Foreign Direct Investment in India and Its Economic Significance In Relation To Development of Various Sectors

Abstract

This paper investigates the impact of foreign direct investment and policies on economic development of various sectors of the economy by considering factors affecting FDI, and includes comparative analysis with the help of statistics relating to sectors attracting highest FDI equity inflows for the financial years 2008-09 to 2010-11. One of the most liberal policies for foreign investment and technology transfer is followed by India. Foreign investment gives the Indian industry a chance for technological up gradation, access to global managerial skills and practices, optimum utilization of human capital and natural resources, and to compete efficiently in the international market. FDI is vital for India's integration with the universal production chains that are engaged by various multinationals across the world. FDI is vital for India's integration with the universal production chains that are engaged by various multinationals across the world. There is a mountain of cash available in the world financial markets, some of which is awaiting Indian government signal to flood in. A few rules and policy changes have to be made before the floodgate is open. This money will also bring with it foreign participation, which is sorely needed for this very complex and highly technical sector. FDI has transformed China. It will do the same to India. The question is what is the delay. The first and foremost is to understand bureaucratically how to manage the FDI in the infrastructure sector and how to pay it back with export earnings.