Competitive Conditions for Foreign Direct Investment in India
Net foreign direct investment (FDI) flows into India reached $15.7 billion in India’s 2006-07 fiscal year, more than triple the $4.7 billion recorded during 2005-06, with the largest share of FDI flows from Mauritius, followed by the United States and the United Kingdom. This study examines FDI in India, in the context of the Indian economic and regulatory environment. We present FDI trends in India, by country and by industry, using official government data from India, the United States, and international organizations. To supplement the official data, the study also discusses specific investment activities of multinational companies in India, representing a wide range of countries and industries. To illustrate the driving forces behind these trends, the study also discusses the investment climate in India, Indian government incentives to foreign investors, particularly Special Economic Zones, the Indian regulatory environment as it affects investment, and the effect of India’s global, regional, and bilateral trade agreements on investment from the United States and other countries. Finally, the study presents two case studies. The first examines global FDI in India’s automobile industry. The second analyzes the effects of India’s 2005 Patent Law on FDI in the pharmaceutical industry.
India; economic growth; foreign investment; trade