Fdi in India

Running head: STUDY ON FOREIGN DIRECT INVESTMENT (FDI) IN INDIA

Study on Foreign Direct Investment (FDI) in India

Ajit Jagtap

Texas A & M - Commerce

Abstract

This paper explores the genesis, evolution and benefits of Foreign Direct Investment (FDI) in India. It also explores various determinants of FDI from the investors’ point of view and how India fares against those determinants. In addition, this paper also discusses the key policy issues and changes that were made to expedite the flow foreign direct investment in India. Finally this paper will highlight the benefits of FDI and its role in economic development of India. India, a rapidly developing economy is benefitted by the abundance availability of young, skilled and cheap labor force; However FDI has been an important and necessary source of investment for India in various sectors like technology, infrastructure, minerals, oil and gas and has direct role in development of these sectors.

Chapter 1

Introduction

Background

        Importance and benefits of foreign direct investment in any country has been a topic that is discussed passionately by the proponents and opponents of such investment. FDI in India is no exception to this discussion. Normally economic decisions in democratic countries are political in nature. There is not been any other economic policy in democratic India that has had an impact politically, socially and economically as this FDI policy. In 1990 the decision to invite FDI by Government of India (GOI) was made out of compulsion and was considered unpopular among the masses. There was far less awareness of the benefits of this policy and more discussion ensued around the disadvantages to the local community, industries and workers. I feel twenty four years is enough time to let the impacts of this decision on economy become evident to the masses. Hence it is good time to evaluate the level of acceptance and awareness of benefits of this policy by general population.

Problem Statement

There has been and is still an ongoing debate about the benefits and acceptance of GOI’s FDI policy. The problem of this study is to evaluate the awareness of benefits and to gauge the level of  acceptance of GOI’s FDI policy by general population.

Purpose

As mentioned earlier, in democratic country all decisions are political in nature. Investment by foreign investors in the country has always been the major debating point among all the political pundits who try to sway public opinion in one direction or other. Understanding true public sentiments helps policy makers to create balanced policies, and they can also use this information to educate the general public on the policies that do not seem favorable to the public yet are necessary for overall health of the economy.