benefits and taken a long-term, sustainable perspective.

The government has been

constantly pursuing efforts to augment international cooperation in the sector, in order to

benefit from the various system employed in other countries to address challenges like

overcrowding, environmental effects, aging infrastructure, altering demographics and the

affect of climate. The Indian government has signed some major memorandum of

understanding and other mutual agreements related to transfer of knowledge. The

mutually beneficial technical expertise transfer agreements will offer long term benefits

of the Indian infrastructure sector. In this chapter, the researcher has analyzed the growth

and d evelopment and overcoming the challenges of various segments in the

infrastructure sector in India.

CHAPTER VII

SUMMARY OF FINDINGS, SUGGESTIONS AND CONCLUSION

7.1. Introduction

7.2. Summary of Findings

7.3. Suggestions

7.4. Conclusion

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7.1. Introduction

The FDI plays a crucial role in enhancing the economic growth and

development of the country. Strategic component of investment is needed for India to

achieve the objectives of its economic reforms and maintain growth and development of

the economy. Today enormous growth in the FDI infrastructure sector plays a

predominant role. The study concludes its research, by providing findings and

suggestions for the policy makers and further possible extended research in the same

areas in the near future according to the changing environment in India. This chapter

provides findings and suggestions based on the empirical data which were used and

analyzed by applying statistical tools and techniques.

7.2. Summary of Findings

The following are the summary of findings of the study

The second chapter titled “Review of Literature” deals with various studies

related to the topic of research. The literature review is to provide a solid background

for a research study investigation. A comprehensive knowledge of the literature of the

field is essential to any research study. so, the researcher has dealt with the theories

related to this topic. The work of different authors are discussed and analyzed. The

review of literature helps in identifying the research issues and gaps for the present study.

The foregoing review of empirical literature highlights the various facts including the

institutional infrastructure and development are the main determinants of the FDI
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inflows. Institutional environment reduces the transaction costs of both domestic and

cross business activity. T he main determinants of the FDI in developing countries are

inflation, infrastructural facilities, debts, burden, exchange rate, the FDI spillovers, stable

political environment and the like, and the market size, exports, infrastructure facilities,

institutions source and destination countries. T he concept of neighborhood and extended

neighborhood is also gaining importance in Europe, China and India.

The third chapter titled “Foreign Direct Investment in Various Segments in

India” delivers overview of FDI in India and the background of the study unit. The FDI

has been recognized as an important driver for economic growth and development. One

of the most striking developments during the last two decades is the spectacular growth

of the FDI in the global economic landscape. This unprecedented growth of global FDI in

1990 around the world has made the FDI an important and vital component of

development strategy in both developed and developing nations and policies are designed

in order to stimulate inward flows. In fact, the FDI provides a win – win situation to the

host and the home countries. Both countries are directly interested in inviting the FDI,

because they benefit a lot from such type of investment. The „home‟ countries want to

take the advantage of the vast markets opened by industrial growth. On the other hand the

„host‟ countries want to acquire technological and managerial skills and supplement

domestic savings and foreign exchange. Moreover, the paucity of all types of resources

viz. financial, capital, entrepreneurship, technological know- how, skills and practices,

access to markets- abroad- in their economic development, developing nations accepted

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the FDI as a sole visible panacea for all their scarcities. Further, the integration of global

financial markets paves ways to this explosive growth of the FDI around the globe.

The Government has setup Foreign Investment Board and enacted Foreign

Exchange Regulation Act in order to regulate flow of foreign capital and the FDI flow to

India. The soaring oil prices continued low exports and deterioration in Balance of

Payment position during 1980s forced the government to make necessary changes in the

foreign policy. Thus, it has resulted in the partial liberalization of Indian Economy. The

government has introduced reforms in the industrial sector, aimed at increasing

competency, efficiency and growth in industry through a stable, pragmatic and non-

discriminatory policy for the FDI flow.

India infrastructure is quite developed and the transportation network of the

country contributes towards its economic development. The transportation network of

India consists of roadways, railways, shoreline shipping, airways etc. The transportation

system of the nation is well-set and efficiently managed and is a key player in

maintaining the financial development of the country.

The FDI has the potential significantly to spur enterprise development in host

countries. The direct impact on the targeted enterprise includes the achievement of

synergies within the acquiring MNE, efforts to raise efficiency and reduce costs in the

targeted enterprise, and the development of new activities. In addition, efficiency gains

may occur in unrelated enterprises through demonstration effects and other spillovers

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akin to those that lead to technology and human capital spillovers. Available evidence

points to a significant improvement in economic efficiency in enterprises acquired by the

MNEs, albeit to degrees that vary by country and sector. The strongest evidence of

improvement is found in industries with economies of scale. Here, the submersion of an

individual enterprise into a larger corporate entity generally gives rise to important

efficiency gains.

The FDI has the potential to bring social and environmental benefits to host

economies through the dissemination of good practices and technologies within the

MNEs, and through their subsequent spillovers to domestic enterprises. There is a risk,

however, that foreign-owned enterprises could use the FDI to “export” production no

longer approved in their home countries. In this case, and especially where host-country

authorities are keen to attract the FDI, there would be a risk of lowering or freezing of

regulatory standards.

Sound host-country policies toward attracting the FDI and benefiting from

foreign corporate presence are largely equivalent to policies for mobilizing domestic

resources for productive investment. As stated in the Monterrey Declaration, domestic

resources in most cases provide the foundation for self-sustaining development. An

enabling domestic business environment is vital not only to mobilize domestic resources

but to attract and effectively use international investment.

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 The India‟s policy indicator indicates that the barriers to the FDI are higher

especially in retail distribution while compared with the OECD. The project investment

in infrastructure during the year 2011-12 has increased from year-after-year. Total

requirement of infrastructure by private investment and public investments has increased

from the year 2006-07 to 2011-12 with the total investments of 8.37 crore. The external

commercial borrowing has been one of the major sources for debt finance for

Infrastructure.

India is in a position in ASEAN Economic in Foreign Direct Investment. India

Position in Global Competitiveness index registered at 59, ease of doing business

registered at 132 and corruption perception index in 2012 registering 94 positions. The

number of FDI Projects have increased from 774 to 932 protects in the year 2011

compared to previous year. The Compound Growth Rate of FDI projects in India from

April 2007-2011 wa s 1.886. The trend co-efficient are statistically significant at five

percent level. R value indicates that there is a positive correlation between actual and

trend value.

The value of FDI in India varies from year to year and the maximum is in the

year 2008 with US$ Million 80,618. The Compound Growth Rate of the FDI value

(US$ Million) in India is negative, the trend co-efficient is not statistically significant at

five per cent level, R value indicates actual and trend values of the FDI in India. India

has recorded 932 protects, increase of 20 per cent over 2010, the second-highest growth

rate of any country in the list. In terms of FDI value, India has ranked fourth, behind
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China, the United States and the United Kingdom. The Bangalore City has attracted 474

investment protects creating more than 1, 10,140 jobs from the FDI. Mumbai is the

second city has attracting 461 FDI Projects creating 54,900 jobs. The third place was

secured by Chennai has attracting 338 investment protects creating 1, 08,708 jobs.

Bangalore has attracted more FDI in the areas of service, information

technology, engineering and bio-technology sectors and Chennai has attracted automotive

sector only. The number of FDI projects in the infrastructure sector grew by 89.5 per

cent in India in 2011. In infrastructure sector, job creation also increased year by year

with the 20.7 per cent. The value of FDI in infrastructure sector grew by 8.1 per cent.

The rate of GDP is comparatively good in all throughout period under study. The public

participation in the infrastructure sector was much higher than that of private

participation in total GDP.

The sixth chapter titled “An Analysis of Various Challenges in the Growth

and Development of Infrastructure Sector in India” has analyzed the highlights of

infrastructure sector in India, growth and development of various sector in infrastructure.

Infrastructure during the 2012 grew at moderate rate. The growth rate of power sector

during 2012 was higher than the growth rate of 2011. The Railway sector also grows

marginally seen in revenue from freight traffic. In the sector of civil aviation passengers

handled at domestic terminal grew marginally and it was declined in international

terminals as well as export, import cargo handled. In telecommunication sector cell phone

connections also dropped considerably as compare to prior year‟s growth.

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 In the road and transport sector 78 projects were delayed by 2 months to

101months with 8 per cent of cost overrun. In the power sector, 47 projects were delayed

by 1 month to 83 months with the cost of 146 per cent overruns. The investment in

infrastructure doubled from Rs.20 trillion to 40 trillion during the twelfth plan period of

2012-17.

The National Highways Network in India is growing year after year. The

government has taken various initiatives to boost development of infrastructure in the

country. It include setting infrastructure targets for various sectors, with the progress of

PPP projects at the central and state levels and facilitating land transfer between

government agencies for PPP projects. The government of India has ear marked Rs.2,

295 crore under VGF (Viability Gap Funding) wherein Rs.500 crore would be released in

2012-13. The subscribers for broadband were increased year after year.

7.3. Suggestions

The researcher has identified some of the problems associated with FDI in

infrastructure sector in India during the period of research and also offered the

following suggestions for solving the discussed problems.

i. There is a need to reform the railways in terms of policy actions and

organization, and make concerted efforts to attract meaningful private

investments. They can be achieved with a blend of short-term actions related to

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 land, clearances, careful PPPs planning, speedy decision-making and long-term

action taken on regulatory structures, organizational reforms and the like.

ii. The recent initiatives of the government such as the captive port policy and the

land policy for major ports are useful steps in removing hurdles and need to be

supplemented with pending reforms such as the port regulatory authority bill

and cumbersome approval procedures.

iii. The Indian economy today boasts of a strong annual growth rate, deep capital

markets and liberalized foreign direct investment regime. The economy of India

has continuously recorded high growth rates and has become an attractive

destination for investments.

iv. The form of investment largely proves to be beneficial not only for the national

economy, but also for the global economy as a whole. This form of investment

not only benefits to the investor but also to the country to a great extent. To

invest in foreign direct investment, is to earn more profits.

v. Tax is a key cost component to the companies in order to achieve tax

optimization. Good tax planning can have a potentially decisive impact in the

bid process and can provide clear comparative advantages.

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vi. It is suggested that the government of India should push for the speedy

improvement of infrastructure sector‟s requirements which are important for

diversification of business activities.

vii. The appreciation of Indian rupee in the international market is providing golden

opportunity to the policy makers to attract more FDI in Greenfield project as

compared to Brownfield project investment.

viii. The policy makers should ensure optimum utilizations of funds and timely

implementation of projects. The government while pursuing prudent policies

must also exercise strict control over inefficient bureaucracy, red-tapism, and

the rampant corruption, so that investor‟s confidence can be maintained for

attracting more FDI in infrastructure sectors.

ix. There is a very large gap between the approval of the FDI and the actual inflow

of the FDI. Most of the FDI proposals are dropped in the approval stage itself.

The government of India may simplify the approval procedures and reduce the

number of stages of approval. There should be centralized, clear-cut norms or

procedures for the FDI inflow and these procedures can be communicated to the

source countries.

x. India should encourage the FDI in the privatization process. The FDI

investment limit on various sectors can be liberal except the sensitive and

security sectors which would benefit the nation.

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 xi. While framing the FDI policy, the country should consider the possibility of

independent and autonomous regulatory system which must be built in order to

benefit the public rather than the owners. The absence of such expertise in the

regulatory system may lead to monopolistic profit to the foreigners than the

domestic operators.

xii. The country may have separate law dealing with the foreign investment and

issues relating to transfer of shares, disinvestment of original investment,

foreign technology collaboration payment, and repatriation of profits,

acquisition and disposal of immovable property.

xiii. Foreign firms usually prefer urban area due to the availability of infrastructure

facilities, availability of skilled labour, access to market and the like than the

rural area it cause imbalanced development in the country. The government

should streamline the FDI distribution to be even among, all the various parts of

the country. It should be given to the rural areas to minimize the labour

migration.

xiv. The infrastructure development increase not only the growth of economy but

also it increases the employment opportunities and will it in turn increases

standard of living and in the long run, poverty can be eradicated

7.4. Conclusion

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 In the face of the global financial crisis and the economic downturn,

infrastructure sector plays an important role to counter balance the slowing economic

activity and lower consumption. In India, the infrastructure sector currently accounts for

26.7 per cent of India‟s industrial output and thus remains a useful tool to balance the

economy. The growth of economy of any country depends on the amount of money

invested in the field of infrastructure. The amount of money invested in infrastructure in

India since the independence has been comparatively low compared to other developed

and developing countries in the World. As a result, the growth in the field of

infrastructure is not at the expected level but now both the Central and State

Governments have started to invest huge amount of money in infrastructure sector along

with the private players. The growth and development of infrastructure in India is

witnessed in all parts of the country in all fields including road, railways, aviations, ports,

telecommunication and power. India is the second largest populated country in the

World and likely to be reached first position very soon, which requires extra

concentration in the field of infrastructure sector on a par with other countries. In this

context, the present study aimed to analyze the role of Foreign Direct Investment in the

infrastructure sector in India with set objectives. The researcher has collected vast

information from different sources to analyze the role of Foreign Direct Investment in

Infrastructure Sector in India. It is found from the study that the progress of the

infrastructure development in India is not at the expected level because of various

constrains especially the shortage of financial resources. The present study is one of the

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studies, which is mainly focused on linkage between the infrastructure facilities and the

growth of socio-economic conditions of the society. This research will pave the way to

conduct further research in the field of Infrastructure Sector in India, especially in the

following areas.

i. A comparative study on Investment in various sectors in the field of

Infrastructure in India.

ii. A study on impact of Investment in Infrastructure and Economic Development

in India

iii. A comparative study on Growth and Development of Infrastructure in India

and other developing countries in the World.

BIBLIOGRAPHY
Books and Journals

A Brief Report On Power And Energy Industry In India (2013), Corporate Catelist
India, New Delhi, p.5

Abhaya Krishna Agarwal (2012), “ERNST & Young”, Transaction Advisory

Services, New Delhi.

Agarwl (2005) in his study titled “Foreign Investment in South Asia: Impact on
Economic Growth and Local Investment” in EM Graham (ed), Multinational
and Foreign Investment in Economic Development, Basingstoke (Palgrave
MacMillan) pp.94-118.

Aniruddha Sarkar, Suvarun Goswamai (2012), “An Overview of India Infrastructure

Sector- A case study of Kingfisher & Airlindia, Zenith international journal
of business economic & management research, Vol.2, ISSN 2249 8826

Anirudoha Sarkar (2012),“ An Overview Of Indian Infrastructure Sector – A Case

Study of Air India & Kingfisher Airlines” Zenith International Journal Of
Business Economic & Management Research, Vol.2 Issue 1, January 2012,
ISSN 22498826
260