Comparative Analysis of India's and China's FDI Flow

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A Comparative Analysis of India's and China's FDI Flow has been summarized in the following article. The rise in the industrial sectors of India and China are regarded as one of the biggest factors which led to the huge amount of FDI inflows in both the countries.

Comparative Analysis of India's and China's FDI Flow at a Glance-

China stands on a higher plane than India in terms of economy. India's per capita income is USD 440 and China's per capita income is USD 990.

The population residing below the poverty line in China is 3 percent whereas in India, the population below poverty line is 30 to 40 percent. China offered investment opportunities to the foreign players much before India did and thereby attracted a raging FDI Inflows in the country. China received USD 52.7 billion of FDI inflows in the year 2002 while, India received USD 4.67 billion of FDI inflows in the same year.

India Lagging Behind China in FDI Inflows-

According to a new World Bank report, India lags behind China in terms of attracting FDI Inflows in the country, in spite of having high-tech industries and adept workforce. The main cause behind this drawback is that India is not skilled enough to adopt the technological advancements at a fast pace. FDI Inflows only contributes to 0.8 percent of India's GDP as compared to 3.5 percent of the same in China. India's high-tech industries claim for 2.3 percent of Gross Domestic Product whereas the high-tech industries in China contributes to around 7.9 percent in the GDP of the country. India did not opened much of economic activities to the foreign players as compared to other developing nations except liberalizing trade and foreign investments.

Advantages of India and China in terms of FDI Inflows-

The majority of the foreign investors prefer China over India for investment opportunities as China has a bigger market size than India, offers easy accessibility to export market, government incentives, developed infrastructure, cost-effectiveness, and macro-economic climate. India on the other hand has skilled and efficient manpower, talented management system, rule of law, transparent system of work, cultural affinity and regulatory environment.

Last Updated on 05/07/2011