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An Analysis of Foreign Direct Investment Inflows in India

Article · April 2019

DOI: 10.18231/2454-9150.2019.0267

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 International Journal for Research in Engineering Application & Management (IJREAM)
ISSN : 2454-9150 Vol-05, Issue-01, April 2019

An Analysis of Foreign Direct Investment Inflows

in India
DEEPAK KUMAR ADHANA, Research Scholar, Institute of Mgt. Studies & Research, M.D.
University, Rohtak, India. deepak.adhana1437@gmail.com
DR. NEELAM GULATI, Professor, DAV Institute of Management, Faridabad, India.
neelamgulati2000@yahoo.com

ABSTRACT - Foreign direct investment (FDI) in India is a major monetary source for economic development in India.
Foreign companies invest directly in fast growing private Indian businesses to take benefits of cheaper wages and
changing business environment of India. Economic liberalisation started in India in wake of the 1991 economic
crisis and since then FDI has steadily increased in India, which subsequently generated jobs.

Foreign direct investment (FDI) in India increased by about 3 per cent to $61.96 billion in 2017-18 on account of steps
taken by the government to improve business climate and liberalised policy norms. FDI inflows stood at $60 billion in
the previous fiscal. The figure includes equity inflows, reinvested earnings and other capital. During the four years of
the Modi government, foreign inflow jumped to $222.75 billion from $152 billion in the previous four-year period.

For the first time in two decades, India has been getting more foreign investment than its neighbour China. In 2018,
India saw more than $38 billion of inbound deals compared with China’s $32 billion, buoyed by stable fundamentals, a
bankruptcy code and fresh opportunities in sunrise sectors. India’s foreign direct investment (FDI) was the highest
ever with 235 deals amounting to $37.76 billion this calendar year

The present study has focused on the trends of FDI Flow in India during 2000-01 to 2017-18. The study also highlights
country wise approvals of FDI inflows to India and the FDI inflows in different sector for the period April 2000 to
March 2018. The paper presents statement on RBI’s regional offices received FDI equity inflows. In the end paper
includes suggestions for increased flow of FDI in India.

KEYWORDS— Foreign Direct investment (FDI), Globalisation, FDI Inflow, RBI, DIPP

I. INTRODUCTION establishing ownership or controlling interest in a foreign

company. Foreign direct investments are distinguished from
“FDI is defined as an investment involving a long-term portfolio investments in which an investor merely
relationship and reflecting a lasting interest and control by a purchases equities of foreign-based companies.
resident entity in one economy (foreign direct investor or
parent enterprise) in an enterprise resident in an economy Broadly speaking, FDI is composed of three distinct modes
other than that of the foreign direct investor (FDI enterprise of financing, namely, equity capital (which refers to
or affiliate enterprise or foreign affiliate)…A foreign purchase of an enterprise‟s share by a foreign investor in a
affiliate is an incorporated or unincorporated enterprise in foreign country), reinvested earnings/profits in the host
which an investor, who is a resident in another economy, country (share of earnings of a foreign direct investor which
owns a stake that permits a lasting interest in the is neither given out as dividends by foreign affiliates nor
management of that enterprise (an equity stake of 10% for remitted to the home country), and intra-company debt
an incorporated enterprise, or its equivalent for an transactions (short or long-term borrowing and lending of
unincorporated enterprise).” finances between foreign direct investor and affiliate
enterprises). Even though there have been attempts to
Foreign direct investment (FDI) is an investment made by a reflect these three aspects of FDI in national and global
firm or individual in one country into business interests databases, several concerns are yet to be addressed.
located in another country. Generally, FDI
takes place when an investor establishes foreign business Apart from being a critical driver of economic growth,
operations or acquires foreign business assets, including foreign direct investment (FDI) is a major source of non-

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 International Journal for Research in Engineering Application & Management (IJREAM)
ISSN : 2454-9150 Vol-05, Issue-01, April 2019

debt financial resource for the economic development of on employment. They discussed that FDI helps in boosting
India. Foreign companies invest in India to take advantage growth of GDP a country.
of relatively lower wages, special investment privileges
Agarwal G., and Khan M. A. (2011) analyzed the Impact
such as tax exemptions, etc. For a country where foreign
of FDI on GDP through Comparative Study of China and
investments are being made, it also means achieving
India and they found that 1% increase in FDI would result
technical know-how and generating employment.
in 0.07%increase in GDP of China and 0.02% increase in
The Indian government‟s favourable policy regime and GDP of India. They found that China growth is more
robust business environment have ensured that foreign affected by FDI, than India‟s growth.
capital keeps flowing into the country. The government has
Anitha, R. (2012) found that FDI inflow into the country
taken many initiatives in recent years such as relaxing FDI
during the Post Liberalization period. Further, the trends of
norms across sectors such as defence, PSU oil refineries,
FDI inflow into the country was projected for a period of
telecom, power exchanges, and stock exchanges, among
five years from 2010-11 to 2014-15 using Autoregressive
others.
Integrated Moving Average (ARIMA) forecasting
Market size technique.
According to Department of Industrial Policy and Nayak, Ranjan Kumar (2013) has examined the growth
Promotion (DIPP), the total FDI investments in India April- patterns and changing nature of Indian inward Foreign
June 2018 stood at US$ 12.75 billion, indicating that Direct Investment, with an emphasis on the post
government's effort to improve ease of doing business and liberalization period, since FDI, along with trade, has been
relaxation in FDI norms is yielding results. Data for April- an important mechanism which was brought about a greater
June 2018 indicates that the services sector attracted the integration of Indian economy with world economy.
highest FDI equity inflow of US$ 2.43 billion, followed by
Singh, Gurmeetand Paul, Justin (2014) revealed that
trading – US$ 1.63 billion, telecommunications – US$ 1.59
Foreign Direct Investment (FDI) plays an important role in
billion and computer software and hardware – US$ 1.41
the growth process of a country. There are two types of
billion. Most recently, the total FDI equity inflows for the
FDI: Inward Foreign Direct Investment (IFD1) and
month of June 2018 touched US$ 2.89 billion.
Outward Foreign Direct Investment (OFDI).
During April-June 2018, India received the maximum FDI
equity inflows from Singapore (US$ 6.52 billion), followed
III. RESEARCH GAP
by Mauritius (US$ 1.49 billion), Japan (US$ 0.87 billion), The review of literature reveals that numerous studies have
Netherlands (US$ 0.84 billion), and United Kingdom (US$ been conducted to assess relation between FDI and its
0.65 billion). growth. Moreover, several research articles have raised the
significant issues with regard to FDI also. However, this
II. REVIEW OF LITERATURE
research paper goes a step further to examine the relation of
Bajpai and Sachs’s (2009) attempted to identify the issues FDI inflows in relation to FIPB /Acquisitions Route, Equity
and problems associated with India‟s current FDI regime Capital of Unincorporated Bodies, Re-Invested Earnings
and more importantly the other associated factors and other Capital. The present study would go to
responsible for India‟s unattractiveness as an investment investigate the various routes of FDI inflows in India and
location. They found that despite India offering a large its relationship with total FDI. It also seeks to discuss the
domestic market, rule of law, low labor costs, and a well directional relationship between FDI through FIPB
working democracy, her performance in attracting FDI /Acquisitions Route and Equity Capital of Unincorporated
flows has been far from satisfactory level. Bodies. Further, in the research paper an attempt has been
made to find out the difference between FDI inflows and
Singh J. (2010) analyzed Economic Reforms and Foreign
FIIs.
Direct Investment in Indian Policy, Trends and Patterns in
the context of increasing competition among nations and IV. OBJECTIVES OF STUDY
sub national entities to attract Foreign Direct Investment
(FDI) and suggest that the FDI inflows, in general, show an The study has been geared to achieve the following
increasing trend during the post-reform period. objectives;

Taufeeque (2011) studied the impact of FDI on Indian 1. To study the trends of FDI inflow in India during
economy and a comparison with China & USA. The paper 2000-01 to 2015-18 (up to March 2018)
has also been ventured into carving out set of strategies to 2. To study the regional disparity in FDI inflows among
deal with the issues & problems in attracting FDI for Indian cities
promotion & growth of international trade. The double log 3. To make suitable suggestions for attracting more FDI
model has been used to find elasticity between different inflows to India
factors in their paper. They also highlight the impact of FDI

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 International Journal for Research in Engineering Application & Management (IJREAM)
ISSN : 2454-9150 Vol-05, Issue-01, April 2019

V. HYPOTHESES OF THE STUDY collected from the various sources such as websites &
reports and compiled as said by the need of the study.
The Hypotheses investigated in the study are listed below:
Sources of Data Collection: The study is based on the
H10 : There is no significant difference between FDI and published data. The data was extracted from the various
FIIs in India. journals, magazines and websites particularly from the
H20 : There is no significant difference between FDI Department of Industrial Policy and Promotion (DIPP),
through FIPB /Acquisitions Route and Equity Capital of Ministry of Commerce and Industry and Reserve Bank of
Unincorporated Bodies. India. Graphs and tables have also been used wherever
required to depict statistical data of FDI during the study
VI. RESEARCH METHODOLOGY period.
Type of Research: Quantitative and Analytical Research TRENDS OF FDI FROM APRIL 2000-MARCH 2018:
Data: Data of FDI Equity inflows from year 2000-01 to The following tables show the trends and pattern of FDI in
2017-18 (up-to March 2018) India during 2000-01 to 2017-18.
Data Collection Method: This study has been carried out
with the help of secondary data only, all the data has been

VII. CUMULATIVE FDI FLOWS INTO INDIA (2000-2018)

A. TOTAL FDI INFLOWS (from April, 2000 to March, 2018):
1. CUMULATIVE AMOUNT OF FDI INFLOWS - US$
(Equity Inflows + Re-Invested Earnings + Other Capital ) 546,452 Million

2. CUMULATIVE AMOUNT OF FDI EQUITY INFLOWS Rs. US$

(Excluding amount remitted through NRI Schemes) 2,075,911 376,848 Million
Crore

Table 1
Table 1 shows the amount of FDI inflows from April, 2000 to March, 2018. It shows the cumulative amount of FDI Inflows
both in terms of Crore and in US $ million.
Point 1 shows the sum of equity inflows, reinvested earnings and other capital. Cumulative amount of inflows are 546,452 in
US $ million. Other than this, cumulative FDI equity inflows which excludes amount remitted through RBI‟s-NRI schemes are
2,075,911 in Crore and 376,848 in US $ million.
B. FDI INFLOWS DURING Q4 OF FINANCIAL YEAR 2017-18 (January to March 2018):
- US$
1. TOTAL FDI INFLOWS INTO INDIA 14,076 Million
(Equity Inflows + Re-Invested Earnings + Other Capital ) as per RBI‟s Monthly
Bulletins
Rs. US$
2. FDI EQUITY INFLOWS 57,432 8,916 Million

Table: 2
The total FDI inflows include Equity Inflows + Re-Invested Earnings + Other Capital, as per RBI‟s Monthly Bulletins.
It shows the total amount of FDI Inflows both in terms of Crore and in US $ million during January to March 2018. Point 1
shows the sum of equity inflows, reinvested earnings and other capital. Total amount of inflows are 14,076 in US $ million.
Point 2 shows the FDI equity inflows amounted 57,432 in Crore and 8,916 in US $ million.
FDI EQUITY INFLOWS (MONTH-WISE) DURING THE FY 2017-18:
Amount of FDI Equity Inflows

FINANCIAL YEAR 2017-18 (APRIL-MARCH) (In Rs. Crore) (In US$ mn)

1. April, 2017 20,826 3,229

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 International Journal for Research in Engineering Application & Management (IJREAM)
ISSN : 2454-9150 Vol-05, Issue-01, April 2019

2. May, 2017 26,159 4,060

3. June, 2017 20,101 3,119

4. July, 2017 31,112 4,827

5. August, 2017 51,198 8,004

6. September, 2017 13,632 2,115

7. October, 2017 17,454 2,682

8. November, 2017 20,019 3,086

9. December, 2017 30,956 4,819

10. January, 2018 15,386 2,418

11. February, 2018 20,478 3,181

12. March, 2018 21,569 3,317

2017-18 (from April 2017 to March 2018) 288,889 44,857

2016-17 (from April 2016 to March 2017) 291,696 43,478

% age Growth over last year (-)1% (+)3%

Table: 3
The above Table 3 shows the amount of FDI inflows during Financial Year from April, 2017 to March, 2018 (up to March,
2018).
It shows the amount in Rs Crore and in US $ mn. The highest FDI inflows in the country is in the month of August 2017 i.e.
51,198 in Rs Crore and 8,004 in US $ mn. Followed by July, 2017 and December, 2017 with inflows 31,112 in Rs. Crore
(4,827 in US$ mn) and 30,956 in Rs. Crore (4,819 in US$ mn) respectively. It can also be observed that there is 1% decline in
FDI over last year in Rs. Crore. When data is taken in terms of US$ there is a growth of 3% in 2017-18 (up to March 2018) as
compare with the data of 2016-17.
SHARE OF TOP INVESTING COUNTRIES FDI INFLOWS (FINANCIAL YEARS):
Amount in Rs. Crore (US$ in mn)
Rank Country 2015-16 2016-17 2017-18 Cumulative %age to
( April - (April – March) (April,17 – Inflows total
March) March, 18 ) (April ‟00 - Inflows
March „18) (in terms
of US $)
1. MAURITIUS 54,706 105,587 102,492 688,442 34%
(8,355) (15,728) (15,941) (127,578)
2. SINGAPORE 89,510 58,376 78,542 393,584 18%
(13,692) (8,711) (12,180) (66,771)
3. JAPAN 17,275 31,588 10,371 152,630 7%
(2,614) (4,709) (1,610) (27,286)
4. U.K. 5,938 9,953 5,473 131,018 7%
(898) (1,483) (847) (25,438)
5. NETHERLANDS 17,275 22,633 18,048 135,215 6%
(2,643) (3,367) (2,800) (23,482)
6. U.S.A. 27,695 15,957 13,505 124,037 6%
(4,192) (2,379) (2,095) (22,417)

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 International Journal for Research in Engineering Application & Management (IJREAM)
ISSN : 2454-9150 Vol-05, Issue-01, April 2019

7. GERMANY 6,361 7,175 7,391 59,435 3%

(986) (1,069) (1,146) (10,845)
8. CYPRUS 3,317 4,050 2,680 49,411 3%
(508) (604) (417) (9,573)
9 FRANCE 3,937 4,112 3,297 33,934 2%
(598) (614) (511) (6,237)
6,528 4,539 6,767 32,953 2%
(985) (675) (1,050) (5,754)
10. UAE

Total FDI 262,322 291,696 288,889 2,075,911

INFLOWS (43,857) (44,857) (376,848)
FROM ALL (40,001)
COUNTRIES
Table: 4
The above Table No.4 and below Figure 1 in graph depict the country having the highest FDI in India. The report shows that
the MAURITIUS country has the highest foreign investor in India with 34%. After Mauritius, Singapore and Japan invest the
highest FDI in India with 18% and 7% respectively. U.K. also gets 4th position with 7% FDI in India.

The inflows from U.S.A are routed through Mauritius due to tax advantage. The tax advantage emanates from the double tax
avoidance agreement that India has with that country USA. This agreement means that any foreign investor has the option of
paying tax either in India or in Mauritius. The tax rates in Mauritius are amongst the lowest in the world. While investors get
higher returns on their money in India, those from Mauritius “get even higher returns on their capital as we have a double
taxation avoidance treaty (DTAT) with the island nation.

MAURITIUS
2%
2% 12% SINGAPORE
3% 34%
3% JAPAN
6% U.K.
6% NETHERLANDS
7% U.S.A.
7% 18%
GERMANY
CYPRUS
FRANCE

Figure 1: Percentage of Total Inflows from Different Countries in India

Source: Author’s Presentation from DIPP data
VII. SECTOR ATTRACTING HIGHEST FDI EQUITY INFLOWS:

Ranks Sector 2015-16 2016-17 2017-18 Cumulative % age to total

(April - (April- March) (April,17 – March, Inflows Inflows (In
March) 18 ) (April ’00 - terms of US$)
March ‘18)

1. SERVICES SECTOR 45,415 58,214 43,249 359,817 18%

(6,889) (8,684) (6,709) (66,185)

2. COMPUTER SOFTWARE 38,351 24,605 39,670 176,459 8%

& HARDWARE (5,904) (3,652) (6,153) (30,823)

3. TELECOMMUNICATIONS 8,637 37,435 39,748 169,912 8%

(radio paging, cellular (1,324) (5,564) (6,212) (30,158)
mobile, basic telephone
services)

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 International Journal for Research in Engineering Application & Management (IJREAM)
ISSN : 2454-9150 Vol-05, Issue-01, April 2019

4. CONSTRUCTION 727 703 3,472 118,111 7%

DEVELOPMENT (113) (105) (540) (24,833)

5. AUTOMOBILE 16,437 10,824 13,461 105,679 5%

INDUSTRY (2,527) (1,609) (2,090) (18,763)

Table: 5

The above Table No.5 and Figure 2 below depict the sector having the highest FDI equity inflow in India. The report shows
that Service sector has the highest FDI Equity inflow 18%, followed by Computer Software and Hardware,
Telecommunication, Construction development and Automobile Industry sector having 8%, 8%, 7%, and 5% respectively.
Other sectors like Trading Industries carries 5% , Drugs & Pharmaceuticals, Chemicals and Power carries 4% FDI inflow each,
whereas the least is of Construction Activities attracting 3% FDI. The service sector includes both financial and non-financial
services. 100% investment has been allowed to the following service sectors- private sector banking, NBFC‟S, petroleum,
housing and Real estate, Hotel and tourism, road and highways, ports and harbors, advertising, films, mass raped
transportation, power, drug and pharmaceuticals, pollutions control and management and special economic zones.

COMPUTER SOFTWARE &

HARDWARE
TELECOMMUNICATIONS
18%
CONSTRUCTION DEVELOPMENT:
34%
8% TOWNSHIPS, HOUSING, BUILT-UP
INFRASTRUCTURE
AUTOMOBILE INDUSTRY
8%
TRADING
3% 4% 7%
4% 5% DRUGS & PHARMACEUTICALS
4% 5%
CHEMICALS (OTHER THAN
FERTILIZERS)
POWER

Figure 2: Percentage of Sectors Attracting Highest FDI Equity Inflows

Source: Author’s Presentation from DIPP data

VIII. STATEMENT OF RBI’S REGIONAL OFFICES RECEIVED FDI EQUITY INFLOWS (From April 2000 to
March 2018):

Amount in Rs. crore (US$ in mn)

S.No. Region State Covered 2015-16 2016-17 2017-18 Cumulative % of total
Inflows Inflow
(April‟00-Mar.
2018)
1 MUMBAI MAHARASHTRA, 62,731 (9,511) 131,980 (19,654) 86,244 (13,423) 633,977 31%
DADRA & NAGAR (115,706)
HAVELI, DAMAN &
DIU
2 NEW DELHI DELHI, PART OF UP 83,288 (12,743) 39,482 49,366 421,159 20%
AND HARYANA (5,884) (7,656) (75,693)
3 BANGALORE KARNATAKA 26,791 14,300 55,334 178,547 8%
(4,121) (2,132) (8,575) (30,949)
4 CHENNAI TAMIL NADU, 29,781 14,830 22,354 155,732 7%
PONDICHERRY (4,528) (2,218) (3,475) (27,235)
5 AHMEDABAD GUJARAT 14,667 22,610 13,457 104,531 5%
(2,244) (3,367) (2,091) (18,743)

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 International Journal for Research in Engineering Application & Management (IJREAM)
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6 HYDERABAD ANDHRA PRADESH 10,315 14,767 8,037 82,360 4%

(1,556) (2,195) (1,246) (15,012)
7 KOLKATA WEST BENGAL, 6,220 332 1,409 22,588 1%
SIKKIM, (955) (50) (218) (4,203)
ANDAMAN &
NICOBAR ISLANDS
8 KOCHI KERALA, 589 3,050 1,339 11,128 1%
LAKSHADWEEP (90) (454) (208) (1,963)
9 JAIPUR RAJASTHAN 332 1,111 752 8,989 0.4%
(50) (165) (117) (1,597)
10. CHANDIGARH CHANDIGARH, 177 39 697 7,273 0.4%
PUNJAB, (27) (6) (108) (1,472)
HARYANA,
HIMACHAL
PRADESH
Table: 6
This table shows the statement on RBI‟s regional offices (with state covered) received FDI Equity Inflows during April 2000
to March 2018. India has received FDI Equity Flows of US$ 376,848.

0.40% 22% MUMBAI

31%
0.40% NEW DELHI
1%
BANGALORE
1%
4% CHENNAI
5% AHMEDABAD
7% HYDERABAD
20%
8% KOLKATA
KOCHI
JAIPUR

Figure 3: Top 10 FDI Equity Inflows Region in India

Source: Author’s Presentation from DIPP data

The above table and graph represents region-wise FDI equity inflows from 2000-18 both in terms of ` Crore and US $ million.
Table shows that Mumbai has registered largest FDI inflow (115,706 US$ in Millions) amounting to 31% of total inflow
received in last 18 years. New Delhi is the second preferred region for FDI inflow (75,693 US$ in Millions) with 20% of total
inflows received in last 18 years. This is due to good quality infrastructure and better quality of life provided in these cities.
The above table also depicts the regional disparity in terms of receiving FDI. Mumbai and Delhi amounts for more than 51%
of total FDI received in India in last 18 years.

IX. FINANCIAL YEAR-WISE FDI INFLOWS DATA & HYPOTHESIS TESTING:

Amount in US$ million

S. Financial FOREIGN DIRECT INVESTMENT (FDI)
No. Year Investment
(April- Equity by FII’s
March) Re- FDI FLOWS INTO Foreign
invested Other INDIA Institutional
earnings capital Investors
FIPB Equity capital + + %age Fund
Route/ of Total growth (net)
RBI’s unincorporated FDI over
Automatic bodies # Flows previous
Route/ year
Acquisition (in US$
Route terms)
FINANCIAL YEARS 2000-01 TO 2017-18 (up to March 2018)
1. 2000-01 2,339 61 1,350 279 4,029 - 1,847

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2. 2001-02 3,904 191 1,645 390 6,130 (+) 52 1,505

%
3. 2002-03 2,574 190 1,833 438 5,035 (-) 18 377
%
4. 2003-04 2,197 32 1,460 633 4,322 (-) 14 10,918
%
5. 2004-05 3,250 528 1,904 369 6,051 (+) 40 8,686
%
6. 2005-06 5,540 435 2,760 226 8,961 (+) 48 9,926
%
7. 2006-07 15,585 896 5,828 517 22,826 (+) 155 3,225
%
8. 2007-08 24,573 2,291 7,679 300 34,843 (+) 53 20,328
%

9. 2008-09 31,364 702 9,030 777 41,873 (+) 20 (-) 15,017

%
10. 2009-10 25,606 1,540 8,668 1,931 37,745 (-) 10 29,048
%
11. 2010-11 21,376 874 11,939 658 34,847 (-) 08 29,422
%
12. 2011-12 34,833 1,022 8,206 2,495 46,556 (+) 34 16,812
%
13. 2012-13 21,825 1,059 9,880 1,534 34,298 (-) 27,582
26%
14 2013-14 24,299 975 8,978 1,794 36,046 ( + ) 5,009
5%
15. 2014-15 30,933 978 9,988 3,249 45,148 ( + ) 40,923
25%
2015-16 40,001 1,111 10,413 4,034 55,559 (+) (-) 4,016
16. 23%
17. 2016-17 43,478 1,223 12,343 3,176 60,220 (+) 8% 7,735
18. 2017-
18(April
2017-March 44,857 816 12,370 3,920 61,963 ( + ) 3% 22,165
2018)

CUMULATIVE
TOTAL 378,534 14,924 126,274 26,720 546,452 - 216,475
(from April, 2000
to March, 2018)
Table: 7
ANALYSIS AND INTERPRETATIONS:
Hypotheses 1: The null and alternative hypotheses can be stated as below:
H10 : There is no significant difference between FDI and FIIs in India.
H11: There is significant difference between FDI and FIIs in India.
Analyse the Data:

Group Statistics
TYPE N Mean Std. Deviation Std. Error Mean

1.00 18 30358.4444 20272.93732 4778.37715

X
2.00 18 12026.3889 14068.31545 3315.93375

1 = FDI, 2 = FII
Independent Samples Test

Levene's Test for t-test for Equality of Means

Equality of
Variances
F Sig. T Df Sig. (2- Mean Difference Std. Error 95% Confidence Interval of the
tailed) Difference Difference
Lower Upper

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 International Journal for Research in Engineering Application & Management (IJREAM)
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Equal variances
3.960 .055 3.152 34 .003 18332.05556 5816.21052 6512.09366 30152.01745
assumed
X
Equal variances
3.152 30.291 .004 18332.05556 5816.21052 6458.55056 30205.56055
not assumed

Statistical Conclusion:
This hypothesis examines the difference between FDI and FIIs in India, the mean of FDI is 23136.5714 and for the FIIs the
mean is 11763.2857 when undertakes the eighteen years data used. The standard deviation for the FDI is 20272.93732 and for
the FIIs had 12026.3889 and the mean difference was 5816.21052 shows in the table H. Levene's Test for Equality of
Variances indicates that FDI and FIIs are significantly differ therefore unequal variance result are used. Table H indicates that
the t-statistics is 3.152 along with the p-value is 0.004 which is less than 0.05 at 5% level of significance, which leads to the
conclusion that the difference is statistically significant. Therefore the null hypothesis is rejected and alternative hypothesis is
accepted. Hence it is concluded that there is significant difference between FDI and FIIs in India.
In other way, table represents the mean, standard deviation and standard error of the mean for FDI and FII. The results of t
test as represented in table assuming both the equal and unequal variances indicate that the null hypothesis is rejected. This is
because the p values both for equal and unequal variances are equal to 0.003/2 = .0015 and 0.004/2 = .002 respectively. Since
the p values in both the cases are less than 0.05, assuming the level of significance, the hypothesis of equality of the mean of
FDI and FII is rejected in favour of alternative hypothesis. Therefore, it can be concluded that FDi is higher than FII.
Hypotheses 2: The null and alternative hypotheses can be stated as below:
H20 : There is no significant difference between FDI through FIPB /Acquisitions Route and Equity Capital of Unincorporated
Bodies.
H21: There is significant difference between FDI through FIPB /Acquisitions Route and Equity Capital of Unincorporated
Bodies.
Analyse the Data:
Group Statistics

TYPE N Mean Std. Deviation Std. Error Mean

1.00 18 21029.6667 14942.09939 3521.88660

FDI
2.00 18 829.1111 559.43447 131.85997
1 = FDI through FIPB, 2 = Equity Capital of Incorporated Bodies
Shows the Analysis of Output

Independent Samples Test

Levene's Test for t-test for Equality of Means

Equality of
Variances
F Sig. T df Sig. (2- Mean Difference Std. Error 95% Confidence Interval of the
tailed) Difference Difference
Lower Upper
Equal variances
43.342 .000 5.732 34 .000 20200.55556 3524.35416 13038.20615 27362.90496
FD assumed
I Equal variances
5.732 17.048 .000 20200.55556 3524.35416 12766.40147 27634.70964
not assumed
Statistical Conclusion:
This hypothesis examines the difference between FDI through FIPB/Acquisition Route and Equity Capital of Incorporated
Bodies in India, the mean of FDI through FIPB/Acquisition Route is 21029.6667 and for the Equity Capital of Incorporated
Bodies the mean is 829.1111 when undertakes the eighteen years data used. The standard deviation for the FDI through
FIPB/Acquisition Route is 14942.09939 and for the Equity Capital of Incorporated Bodies had 559.43447 and the mean
difference was 20200.55556 shows in the table. Levene's Test for Equality of Variances indicates that FDI through
FIPB/Acquisition Route and Equity Capital of Incorporated Bodies in India are significantly differ therefore unequal variance
result are used. Table indicates that the t-statistics is 5.732 along with the p-value is 0.000 which is less than 0.05 at 5% level

130 | IJREAMV05I0149096 DOI : 10.18231/2454-9150.2019.0267 © 2019, IJREAM All Rights Reserved.

 International Journal for Research in Engineering Application & Management (IJREAM)
ISSN : 2454-9150 Vol-05, Issue-01, April 2019

of significance, which leads to the conclusion that the difference is statistically significant. Therefore the null hypothesis is
rejected and alternative hypothesis is accepted. Hence it is concluded that there is significant difference between FDI through
FIPB/Acquisition Route and Equity Capital of Incorporated Bodies in India.
In other way, table represents the mean, standard deviation and standard error of the mean for FDI through FIPB/Acquisition
Route and Equity Capital of Incorporated Bodies in India. The results of t test as represented in table assuming both the equal
and unequal variances indicate that the null hypothesis is rejected. This is because the p values both for equal and unequal
variances are equal to 0.000/2 = .000 and 0.000/2 = .000 respectively. Since the p values in both the cases are less than 0.05,
assuming the level of significance, the hypothesis of equality of the mean of FDI through FIPB/Acquisition Route and Equity
Capital of Incorporated Bodies in India is rejected in favour of alternative hypothesis. Therefore, it can be concluded that FDI
through FIPB/Acquisition Route is higher than Equity Capital of Incorporated Bodies in India
X. SUGGESTIONS FOR INCREASED FDI IN INDIA:
Followings are the essential suggestions that will help India in increasing FDI:
A. Flexible labour laws needed B. Re look at sector-wise caps
C. Geographical disparities of FDI should be removed D. Promote Greenfield projects
E. Develop debt market F. Strengthen research and development in the country
CONCLUSION:
FDI in India has a significant role in the economic growth and development of India. FDI in India to various sectors can attain
sustained economic growth and development through creation of jobs, expansion of existing manufacturing industries. The
inflow of FDI in service sectors and construction and development sector, from April, 2000 to March, 2018 attained substantial
sustained economic growth and development through creation of jobs in India.
The study shows that Mauritius has the highest foreign investor in India with 34%. After Mauritius, Singapore and Japan invest
the highest FDI in India with 18% and 7% respectively. U.K. also gets 4th position with 7% FDI in India. The Service sector
has the highest FDI Equity inflow 18%, followed by Computer Software and Hardware, Telecommunication, Construction
development and Automobile Industry sector having 8%, 8%, 7%, and 5% respectively. Mumbai has registered largest FDI
inflow (633,977 Crore) amounting to 31% of total inflow received in last 18 years. New Delhi is the second preferred region
for FDI inflow (421,159 Crore) with 20% of total inflows received in last 18 years.
On the basis of data analysis, it is clear that the FII and FDI are influencing the economic development to a greater extent. But
after the analysis, the result shows that there is a significant difference between the FDI and FIIs in India. Analysis indicates
that the t-statistics is 3.152 along with the p-value is 0.004 which is less than 0.05 at 5% level of significance, which leads to
the conclusion that the difference is statistically significant. The study also shows the difference between FDI through FIPB
/Acquisitions Route and Equity Capital of Unincorporated Bodies statistically significant and shows the t- value is 5.732 with
the p-value 0.000 which is less than 0.05. So it is concluded that the difference is significant and leads to conclusion that other
sources of Investment rather than Mergers and Acquisitions are least effective and still efforts are require for attracting foreign
Investors.
India has become the most attractive emerging market for global partners (GP) investment for the coming 12 months, as per a
recent market attractiveness survey conducted by Emerging Market Private Equity Association (EMPEA). Annual FDI inflows
in the country are expected to rise to US$ 75 billion over the next five years, as per a report by UBS. The World Bank has
stated that private investments in India is expected to grow by 8.8 per cent in FY 2018-19 to overtake private consumption
growth of 7.4 per cent, and thereby drive the growth in India's gross domestic product (GDP) in FY 2018-19.

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 International Journal for Research in Engineering Application & Management (IJREAM)
ISSN : 2454-9150 Vol-05, Issue-01, April 2019

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WEBSITES
[10] http://www.dipp.nic.in
[11] https://factly.in/sectors-fdi-allowed-india/
[12] http://www.makeinindia.com/policy/foreign-direct-investment
[13] https://www.ibef.org/economy/foreign-direct-investment.aspx
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government/articleshow/64509052.cms
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132 | IJREAMV05I0149096 DOI : 10.18231/2454-9150.2019.0267 © 2019, IJREAM All Rights Reserved.

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