Efficacy of Foreign Direct Investment in India - An Evaluation

Abstract

Foreign investment plays a noteworthy role in all walks of development. Foreign Direct Investment bridges the gap between saving and investment. In the process of economic development, foreign capital helps to cover the domestic saving constraint and provide access to the superior technology that promotes efficiency and productivity of the existing production capacity and generate new production opportunity. The perceptible growth of India’s GDP, particularly in the past few decades has lifted millions of people from sever poverty on the one hand and made the country a conducive ground for foreign direct investment on the other hand. A recent UNCTAD survey projected India as the second most important FDI destination after China for transnational corporations during 2010-2015. Services, telecommunication, construction activities, computer software & hardware and automobile are major sectors, which attracted higher inflows of FDI in India. Few nations such as Singapore, Mauritius, the US, and the UK were among the leading suppliers of FDI in India. This paper intends to examine the degree of global countries’ participation, the sector-wise inflow of foreign capital and the recent initiatives of the government policy towards foreign direct investment.