FDI issues, challenges, recent trends and electronic sector growth in India

Foreign Direct Investment (FDI) is the major source for economic development in India. Foreign companies carry out privileges in tax exemptions, lower wages, technical knowhow and employment.

International Journal of Management (IJM) Volume 11, Issue 2, February 2020, pp 170–174, Article ID: IJM_11_02_018 Available online at http://www.iaeme.com/ijm/issues.asp?JType=IJM&VType=11&IType=2 Journal Impact Factor (2020): 10.1471 (Calculated by GISI) www.jifactor.com ISSN Print: 0976-6502 and ISSN Online: 0976-6510 © IAEME Publication Scopus Indexed FDI ISSUES, CHALLENGES, RECENT TRENDS AND ELECTRONIC SECTOR GROWTH IN INDIA Dr Thangadurai N Professor, Department of Electronics and Communication Engineering, JAIN (Deemed-to-be University), Bengaluru, India Dr S Pallavi Professor, Department of Business Administration, Annai Women’s College, Tamilnadu, India ABSTRACT Foreign Direct Investment (FDI) is the major source for economic development in India Foreign companies carry out privileges in tax exemptions, lower wages, technical knowhow and employment Telecommunications and computer software form the attracting areas in India during the first quarter Singapore and Mauritius was the largest source of FDI in India Regulating authority, resource challenge, Equity challenge, stringent labour laws, land acquisition issues are the challenges in foreign direct investment in India requires more investment in upcoming years and renovated infrastructure stimulate growth India is encouraging destination in 2020 by the government liberalized norms and comfort doing of business 100% FDI allowed in telecom, medical, and single brand retail sector in India FDI provide best profit with limited risk New government initiative and make in India create most attractive destination once again India will be known as Ideal land for investors In India Compound Annual Growth Rate (CAGR) was successive rate in the past decades and will consider as golden year for FDI Keywords: Automatic Route, Technological Know How, Tax Exemption, Make in India, Cloud Initiative Cite this Article: Dr Thangadurai N and Dr S Pallavi, FDI Issues, Challenges, Recent Trends and Electronic Sector Growth in India, International Journal of Management (IJM), 11 (2), 2020, pp 170–174 http://www.iaeme.com/IJM/issues.asp?JType=IJM&VType=11&IType=2 INTRODUCTION Foreign direct investment increased in all countries past three decades and it includes opportunities and challenges journal of financial management of property under construction In 2011 India permitted 51 percentages FDI in multi brand by that consumerism and http://www.iaeme.com/IJM/index.asp 170 editor@iaeme.com Dr Thangadurai N and Dr S Pallavi urbanization also increase nowadays India is second fastest growing economy in the world Lal and Albaladejo (2003) competition among developing country suppliers with developed country market is becoming more important factor because developing countries engaged low Technology products Liberalization and deregulation of financial market, merger and acquisition, investor’s interest development of telecommunication and computer network plays vital role in India In 2002 FDI flows from organization for economic cooperation and development countries facilitate to enter into international market and encouraged non organization for economic cooperation development countries by the guidelines for multinational Enterprises OECD Sharma poudel (2002) location factors that is cause for social and cultural and infrastructure issues of FDI concerned with economic development (Shenti Kumar 2008) development of technology, managerial capabilities automatic route leads to development of FDI faces political, regional and equity challenges (business maps of India) India offering large domestic market ,rule of law and supporting human rights centralized decision making process limited export processing zone cause India an unattractive investment location Bajpai, Nirupam; Sachs, Jeffrey D (2009) Harvard Institute for International Development 100% automatic route helps to abundant growth in electronics Lack of technological of potential for development, lack of foreign exchange is reason for the socio economic problem Deepak Kumar, Dr S Srinivas Rao, Ms Shweta Shriwas (2019) Technological advancement, knowledge based agent in dynamic leads to complex the markets thus stimulate innovation in entrepreneurial activity that drive benefited to BRIC nations of Brazil, Russia, China and India John McManus Don White Neil Botten (2008) Organization drawn to view their manufacturing location decisions through a wider view gives more weight age to supply chain and strategic factors Lisa M Ellram Wendy L Tate Kenneth J Petersen (2019) 1.1 Issues FDI investment best competitive advantage of cheaper wages, taxes exemption privileges offered by the country, technical knowhow business expertise knowledge and essential form ensure capital market development Now India is the fastest growing economies in the world The regulatory environment in terms of Finance investment makes it investor friendly Foreign direct investment equity inflows rose 28% in the first quarter of 2019 - 2020 to $16.3 billion from $12.7 billion the year ago economic times India is platform world economy remarkable inflow of FDI various industrial units life of country Trade: products of superior quality by various industry India helps huge amount of FDI inflows in the country Technology Scattering Knowledge Transfer: FDI Outsourcing knowledge from India information technology foreign expertise can be an important factor in upgrading the existing technical process for example transfer of nuclear energy knowhow between USA and India Increase the Competition: because of the FDI syllable of competition is increased show the peoples can get quality of products and services and the FDI large number of employment opportunities globally valued human resources 1.2 Challenges India have huge amount of resources at the same time some of the resources utilized some of the resources are not utilized properly 1.2.1 Equity Challenge Equity challenge in India is developing much faster but poor sections are exploited and the rural areas not developed up to urban one This is the obstacle for social equality and balanced economic growth India must focus to reduce Poverty http://www.iaeme.com/IJM/index.asp 171 editor@iaeme.com FDI Issues, Challenges, Recent Trends and Electronic Sector Growth in India 1.2.2 Resource Challenges India have huge amount of resources but the resources are not fully utilized it is unexploited or under exploited in rural and urban areas in rural and urban areas on account of infrastructure government policies 1.2.3 Political Challenges India still fails to keep pace with others in attracting FDI poor infrastructure, inadequate government policies, uncontrollable corruption, and inflexible labor laws India must focus on to reduce the poverty, liberalized trade, banking and insurance sector RECENT TRENDS IN INDIA New government policies initiatives for FDI like make in India promote foreign direct investment and built climate in the country India has 15 positions in 2014 and moves to tenth position India plays vital role in service sector information technology, construction etc 2018-19 data indicates that the service sector attracted FDI equity inflow followed by computer and trading and telecommunication also in good position Cheaper labor, huge market size attracts foreign investors Lack of technological of potential for development, lack of foreign exchange is reason for the socio economic problem After the implementation of Make in India displaying influence to foreign investors immediately investors got friendly signals In FDI India were 15 ranks in the world and 9th position in 2015 Now India play top role in foreign direct invest 2.1 Government Advantage Government of India plan to 100 percent FDI in insurance to attract more funds and the government concentrate more on ecommerce Telecommunications, services and computer software were the more attracting Foreign Direct Investment (FDI) in India during the first quarter of the currently an ongoing economic crisis FDI increased up 28 percent in April – June 2019 according to our bureau New Delhi Telecommunications, services and computer services are attractive areas in foreign direct investment In 2019 Singapore was the largest source of FDI in India in telecommunication, successively the following countries Mauritius, Netherlands, and Japan In April –June 2019-2020, Telecommunications play as the top sector in attracting FDI worth $4.22billion Figure The percentage of National Accounts http://www.iaeme.com/IJM/index.asp 172 editor@iaeme.com Dr Thangadurai N and Dr S Pallavi Service sector: In 2019 financial, banking, insurance, non-financial business out-sourcing courier and technology testing and analysis, R&D are play second vital role in FDI and its worth is $2.8 billion followed by computer software and hardware worth $2.24 billion According to Commerce and Industry Ministry report trading worth $1.13 billion, in 2019 first quarter Delhi, Uttar Pradesh, Haryana attract greatest FDI and Karnataka, Ahmedabad Maharashtra were progressive Figure reveals that, the nominal GDP has been increased during the month of June and September, 2019 The private consumption has shown moderate compared to nominal GDP The Public Consumption expenditure has shown low value for 1, 00,000 million ELECTRONICS INDUSTRY In 2016 -17 electronics market contribution was $100 by electronics industry is estimated to reach US $228 by 2020 Electronic products are mobile devices ,consumer electronics, industrial electronics, IT office automation, medical, automotive electronics, telecom, strategic and others Now a day’s digital media, digital wallet, Wi-Fi connectivity, smart cities, cloud initiative by the govt., national knowledge network, ultra mega solar project, and the govt initiation to connect educational institutions and labs lead to development of FDI in electronic sector Figure FDI Inflows in Electronic Sector Figure reveals that electronics sector information from 2009 to 2014 Its growth is good in successive years Demand growth 0.8 billion to 1.3 billion in 2014 Demand support, supply advantages and policy supporting FDI CONCLUSION FDI helps the people to get quality products and services from various industry but the rural and urban areas are exploited Govt supportive policies and favorable environment condition helps to develop FDI Recently trade, information and technology plays successive growth in economy and automatic route high end technologies demand, supply advantages and policy supporting FDI accelerate the electronic products http://www.iaeme.com/IJM/index.asp 173 editor@iaeme.com FDI Issues, Challenges, Recent Trends and Electronic Sector Growth in India REFERENCES [1] Alemayehu Geda, (2006) “Emerging challenges of FDI in India, Foreign direct investment for development maximising benefits and minimising costs, & Recent FDI trends and challenges in comparison with other region in transition”, pp.1-34 [2] Deepak 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Make in India displaying influence to foreign investors immediately investors got friendly signals In FDI India were 15 ranks in the world and 9th position in 2015 Now India play top role in foreign... advantages and policy supporting FDI accelerate the electronic products http://www.iaeme.com/IJM/index.asp 173 editor@iaeme.com FDI Issues, Challenges, Recent Trends and Electronic Sector Growth in India