A Study of Foreign Direct Investment Flows in India Vis-a-Vis Merger and Acquisitions

Abstract

The world economies, particularly developing economies, are rivals with each other to attract foreign capital. The wave of liberalization and globalization sweeping across the world has unlocked many national markets for international business. Therefore Cross border merger and acquisitions have emerged as the single largest way of integrating the world economies on the basis of investment done way back where they accounted majority of FDI flows. Riding on the foreign direct investment policy liberalisation and reforms in the last financial year, India received $64.37 billion in investments in 2018-19. This is the highest ever FDI received in India. According to a report by Department for Promotion of Industry and Internal Trade (DPIIT), it was up from $60.98 billion received in the previous financial year. In India Foreign Direct Investment (FDI) worth $286 billion has been received in last five years. The Government of India is working on a road map to achieve its goal of US$ 100 billion worth of FDI inflows. The present study focuses on the trends of FDI Flows in India during 2000-01 to 2018-19. In this research paper, an effort has been made to evaluate the foreign Direct Investment flows in India through Merger and Acquisitions. The paper also presents entry routes for foreign acquisitions with sectoral caps. In the end paper examines the relationship between various components of foreign direct investments i.e. equity and reinvested earnings with total FDI.

Keywords: DPIIT, FDI, Mergers and Acquisitions