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

International Journal of Management (IJM)
Volume 11, Issue 2, February 2020, pp. 170–174, Article ID: IJM_11_02_018
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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.
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1. 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

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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
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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

2. 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 1 The percentage of National Accounts

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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 1 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.

3. 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 2 FDI Inflows in Electronic Sector

Figure 2 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.

4. 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.

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FDI Issues, Challenges, Recent Trends and Electronic Sector Growth in India

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