FDI in India has increased over the years due to the efforts that have been made by the Indian government. The increased flow of FDI in India has given a major boost to the country's economy and so measures must be taken in order to ensure that the flow of FDI in India continues to grow.
Advantages of FDI in India:
The Indian government made several reforms in the economic policy of the country in the early 1990s. This helped in the liberalization and deregulation of the Indian economy and also opened the country's markets to foreign direct investment.
As a result of this, huge amounts of foreign direct investment came into India through non- resident Indians, international companies, and various other foreign investors. The growth of FDI in India boosted the economic growth of the country. Major advantages of FDI in India have been in terms of -
- Increased capital flow.
- Improved technology.
- Management expertise.
- Access to international markets.
Amount of foreign direct investment in India
The total amount of FDI in India came to around US$ 42.3 billion in 2001, in 2002 this figure stood at US$ 54.1 billion, in 2003 this figure came to US$ 75.4 billion, and in 2004 this figure increased to US$ 113 billion. This shows that the flow of foreign direct investment in India has grown at a very fast pace over the last few years. The various forms of foreign capital flowing into India are NRI deposits, investments in the commercial banks of India, and investments in the country's debt and stock markets.
FDI in major sectors in India
The major sectors of the Indian economy that have benefited from FDI in India are -
- Financial sector (banking and non-banking).
- Insurance
- Telecommunication
- Hospitality and tourism
- Pharmaceuticals
- Software and Information Technology.
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