Introduction Of Foreign Direct Investment Essay

775 Words Dec 30th, 2015 4 Pages
INTRODUCTION TO FOREIGN DIRECT INVESTMENT
Foreign direct investment is one of the major monetary sources for economic development. Foreign companies invest in India to take various advantages such as cheaper wages and the changing economic environment of India. With the liberalization of Indian economy in 1991 under foreign exchange management act (FEME), FDI has steadily increased in India.
According to the financial times (2015) china and US were overtaken by India in the marathon of the top destinations of FDI. Increased FDI may be linked with improved economic growth due to the influx of capital and increased tax revenue of the host country and this FDI is channelized into infrastructural and other economic development projects.
Globalization is providing new opportunities to countries around the world through economic liberalization, foreign investment and capital inflow, technological exchange as well as information flow. Furthermore, transfer of skills technology and research& development resources takes place. The domestic country gets benefitted through employment opportunities created by new businesses.
There are two methods or routes that could be used by the Indian economy for the purpose of acquiring finance through FDI
1-AUTOMATED ROUTE –here the FDI is allowed without prior approval of either reserve bank of India or the government of India in all the activities/ sectors as specified in the consolidated FDI policy issued by the government of India from time…

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