGDP was 10% during 1998-2000.

In 1996-97 GDP of Chinagoes down to 7-8%.

GDP of China in 2007 wasUS $3.25 trillion and it wasthe 4th largest economy inthe world.

Per CapitaGDP of China in2007 was US $7,800 and itwas ranked 90 in theworld.


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INDIA Based on Purchasing

Power Parity (PPP) IndiasGDP in 2010 was $4,198

and was ranked 4th

in theworld.

In 2007, Indias exportswere $13,140 million.

Total imports were$22,504.41 million.

Indias Foreign ExchangeReserve in 2007 was$199.2 billion.

CHINA Based on Purchasing

Power Parity (PPP) ChinasGDP in 2010 was $10,084

and was ranked 2nd

in theworld.

In 2007, Chinas exportswere $1.22 trillion.

Total imports were $955.8billion.

Chinas Foreign ExchangeReserve in 2007 was $1.53trillion.


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Growth Rate of India and ChinaGrowth Rate of India and China


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Role of FDI in EconomicDevelopment of India and

China


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FDI in IndiaFDI in India

India has among the most liberal and transparentpolicies on FDI among the emerging economies.FDI up to 100% is allowed under the automaticroute in all the sectors except the following:

(i) Activities that require industrial license.

(ii) Proposal in which the foreign collaborator has anexisting financial/technical collaboration in Indiain the same field.

(iii) All proposals falling outside notified sectoralpolicy in which FDI is not permitted.


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FDI and Economic Development ofFDI and Economic Development ofIndiaIndia

Increase in total FDI: 46.8%.

Rise in foreign equity: 36%.

Reinvested foreign earnings and other capital: $3.2billion.

Total FDI earnings (inward) 2005-06: $5.7 billion.

Total FDI earnings (outward) increase 2000-01:$757 million.


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Positive growth in Indian economy in terms ofPositive growth in Indian economy in terms ofGDP growth:GDP growth:

Govt. has removed 10% voting limit in banks.

Revisit foreign shareholding norms in telecom iswelcome change.

Removal of unwarranted restrictions on hindrancesto foreign investments has exceptionally increasedFDI in India.

Govt. of India has already allowed FDI up to 51%with prior government approval in the retail trade

of "single brand" products.


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FDI in ChinaFDI in China

China began reforming itsclosed, centrally planned

economy in 1978.

China absorbed a total of$53.5 billion worth of FDI in2003.

The foreign investment in2004 rose to $60 billion.


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FDI and Economic Development ofFDI and Economic Development ofChinaChina

Foreign enterprises account for 28 per cent of China's industrial added value and one-fifth oftaxation.

They export about 57 per cent of the country's totalgoods and services and account for 11 per cent oflocal employment.

Entry of China into World Trade Organization hasmade it favorite destination for global investment.


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Comparative Inward FDIComparative Inward FDI


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Why India and China

targeted for FDI


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India was preferred destination for FDIIndia was preferred destination for FDIbecause:because:

It is the 3rd largest economy in the world in PPP terms.

India has strength in IT and other important areas such asauto components, apparels, chemicals, pharmaceuticals, andjewellery etc.

India has a large pool of skilled managerial and technicalexpertise.

The size of the middle-class population at 300 million

exceeds the population of both the US and the EU, andrepresents a powerful consumer market.

India has the cheapest labour.


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China was targeted because:China was targeted because:

y China was very fast in adapting new technologieseasily so everyone was interested to have traderelations with China to get latest technology fromChina. And this was also helpful to compete with

other powerful nations.


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THANK YOUu

India China FDI

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