The capital inflow of FDI allows strengthening infrastructure, increasing productivity and creating employment opportunities in India. FDI also acts as a medium to acquire advanced technology and mobilise foreign exchange resources. FDI provides a favourable economic environment for the development of the Indian economy.
FDI helps Indian economy in more ways than one, some of which are mentioned below:
- FDI helps in balancing international payments.
- It boosts development in various fields.
- FDI helps to generate greater employment opportunities for the people of India
- FDI encourages export from the host country.
Apart from the above mentioned advantages, FDI helps in creating a competitive business environment in the country which leads to higher efficiency and superior quality of products and services.
Thus, we can say that FDI plays a crucial role in the growth of Indian economy as it helps new technologies, employment generation, improvement in business operations, etc. With the recent inflows of FDI, Indian economy is poised for greater growth in the days to come.
Foreign Direct Investment is critical for developing emerging market countries. The host countries need the multinationals’ funding and expertise to expand their international sales. The host countries need foreign investment in infrastructure, energy and water to increase jobs and wages. Data show in 2017, developing countries received $ 671 Billion or 47% of total global FDI, investments rose 9% in developing Asia, which received $ 476 billion.
Contrary to general perception, the developed economies, such as the European Union (EU) and Unites States of America (USA) also need FDI. Most of these countries’ investments take place via mergers and acquisitions between mature companies.
FDI benefits the global economy at large. It also benefits the investors and the recipients. Capital goes to the businesses with the best growth prospects, anywhere in the world. The profit motif is always colour-blind and doesn’t care about religion or politics.