A Study on Impact of Fdi on Service Sector

4081 Words Oct 12th, 2012 17 Pages

Presented By:

Ms Pushpa A
Dept of Management studies
Garden City College

Ms Shymala J.
Dept of Management studies
Garden City College


The last two decades have witnessed an unprecedented growth of the Indian service sector. FDI is a tool for economic growth through its strengthening of domestic capital, productivity and employment. FDI plays a vital role in the up gradation of technology, skills and managerial capabilities in various sectors of the economy. The study aims to analyze the growth dynamics of the FDI. It intends to see whether the growth in FDI has any significant impact on the service sector growth and also investigates whether a growth in this
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* Horizontal: When the MNCs kick off similar business operations in different countries it becomes horizontal Foreign Direct Investment. It is actually a cloning that is happening here. Both the countries enjoy the same share of growth.

After getting independence in 1947, the government of India envisioned a socialist approach based on the USSR system to developing the country’s economy. The last decade of the 20th century witnessed a drastic increase in foreign direct investment (FDI), accompanied by a marked change in the attitude of most developing countries towards inward investment. FDI flows have grown in importance relative to other forms of international capital flows, and the resulting production has increased as a share of world output.. FDI in India has in a lot of ways enabled India to achieve a certain degree of financial stability, growth and development during recession. This money has allowed India to focus on the areas that may have needed economic attention and address various problems that continue to challenge the country. The factors that attracted investment in India are stable economic policies, availability of cheap and quality human resources, and opportunities of new unexplored markets. Mostly FDI are flowing in service sector and manufacturing sector recorded very low investments. The investments in service sector enhanced the benefit of flow of funds to the home country. Presently India is contributing about 17% of
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