International Journal of Academic Research and Development

ISSN: 2455-4197

Vol. 1, Issue 6 (2016)

Foreign direct investment (FDI) in India: A key for economic growth in India

Author(s): Angad Singh Maravi
Abstract: Foreign Direct Investment (FDI) is the major monetary source for economic growth in India. Foreign companies invest directly in fast growing private Indian businesses to take benefits of cheaper wages and changing business environment of India. FDI helps in transferring of financial resources, technology and innovative and improved management techniques along with raising productivity. This paper tries to highlight the impact of FDI on the Indian Economy. The government recently has announced the foreign investment of 49% stake for the foreign players to enter into the retail segment. Recently, Government of India allowed FDI in different sectors of Indian economy. Ministry of Commerce & Industry, Government of India is the nodal agency for monitoring and reviewing the FDI policy. But several opposition parties are making it a political issue in parliament on these policy decisions and amendments. FDI seen as an important catalyst for economic growth in the developing countries, It affects the economic growth by stimulating domestic investment, increasing human capital formation and by facilitating the technology transfer in the host countries. During the FY2015, India received the maximum FDI equity inflows from Singapore at US$ 10.99 billion, followed by Mauritius (US$ 6.12 billion), USA (US$ 3.51 billion), Netherlands (US$ 2.15 billion) and Japan (US$ 1.08 billion). Foreign Direct Investment in India increased by 1850 USD Million in March of 2016. The Government has put in place a liberal policy on FDI, under which FDI, up to 100%, is permitted, under the automatic route, in most sectors/activities.
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