The Growth and Prominence of FDI in India

The term FDI stands for Foreign Direct Investment. It is an investment in the form of business done by an individual or firm from a different country whose business interest is located in a particular country. The inception of FDI in India was occurred in the year 1991 by the then finance minister, Dr Manmohan Singh.

FDI opened the gate for overseas investments and it stimulated large economic growth in India. In fact, it revolutionaries the Indian economy to a whole new level. The reputed MNCs started coming to India and it eventually augments the employment rate. Large-scale employment results in people living a better lifestyle and also improves their standard of living.

The current FDI rate in India stands at US$ 49.97 billion in 2019–20. FDI is allowed in a number of sectors like petroleum & natural gas, mining, agriculture & animal husbandry, defence manufacturing, plantation, broadcasting, civil aviation, etc. During 2019–20, India had received the highest FDI equity inflow from Singapore (US$ 14.67 billion), followed by Mauritius (US$ 8.24 billion), Netherlands (US$ 6.50 billion), and United States (US$ 4.22 billion) and Japan (US$ 3.22 billion).

There are many ways by which FDI benefits the home country. Have a look!

· By creating ample jobs opportunities in the home country.

· Providing exposure to new technology, innovations, and managerial expertise.

· Through stimulation of economic development.

· Development of backward areas.

· Human resource development

· Increased overall development and financial growth.

· By improving capital inflow.

· The reduced disparity between revenues and costs.

· Improve infrastructure and lead to an increase in the per capita income of the country.

Each year government regulates the FDI inflow in the country by prioritising its FDI plan. The growth and prominence of FDI in India are increasing every year as more nations want to establish themselves in India due to the easy & cheap availability of resources.

The Bottomline

Foreign Direct Investments can help develop a nation’s backward areas and helps it transform into an industrial hub. Also, goods & services offered through FDI may be promoted nationally and also exported overseas, creating another vital revenue stream. It also advances a country’s capital inflow, exchange rate stability, and helps in creating a competitive market.

Images Source: Google (Creative Common Licenses)