Political impact of larger FDI

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The political impact of larger FDI in India has transformed the Indian investment scenario in various areas. The fact that more multinational corporations are investing in India signifies that India is increasingly focusing on the industrial sector.

The increase in Foreign Direct Investments resulted in the Government of India making critical reforms in 1991 and since then, the emphasis on Indian industry has been constantly on the rise.

The political impact of larger FDI is influencing the government to initialize and support concepts like liberalization. The political climate is focusing on liberalization of banking, telecom, infrastructure, and insurance sectors. The political scenario is changing gradually, and is accepting the concept of Foreign Direct Investment widely within the country. The government is looking forward to working on the rural areas and bringing about equality in terms of investment and wealth distribution with the urban areas.

In November, 1991 there was tremendous activism against opening up the Indian market to multinational corporations. But now, the situation is completely different since there has been an increase in the investment of multinational corporations. The political scenario too is learning to accept globalization and privatization with an open and progressive outlook. Reformation in this regard is taking place in the public sector, financial services, and tax structures as well.

The political scenario of India is looking forward to Foreign Direct Investment as a mechanism for development. In fact, there has been development in the fields of land use, water, power generation, and roads. This points towards the great political impact of larger FDI.

The increase in FDI flow has strengthened the foreign political relations and now foreign companies are trying to persuade the Indian Parliament to increase FDI capital depending on the sector. There are some chief bodies and boards that have been set up for the purpose of Foreign Direct Investment, such as:
  • Project Approval Board (PAB)
  • Licensing Committee (LC)
  • District Industries Centers
  • Investment Promotion and Infrastructure Development Cell
  • Foreign Investment Promotion Board (1991)
  • Foreign Investment Promotion Council (1996)
  • Foreign Investment Implementation Authority (1999)
  • Investment Commission (2004)
Thus, the political impact of larger FDI has made prospects for India's future relationships with foreign companies really bright and exciting.