A Study on FDI Trends in India – An International Approach Towards Nation Building

Abstract

India, the capital deficient country needs more capital from outside the country. Capital is one of the significant elements of factors of production. The industrial development of any country fundamentally depends on the availability of capital. Because of shortage of capital, particularly, underdeveloped and developing countries need more capital for their survival and technology for competing with other countries. Inadequacy of capital is a foremost obstacle for industrial growth of developing nations. The role of Foreign Direct Investment (FDI) is very much a significant in the economic development the country. The amount of FDI, compared to China and other developed countries is quite less. The Indian Government has reviewed policy to attract more FDI and these policy measures boosted the FDI inflows and out flows. But in the recent years, the amount of FDI has been declining. The procedures for FDI approval, environmental clearance, legal aspect, etc., are time consuming. In this paper attempt is made to analyze the direction and impact of FDI on the Indian economy. Global foreign direct investment (FDI) inflows rose 16 per cent in 2011, surpassing the 20052007 pre-crisis level for the first time, despite the continuing effects of the global financial and economic crisis of 2008-2009 and the ongoing sovereign debt crises. This increase occurred against a background of higher profits of transnational corporations (TNCs) and relatively high economic growth in developing countries during the year. The study is based on the secondary data and information.