Foreign Direct Investment In India

In July 1991 the Government introduced Economic Reforms due to foreign exchange crisis faced by the country and in view of other disequilibria in the economy. While India had a very large potential for attracting Foreign Direct Investment in the country, the quantum of inflows had been very slow as compared to other emerging e conomies. Capital constraint has been the leading reason for slow growth of infrastructure in the country and due to this reason a larger amount of capital inflows became an indispensable part of the new economic policy. Larger inflows were required for multisided development in different sectors like agriculture, health, education, energy, national highways and other infrastructural facilities. In the absence of foreign capital inflows modernization of industries, creation of more employment opportunities, diversification of industrial development and better inflow of a high level of technology were not possible. FDI or FIIS had to play import roles in filling this gap. Since 1991 it has been a constant policy of the Government to liberalize the economy for opening new vistas of foreign investment in different areas. This descriptive study is devoted to analytical evaluation of recent trends of foreign direct investment in India and critically reviewing of FDI policy. The study also discusses the problems and prospects for raising the pace of FDI inflows in the country.