Foreign Direct Investment in India

Running Head: FDI IN INDIA 0
Foreign Direct Investment in India
Academic Essay: Foreign Direct Investment in India
(Student details :)
3/12/2019

FDI in India 1
Foreign Direct Investment in India
This academic essay is mainly focused on a rapid GDP growth in India accompanied through
record levels of Foreign Direct Investment (referred as FDI) flowing into the country. In
order to critically evaluate FDI entry in India, the essay will utilize case studies of Flipkart as
well as Walmart. By using such case studies, international strategies to move into India along
with the implications of above to the host country will also be discussed (Buckley & Ghauri,
2015).
In this context, recent quick GDP growth of India has been clearly accompanied through FDI
in the country. For an example, in the year 2018 world’s largest retailer, Walmart has
acquired Indian e-commerce giant, Flipkart for a 77% stake (Hill & Hernandez, 2008). In
addition, India as the 3rd most attractive FDI destination in the world is having a favourable
foreign investment setting. In this context, Indian policy structure offers clear guidelines for
the FDI entry, liberty of location, technological inclination, production as well as capital
repatriation. Furthermore, in terms of applying economic theories and principles, India has
considerably reduced international trade restrictions which encouraged FDI inflows; hence
economy growth opportunities have been expanded (Competition Commision of India, 2018).
Additionally, several aspects which will be considered include country’s role in the global
economy, Wal-Mart’s motivation to enter India, concerns arising, and India’s FDI regulations
and restrictions (Live Mint, 2019). Thus, with the help of this essay major feature of the
world economy and FDI trends will be critically assessed and identified. Moreover,
comparative advantage along with the trade models to analyse India’s role in global economy
will be employed as well.
In order to discuss FDI in India, first the concept and features of global economy, FDI trends
and triad economies needs to be elaborated. Features of new global economy include more
alternatives for production, extension of small firms into big, chances to evolve new markets
and inter-connected new networks. Moreover, liberalisation and free trade should also be
promoted in grow national and global economies – such as the situation for India.
Globalisation of economic activities and international trading will further allow different
countries to enter into new markets to develop new businesses (Barnes et al., 2004).
In addition, for the globalization especially financial globalization, economies of all global
countries are becoming places full of mutual influence, interdependence and mutual

FDI in India 2
promotion. In this context, triad economies are a concept about US, EU, Japan being the
world’s great economies. Hence, up to a certain degree, the estimation of global economy is
now becoming the economic estimate of such 3 greatest economical entities of the US, EU
and Japan (Buckley & Ghauri, 2015). On the other hand, FDI in India will lead to a huge
employment opportunities’ loss. For an example, small retailers as well as small store owners
will likely to suffer with a huge loss in business as the giant retailers along with the
supermarkets such as Walmart; Carrefour will replace such small retailers at a large extent
(The Economic Times, 2018).
Now, the question arises about FDI and recent FDI trends which can be easily answered as
FDI refers to a direct investment which any foreign business makes in other country, through
an act of obtaining that company or through growing few existing businesses in that country.
Besides, recent FDI trends are all about foreign capital and funds which brings to any country
where the foreign direct investment is to be made. Moreover, FDI enables the exchange of
qualified skill sets, info and expertise, employment opportunities while also leads to an
upsurge in the overall productivity levels. For instance, several Asian progressive economies
such as China, South Korea have also considerably experienced hikes in their economies
because of the higher proportion of FDI within their economies. Additionally, through an
economic perspective, the FDI can also be referred as the measurement of foreign ownership
of national productive assets counting organizations, factories and land (Compact, 2009).
Being the largest democracy and third largest economy, India is consistently showing growth
in performance with its abundantly high-skilled manpower. Hence, the country offers
enormous opportunities for investment, both foreign and domestic (Barnes & Hunt, 2013).
Investment in the country is easily possible both by resident and non-resident Indian entities.
In this way, FDI in this essay can be defined as while a non-resident invests in an Indian
company then it is known as Foreign Direct Investment in India. Indian Government has
embarked upon many important economic transformations since mid-1991 having a view to
assimilate with the global economy (Zott et al., 2011).
As per the recent sources, India is the 3rd most attractive FDI site of the world, after the
United States and the China as they are ranked at 1st and 2nd positions. India has a highly
favourable foreign investment setting which offers freedom of access, investment, site,
technological choice, import and export as well. Indian policy structure also apparently offer
guidelines for the access, liberty of site, technological preferences, production, along with the