Foreign Direct Investment in India - Research Proposal Example

FDI in India College: This is a brief ment of what you are intending to research. It should be nomore than 1-2 paragraphs. This needs to describe the proposal content. CHAPTER ONE: INTRODUCTION 1.1 Introduction The public’s perception on the role played by foreign direct investment (FDI) towards the development process of a given country has undergone a dramatic change in the past few decades. The change in perception in most countries especially the developing countries led to a spectacular development of FDI in the global economic landscape. Three decades ago, most countries viewed FDI as a partner in the country’s development endeavors. Among the countries that welcomed the concept of FDI is India. However, in early 1980s, India used to follow conservative policies with the main motive being to protect the local industries and investors. This move of liberalizing its policies hindered economic growth of the country in a significant way. On the other hand, economies of countries that had implemented open door polices such as China continued to flourish and grow in a tremendous way. This was the main reason that made legislatures in India to make amendments in their investment laws in order to lure foreign investors in order to boost economic growth of the country. In the past two decades, India was among the countries that experienced the highest level of foreign direct investments globally, a factor that significantly improved the country’s economy. Most importantly, the intense growth of India’s economy led to the changing of many countries perception about FDI particularly developing countries, which viewed inward investments as a threat to the local industries. Many countries both the developing nations and the developed ones had to reform their policies in order to give room for inwards investments from foreign countries as one of the measures of improving their economy. According to 2009 UNCTAD Report, FDI has drastically grown globally in a short period. In 2008, the global figure for FDI was US $ 1697 billion, which was a magnificent improvement from that of $ 1400 billion which had been experienced in 2000. Moreover, the $1697 billion was a slight decrease from the 2007 of $1979 billion, a decrease that was accorded from the 2007/2008 economic crisis. In the modern world, FDI is viewed as a leading strategy of national development in most countries inclusive of India. FDI helps a lot in creating good and reliable networks with other major countries or corporates as well as providing opportunities for the recipient country as they utilize their locally available resources. There are numerous determinants that have made FDI become a vital part in the developing countries like India with the main ones being availability of cheap labor, abundant availability of raw material and the element of low production cost compared to other developed countries. In developing countries such as India, foreign investors are able to penetrate into the market in an easy way. On the other hand, India is enjoying numerous benefits for having a favorable policies that allow FDM with the main ones being creation of jobs, transfer or acquisition of important skills and technology and most importantly FDM creates an inflow of foreign funds and capital. Most recent researches on the effects of FDM on the local micro enterprises of the developing countries have shown that foreign investment tremendously increases local production. The manufacturing and the service sector are some of the sectors that have been significantly impacted by FDM in India. India government has allowed FDM in various sectors and the government did set a policy to regulate it, a policy that is reviewed after every six months. in some sectors, FDM is partially permitted with others lie manufacturing being fully permitted. The service sector is also fully permitted though there exist some exemptions. As a result, the industry has continuously grown and is currently among the sectors that are contributing significantly to the country’s GDP. The retail sector is another major are that has been impacted in a great way by FDM despite the fact that FDM is only permitted in selective cases in the industry. 1.2 Research Objectives The aim of this research proposal is to fully meet the following research objectives. 1. To analyze the determine the key determinants of FDI in India 2. To evaluate the effects of FDI on small scale businesses in India 3. To establish the measures to be considered while preparing Indian FDI regulatory policies 4. To analyze the status of FDI in various sectors of the Indian economy like service industry, manufacturing among others. 1.3 Research questions 1. What is are the key determinants of FDI in India?  2. What are the effects of FDI on small-scale businesses in India? 3. What are the possible measures to be considered while preparing Indian FDI regulatory policies? 4. What is the status of FDI in various sectors of the Indian economy like service industry, manufacturing among others? CHAPTER TWO: LITERATURE REVIEW 2.0 Literature Review FDI IN INDIA – AN OVERVIEW Starting from a baseline of less than $ 1 billion in 1990, a recent UNCTAD survey projected India as the second most important FDI destination (after China) for transnational companies during 2010-12. As per the data, the sectors which attracted higher inflows were services, telecommunication, construction activities and computer software and hardware. Mauritius, Singapore, the US and the UK were among the leading sources of FDI. FDI in 2010 was $ 24.2 billion, a significant decrease from both 2008 and 2009. FDI in August 2010 dipped by about 60 percent to approx. $ 34 billion, the lowest in 2010 fiscal, industry department data released showed. In the first two months of 2010-11 fiscal, FDI inflowinto India was at an all-time high of $ 7.78 billion up 77 percent from $ 4.4 billion during the corresponding period in the previous year (Ibid).The world‟s largest retailer Wal-Mart has termed India‟s decision to allow 51 percent FDI in multi – brand retail as a „first important step‟ and said it will study the finer details of the new policy to determine the impact on its ability to do business in India. However this decision of the government is currently under suspension due to opposition from other parties.Now, a sudden flash into the recent FDI inflows into India to get an idea about the trend of FDIs over the last few years CHAPTER THREE: METHODOLOGY 3.1 Introduction This chapter of a research proposal explains the research methodology that the researcher will apply while conducting his or her research. It also gives adequate support for the made choice. Methodology shows the research design that the researcher will use, his or method of data collection, research instruments that will be applied as well as the analyzing method the researcher will use in analyzing the obtained data. 3.2 Research Design This part of the research proposal explains what the researcher will do, in what method and give reasons to why he or she will use that particular research design. As a result, the researcher is able to a set a clear plan on how the data will be collected and analyzed effectively and in an easily way. This research will be conducted using both qualitative and quantitative research methods, meaning that the researcher will combine both qualitative and quantitative research concepts. The researcher will use quantitative tactics in collecting data relating to the effects of FDI on small and micro enterprises in India. The researcher will distribute more than 600 copies of questionnaires in various parts of the country especially in the major cities like New Delhi. The researcher will employ qualitative methods in collecting data using data collection mechanisms such as interviews be it live, or phone call interviews (Ogden and Goldberg, 2002, p.26). Using an integration of those two research methods will significantly reduce the cost of data collection and analysis. In addition, application of that hybrid method of research design will ensure that the data collected is well detailed, reliable, and quantifiable so that a general conclusion can be drawn from the research. Application of these methods will also give the researcher an opportunity to interact with the respondents thus able to verify the obtained data easily. However, the main disadvantage of these methodologies is the fact that collecting and analyzing data is likely to be time consuming and tiresome. 3.4 Data collection a) Questionnaire Under this method of data collection, more than 600 questionnaire forms inclosing sets of questions relating to the key determinants of FDI in India, its effects on the SME sector, sectors that have mostly been affected by FDM and the measures that respondents believe need to be incorporated in the policies controlling FDM in India. All the questions used will be open (respondents will be free express themselves without limitations). Moreover, the questionnaire forms will only be disbursed to relevant parties as listed under the subheading ‘scope of the research’. b) Personal Interview This will preferably involve live interviews, phone call interviews video calls interviews using Skype. The researcher will interview the relevant key players as mentioned there above (under questionnaire). c) Secondary methods of data collection Secondary methods of data collection like researching in the internet, reading written books by experts in this field, reading journals as well as going through previous studies done on this topic if there exist any. The researcher will ensure that the collected data is from reliable and credible sources so that the conclusion of the research can be used for future reference or can be cited on matters relating to this topic.  Data collection – relates to the last phase of the research onion (techniques and procedures). Identify how specifically the data will be collected (i.e. questionnaire, focus group, etc...). You are expected to provide the advantages and disadvantages of the various data collection methods and select the most appropriate data collection method(s). 5. 7. Research Ethics 6. 8. Resources 7. 9. References 8. 10. Appendix 9. A copy a proposed questionnaire or semi/unstructured interview questions should be 10. presented as part of the appendices. A covering letter to explain the purpose of the 11. questionnaire should be presented Bibliography Read More