Table of Contents

Executive Summary
1. Chapter 1 2
1.1. Introduction to the Industry 2
1.2. Introduction the Project

2. Chapter 2 28
2.1. Literature Review 28

3. Chapter 3 32
3.1. Research Methodology 32
3.2 Scope and Limitations 33

4. Chapter 4 34
4.1. Data Analysis & Findings 34

5. Chapter 5 48
5.1. Conclusions 48

5.2. Recommendations 50

6. References 51

Bibliography 51
 Executive Summary

India has gained gigantic ground in building an arrangement situation to cmpower

venture. Therefore, the nation's cconomy is devcloping more quickly and FDI
inflows have quickened amazingly. Be that as it may, venture stays lacking to
address India's issues, especially in the framework.

Current endeavors to reinforce and change the administrative structure for venture
should be strengthenedand India's allaround created financialenactment executed at
a quickened pace both at the national level and right over India's states and
association regions.

India's FDl inflows have quickened pointedly as of late (until the current financial
emergency). FDI inflows have developed from generally inconsequential levels in
the mid-1990s to extents now more noteworthy than most creating nations. These
inflows have started to assume a significant job in giving work, broadening
purchaser decisions and including the serious upgrade to local ventures.

In the Present Era. FDI and FIl play an important role in a Growth of a Nation
Economy to understand these several parameters have been chosen to compare with
FDI and FII such as GDP, Interest Rates, Inflation Rates and Stock Market BSE
Sensex. This Study would help all those who want to know how foreign countries
invest in India in which sectors do they invest and what are the important countries
for India etc.

1
 Chapter 1

1.1.Introduction to the Industry

Financial services are the backbone of economic growth and development

of anation. The finance industry enables the creation of new business and expansion
of existing ones. So this Ultimately facilitates more cmployment and job crcation
with the growth and development of other mainstream industries. India's financial
services industry managcs moncy for individuals and corporations. The
finance sector mainly comprises insurance companies, commercial banking, non
banking financial companies (NBFC), co-operatives, mutual funds, pension funds
and other smaller financial entities.

Aside from being a basic driver of monetary development, remote direct venture
(FDI) is a significant wellspring of non-obiigation money related assets for the
financial advancement of India. Outside organizations put resources into India to
exploit moderately bring down wages, uncommon venture benefits, for example,
charge exclusions, and so forth. For a nation where remote speculations are being
made, it likewise implies accomplishing specialized skill and producing busines
The Indian government's good arrangement system and powerful business condition
The
have guaranteed that remote capital continues streaming into the nation.
administration has taken numerous activities as of late, for example, unwinding FDI

standards across parts, for example, resistance, power trades, and stock
trades,telecom among others
in the
India's asset management industry is one of the fastest-growing industries
world. Absolute AUM of the business expanded 40 percent year-on-year to hit a
record Rs 23 lakh crore (US$ 358.78 billion) toward the finish of November 2017.
Corporate investors account for around 46.26 percent of total AUM in India. High
Net Worth Individuals and retail investors account for 28.01 percent and 22.96

percent, respectively.

Also, the Revenues of the brokerage industry in India are estimated to grow by 15
20 percent to reach Rs 18,000-19,000 crore in FY2017-18. The insurance industry is
 1.2.Introduction to the Project

1991represcnted a significant tuning point in India's cconomic history. In response

to the major balance of payment stimulatcd by the collapse of US.SR, Indta's
major trading partner of the era, and hike in oil prices due to the Gulf War. the
Govennment of lndia sought the IME to grant a bailout loan of L8 billion US
Dollars

The Indian cconomy pursued an inward-looking post-independence development

stratcgy in fomulating cconomic policics that led to the implementation of an import
substitution policy, state intervention in industrialization; a grcater role was placed
by the public sector in uplifting the cconomy. That has made India an enticing
foreign capital destination. The Indian government scparates cross-fringe inflows of
capital into various classifications, for example, Foreign Direct Investment, Foreign
Institutional Investment, Non-Resident Indian and Indian Investment Person.
Foreign Dircct Investment, FDI and Foreign Institutional Investor, FII are the two
mos1 important sources through which India receives foreign capital. The dividing
line between the two is an interest they have in the business in which they make the
investment and the purpose behind the same. The main difference is that one which
flows into the stock market is FIll and the other which flows into the primary market
is FDI.

International Monetary Fund agreed to India's request for this bailout loan but
demanded it to absorb several reforms into its economic policy in return. The

government agreed upon this and absorbed some reforms into the economic policy of
Liberalization.
India. Such reforns are recognized in India as the 1991 Economic
Under these reforms, major stress was laid by the government in three areas, namely
- Liberalization, Privatization & GIlobalization. It is for this reason that the
Economic Reforms of 1991 are sometimes also referred to as the LPG policy of
India.

Here our subject matter is Globalization, in simple terms; the aim of the
globalization was to integrate the Indian Economy with the World Economy, by
enabling an unhindered Trade flow, Caital flow, and Technology flow across the
State and National Borders. For this purpose, several steps by the Government of

9
Objectives

To study the impact of FDI and Fil

through the GDP, Interest Rates and
Inflation.

To Analyze the following parameters GDP, Interest rates and inflation

through Correlation.

To understand how the different sectors have been shaped up due to FDI and
FII invest1nents.

To study how FDI and FII whether or not have an impact on Indian Share
Market (BSE - Sensex)

last
Tostudy the flow of FDIand FIIinvestments during the given period of
3 years.
 Chapter 2
2.1.Literature Reviey

L/2015).Navcen Sood.Significance of FDI AND FII for the cconomic growth of

Statisticalanalysis 2001.-2015.
India.
prescntpaper endeavors to cxaminc the centrality of FD0 what's more. FII for
The
monetarydevelopment of India during 2001-2015. So as to accomplish the goal
the
paper,
information has been gathered from different optional sources and the
ofthe
devices of relationship and relapse have been applied. The investigation infers that
FDI
influencesthe financial development of Indiaaltogether though the joh of FII
financial development of India is factually immaterial.
forthe
Mauritius has developed as the most
prevailing welispring of FDI contributing 89.64
absolute FDI inflows in India and the FDI
billion and represents 34.74% of the
USS billions with 16.80%
administrations is the most elevated with 43.35 USS
inflows in
study (Sood, 2015)
during the time ofthe

and Guntupalli Lakshmi Vishali.An Empirical

Prasad
2(2017). Dr. R Siva Rama
pattern in the Indian
Capital Market.
investment
Studyon FII
concentrating on the significant
fundamentally
principle aim of this paper current situation.
For this reason,
The interests in the
of FII to center
commitments and job
This paper makes an cndeavor
considered. capital
pointers like GDP was speculations into the Indian
monetary example of FII
the nature and savvy ventures of Fll into
and concentrate the division
paper likewise uncovers
particularly centeredaround
market. This
ofthe securities exchange pattern inlndian
portions investment
dterent speculation ELapirical Study on FIl
Vishali, An
NSE. (Prasad &
Capital Market, 2017)

28
 Chapter 3

3.1.Research Methodology

presentstudy bascd
on sccondary data. For the sake of rescarcher converience.
The financial years bascd
periodof study was considered between the 2018-2020 and
the
onmonthlydata.

from bulletins of the Reserve bank of

required FDI & FII data were collected
The India, Real GDP
publications fromthe Ministry of Commerce, Government of
India, annual reports from
as economic growth indicator and was collected IMF
wastalken
annual
websites. Sector-wise FII and FDI investments are taken from
official
the
reports.

ranges from -1
correlation are used. The correlation coefficient
Statistical tools like the
of the relation between the variables under
the strength
to +l which can give taken from the BSE site. The Karl
estimation of every year is
study. The end file the relation and impact of FDI
and
correlation is used to know
Pearson coefficient of
Market.
FIIon the Indian
 all The guideline
changes,
in Investment.
"A offer the
doorstransmission spending
upgrade
foundation been limitations.
is entitled for
will foundation have
development open its examination
and media Growth.", that major
Direct investment rates
sending, the were
The speculation, to Economic
of
Inflation
needspresent divisions Resources
planet.Foreign
privateand and
It
onthe the ports areas. The India's different Interestand Journals.
down
throughthe open 2020.
developing
country street,FDI. economy.
Indian Time
targets, by in for
by FDI ininflows only. and
Limitations sum
to
break
power,contributed foundations is
there yearsWebsites
tremendousfuture on speculation
and
limitation
difficulties,
including FDI FDI
fastest aeronautics other of ofthe 3
of from
and isexamination improvethe
|
Scope the
need
they
tra
areasm f
eow
r ork huge and Role
keynolivatioIS, common requireports
advancement
Overall
s the proposals
oniy
isFDI

with
taken
ofone andsetors streets,on to the is
Study
comelated
32. India Study as
1s and India on
far
As The
 34
8.498 5.241 54 6.4 7.41 8.17 7.17 6.81 6.12

GDP

2942216812 275825010 40923-40167735 22165 -22254531

.359| 308| .006| .987 10 10
10
GDP
Chapter
4 .006 .987 10]
FIJ -.364| 301| 10 10|

FII
34847465563429836046 451485555960220600826200134900
(2010-2019) 10/
Analysis.
Data
Findings 10
-.364| 301 10 .359 .308
GDP Correlations
FDI
on FII
& Fll FDI Correlation
Pearson
AND Correlation
Pearson Correlation
Pearson
and (2-tailed)
Sig.
(2-tailed)
Sig. (2-tailed)
Sig.
FDI
ofImpact 2010 20112012 2013 2014 2015 2016 2017 2018
2019 FDI
1:GDP,
N
Ycars N N
,4.1. Table GDP
FDI FI
 not Anothernot each FDI, consecutive
is but with between
that, as has decreasing nega1ve similarIn FII which runningFI bad that similarnegative
29422decreased In remain 35
there after figures
India year. FDI, but FII change year.
values at Fl steadily been been last FII
but 0.05. correlation and similar confidence
in seen FIl at previous
2014 in and
relationship isalso and GDP were in year didn't and straight
little has
correlaied 0 bit
than at 2016 also
ithas both In seen FDI had tocompared
correlated FII 34897and the 1%. was secondgrew FDI FIl $
greater negative till had FII to ajust 2018
million
3for
steady it FII by shift 2017 but
positively direct want.
year investors US $and was and increased
compared GDP grew 1%.Inyear as 35000again
FDI but FDI big afor
far normally a in the
last rate
they and GDP S.In by cach was
a
havinga to 2010 increased
2012 a GDP yet
is
slightly
is
there grown foreign 29422 slightly
and
had held FDI milliondecreased reaching
figuresGDP to decreased
In and 2015and
mil ion.decrease respectively.
0.308 from GDP in
they are and a
growing
at FDI respectively. was FDI 5
that increased year
and GDP
had to of2010Starting $
are levelthat FIl say FDI
years due
2011 and election 7.4%.In
previous 2016 773 GDP
GDP significant
is and conclusively say the might
be highest
in 2018.
22000
In
with 60000marginal
and %
and

aterp etaion:
GDPFDI not In 5.2 had reachinglevels.year mil ion
50 $
and can over 8.9%.and by the % hitting decreased %
and assurance. to
India and GDP as its
lot increased negative this 300 slightby 6.12
FDl reached
table as FII
the evidence
of
interprestiaginonticant GDP.andFll,
can't
-Analysis:
we decrcasing
above
table
This
years.
initial
ofthat
due
hasit lowered
theFromstarted been
with
its 2015

years in
at
stood
16812 a
to 2010
and decreased
Siønificantly all
from
40000
1%
by
positive years
by
grown aand
3 againFDI
4512
with
and
in
see
is
enough Also,
we FIl
over for (GDP of FII
the
GDP to
to
increased remain
decreased FII last positiveyears
We
As
with other. aluos
and
levels 2013 and jump
to
much the yet 2019
to
 Impact,of FDIand FIl on Interest Rates
2.

FDI Interest Rates Inflation Ratcs

Ycars
3976 6.25 1.86
Jan-17
1210 6.25 2.62
Feb-17
2448 6.25 2.61
Mar-17
3229 6.25 2.21
Apr-17
4060 6.25 1.09
May-17
3119 6.25 1.08
Jun-17
4827 6.25 1.79
Jul-17
8004 6 2.52
Aug-17 2.89
2115 6
Sep-17 6 3.24
2682
Oct-17 3.97
6
3086
Nov-17 6 4.00
4819
Dec-17 5.11
2418
Jan-18 6 4.74
3181
Feb-18 4.36
6
3317
Mar-18 3.97
5348
3.96
Apr-18 4513
6
3.93
May-18 2891
6.25
Jun-18 6.25 5.61
2770
5.61
Jul-18 6.50
2508
5.61
Aug-18 6.50
4635 5.23
Sep-18 6.50
4698 4.86
Oct-18 6.50
1739 5.24
Nov-18 6.50
4391 6.60
Dec-18 6.25
4408 6.97
6.25
Jan-19 2865 7.67
Feb-19 6.25
3601 8.33
6
Mar-19 5252
Apr-19 36
 3. Top 5,Sectors with FDI and FIL Investments

Sectors FY 17 FY I8 FY 19
Contribution
Service Sector 6,709 9.158 4455 18%

Computer Software & Hardware 6153 6415 4025 9%

Tele Conmmunications 6212 2668 4280 8%

Construction Development $40 213 268 6%

Infrastructure
Trading 4348 4462 2143 6%

Table 3:-Top 5 Sector Based on Contribution (2017-2019)

Analysis:

shows that a maximum FDIinflow

The sector-wise analysis of FDIinflow in India
sector has topped the list with US
has taken place in the services sector. The services
Computer Software and Hardware sector
$37,235 million (18 percent) followed by
Telecommunication sector with US $12,856
with US $22,080 million (9 percent),
and Infrastructure with US $11,691
million (8 percent), Construction Development
million (6 percent). Inflows of FDI in
mi'lion (6 percent), Trading with US $10,318
services sectors. In 2018 we can highest
India have been uniform across all
sector is 9158 million $ and the lowest
contribution have been made in the service
Development and Trading with just 213
Contribution being of the Construction
the same year. Trading is also increased in its contribution to 6% from
million $ in
its previous years.

39
 20509.09
15454.92 21170.68
19426.71 27499.42 26626.46
26117.54 34056.83 41253.74
36076.72
Sensex
Closing

.334| .346 10 -.340|.337 1 10|

10
2942216812275825010 40923-40167735 22165-22254531 Sensex

market(BSE)
t
(2010-2019)
FII -,364|.301| 10 10
-,340|337| 10
1
FII

Closing
10
-.364 .301| 101 .334|.346| 10|
on
the
Indian 46556342983604645148$555960220600826200134900
34847 Correlations
FDI
1

Sensex
FDI
Correlation
Pearson Correlation
Pearson Correlation
Pearson
BSE
FII (2-tailed)
Sig. (2-tailed)
Sig. (2-tailed)
Sig.
and and
20102011 20122013 2014 20152016 201720182019 FII
FDI
4:FDI,
Impact
of Years N N

Sensex
Table FDI FII
4.
 32 20
Contribution 7 6 3 2 2 2 is are Arab 2%. due avoidanceany tax investors
Singapore
investment Mauritius
from United3%, that The
2019)
received 6%, meansMauritius.
big
tax (DIPP.GOV,
% 6%, through
32%. directFrance,
doubleagreementother
63648019 1784 2323 2152 856 260 108 334 164 been as 7%, in The
foreign or
19
FY have high Cyprus,
7%, routedthe Indiaworld.
India (2017-2019) as are from This Netherlands.
19 be of are in
207-20 sources FDI
Germany,
in to USA. eitherthe
U.S.Aemanates
highest
inflows 8084162282965 38703139 1351 886 296 406 8981 of
has in
FY
18 Contributionof inflowsmajor inflow from country tax lowest
the
Period paying and
UK,
other of inflows
advantage
the Britain,
5941
I 12180
1633 28002095847 1124 417 S11 1050 the these USA, share that
of
Countries
the wise over The amongst
with option
with
17
FY respective
The
in 20%.Netherlands, tax
Country respectively. US,
FDI share has the
The the
of of India are Singapore,
Mauritius JapanNetherlands
Singapore USA UK CyprusFranceUAE
Germany 10 its share
inflows advantage.has Mauritius
their
Mauritius, that investor
5. Countries
10Top TOP
largest with
Japan,and 2%
a
5:- Analysis: Emirates
and
agreement Included
second tax
Toreign
in
Table from
The from 2%, rates
to
 100%100%100%100%49% 100%26% 100%49% 49% 100%100%100%
to country
Government 100%74% 49% underroute
Government
49% 100%100%20% 100%
access
to 74%
the up
49% in
in Automatic
resulting
technology to
to under up
CAP up &
49%cases
Automatic 49%
Abovein modern Above
route

Husbandry
& Plantation
SectorMiningGas Defense
Manufacturing Media Airports
Broadcasting Exchanges
Power
Sector
Pension
produced
Companies
Finance
Non-Banking in infrastructure
India Railways
Pharmaceuticals sector
private
Banking E-commerce
Insuranceservices
FinancialOperations
Sector
Public
Banking-
Natural Cap
Print Wise
or
Animal
Agriculture
&
Aviation manufactured ATM Sec
Petroleum
Cap Sector Label
Civil and
WiSector
se6. White
products 6;-F

Food Tab
 financial
FDI nation
a outs1decdge Rates,and to may. ventures. job The makingand lndiato huge as this In lot monetary the in the in
evitable way risen nation.a to intlow forces
may.
it Correlated dynamic
do. relaxationsof the to
eredited with of
owing significance
cutting Interest it development
any
creating
of as
FII
FDIsimply afound of has this agreements motivating
inflow are that ventures. Mauritius the FDI
one
development.
as
that cxchange
of GDP.negative that Be ofeventand economy
as
we'reduty has is
explanation
with of ieconomy
s
the
(DTAA) up
the nation.
approaches exchange battle worthwhile the few
he of morc
with to the now, the haul financial India study, speeding and abouta
huge.India' the understandingIndian
the
progression work. corrclated mostly long area given
the in the
Right alongside the
just about
the actualized
securities administration
for correlated.
negatively for raise for and measurably in of and increasingly Thinking
Chapter
5 not openings remains the furthermore
steady. period FDl 'Make time India
the the has
India
nation positively actualized to
caused way, for ofdevelopment
in brings Fll be in lockingamong's the in shirking inflows noteworthy, Administra
of parts.
FIl the unfocused/to isn't of During
making producers this
altogether as dispatch FDI have
whereas and and IndiaIn exacting connection the admin
FDI addition, more
for thanadvances seen
of assessment
should FDI
ventures
engaged break. point.wellspring
invited therefore the by most
Concl
41. usions job
significantyct,
in
is BSE are
FDI
also
left
outside
benefits to
not bringing be
and
is late
affiliation
and this
demonstrate
enlarge appeared
India Moreover, the
the
are abilitics, Senscx
Rates,
Inflation creators regions were must high
FIl India. factors FIl
and
the brecze and inflows prevailing
tax DTAA part, ofassor
and
FDIl
Both venturcs were there twofold to that administration
is
administr
pAS UIMCasrticularl innovation
like
and
and of
ASsCts terms
FDI strategy
of
few were
wellsprings
they
sure
this
Still, theytradesexemptions,more,FDI
ais to most is
as
way,
development.
nations
dynamism
of'ms The
a FII
are nlavers.
capital There what'sexpandguides reality more wide
la Since stock the this
dhe dhere a
n
 to with
more help decademediaface developing
GOI, of of obstacles
nced
intricacy
disposed
can age, fragment the
FIl multi
so
Economy
we by the
help and jobs
recent this
the appropriately
an be of
would
turn
in
FDI in irnplies is to one
economy most divisions,
same thereoughtis
this
Nation with
it directed advancement
development
that since
nationby contributeddevelopment,
nation improved this market possibie
Building
a which developed of
underdeveloped portion not
public is doesn't are after capital
reasonable consider
area significant
FDI part
Recommendations
in abecoming
helpfulthe opportunities.
employment administrations
area with
that,Indian
administration
among the locate woulddevelopment.
financial
of
quite an that of defilementfor
the
or of yet one examination
concentration
in
many
are developing
awareness goal rules
2019),
is
transmission what
FIl the in of
fragments covering
gigantic
and reachFDI - beyond
(2000
FDI make a
For to The this This
5.2.