What is FDI?
FDI stands for Foreign Direct Investment. FDI is an investment made into a country by a company located in another country. It can be done either by purchasing stake in a company or by expanding the operation of an existing company within the country.FDI has played an important role in the economic growth of the country.
Benifits of FDI in India
With the help of the government FDI has helped in the growth of the Indian economy. The FDI approvals are generally done by the RBI (Reserve Bank of India)and Foreign Investment Promotion Board. The procedure is done fast so as to bring in large amounts of FDI into the country.
Sectors - FDI
The survey conducted reveals that maximum FDI approval has taken place in the sectors such as information and technology, pharmaceuticals, electronics and hardware, automobiles, travel, telecommunications etc. The telecom industry has been growing rapidly due to the FDI inflows as the international companies entering the market. The telecommunication sector is noted to be one of the fastest growing industry in India.
Guidelines for Sectors
Guidelines have been issued to different sectors by the government of India to increase the flow of FDI into the country. These sectors mainly includes the tourism, banking and housing etc. FDI is allowed in financial services including credit card business. Foreign investors can buy up to 40% of the equity in private banks.
USA, UK, Japan, France, Germany, Singapore, Malasia, Switzerland are some of the countries participating in FDI with India.
Why FDI in India?
Today, Indian market is one of the developing market in almost all sectors. The advantage for FDI are:
- The rise of the Indian economy.
- Cheap wages.
- Tax redemption.
- India has majority of workers who are educated and have the ability to speak English.
- Increase in incentives to Foreign investments.
- Growth and increased earnings in most sectors of business.
- A huge market with high returns.
FDI Prohibited Areas.
There are some FDI restricted area like the arms nuclear, gambling, railways, coal and mining industry, chit fund business, lottery business etc.
These are some of the government restricted areas to safe guard and protect the interests of the nation.
FDI is a great way to give positive impetus to the economy of a country. There are several sectors in which FDI has been a boom in India. One of the reasons for this is that India has a highly prospective market. However, the government should put in efforts to attract more FDI inflow in the country.
FDI is one of the most efficient way of expanding the economy of a nation and maintaining friendly relations with other countries ,as well. The article supports various sectors where FDI is done and the reasons for growing FDI in India have also been mentioned. Our government is also supporting the same through the launch of various campaigns like digital india etc. great work!!
Foreign Direct Investment in India is growing day by day. India is becoming the fastest growing market and all the big companies are investing their money in our country. FDI will lead to privatization which will indeed increase the quality of products. $9 % inclusion of FDI in Defense is indeed a revolutionary decision which will give better weapons and defense systems to our soldiers. Though FDI has benefits like higher job opportunities, better quality products, etc. it also leads to certain demerits like destruction of small entrepreneurs, no scope of growth for Indian production companies, inflation etc.
Foreign direct investment helps the country with the extra capital needed for growth and development. No doubt the telecom sector has seen an upward trend. It gives the economy a much needed push. The many benefits include employment benefits for the youth, more development. great returns. As it is approved by the RBI there is less scope of any negligence.
Involvement of international companies in India definitely helps Indian economy to grow faster but there has to be some limit in this. Many times, it has been seen that to reduce the competition international companies buy rival Indian companies and then cut off important employees which leads to the unemployment.
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