fdi in india and its growth linkages - Department Of Industrial Policy ...

FDI IN INDIA AND ITS GROWTH LINKAGES
companies in that sector. By this method, the entire sample of 2,000 companies was allocated and then redistributed
across sectors. This sample accounted for 39 per cent of total cumulative FDI.
After the allocation of samples to the sectors, the next stage of sampling involved exact identification of companies
through the simple random selection method. This was achieved by the use of SPSS software through which the
allocated companies in each stratum were randomly selected without replacement. 2 This formed the total sample of
companies to which questionnaires were to be sent.
Efforts were made to compile company addresses since the DIPP records contained only the company names and not
their addresses. Different sources, such as the Capitaline and Prowess databases and various websites, were used to locate
these addresses.
After compiling the addresses of both manufacturing and services firms, we posted the questionnaires to companies
across India. About 1,500 questionnaires were despatched along with covering letters from DIPP and NCAER. After
three months of waiting and a follow-up, we received very few responses, so the survey was conducted through
personal interviews.
7.2 Difficulties in Conducting the Survey
The first problem was collecting the addresses of the manufacturing and service firms, and several sources were used
to locate them. Most of the information compiled from the Ministry of Corporate Affairs website and the internet
was outdated as many companies had either shut down or relocated. We mainly relied on the information in the
Capitaline database.
Other difficulties were as follows: lack of responses from company representatives, including the top management; most
respondents merely handed over annual reports of the company and were not willing to discuss the questionnaire; and
those who did discuss the questionnaires could not answer many of the questions due to lack of information. Thus, the
response rate to the questionnaires was low.
We received more than 400 responses but selected only 284 due to data consistency. These included 129 manufacturing
firms and 155 service firms.
7.3 Analysis
All the completed questionnaires were entered in an Excel database and SPSS software was used to tabulate the
aggregated results. All individual company data remain confidential.
Of the 284 FDI-enabled firms, there are 129 manufacturing firms (25 are common with the secondary data base) and
155 service companies (9 are common with the secondary data base) (Table 7.1a). These companies are spread across
four zones – East, North, South and West – and also large and small cities, where large cities comprise Class-1 and
Class-2 cities combined, and small cities are Class-3 cities. The large cities are towns with a population of 5,00,000 and
above, and Class-3 cities are towns with a population of less than 5,00,000. This bifurcation of large cities and small
cities was made partially to address the question of where FDI goes within a particular zone. More specifically, the
interest was in knowing whether FDI is concentrated in large cities, i.e., metros, or small cities/towns/rural areas. Of the
284 firms which could be surveyed, there is concentration of firms in the North and South zones followed by the West
zone; there are few FDI-enabled firms in the East zone. The maximum number of surveyed manufacturing firms is in
2. The number of companies randomly selected from each stratum was different depending on their weightage.
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