How is FDI relevant for India’s foreign trade growth?

India’s economic growth is dependent on productive investment as it is increasing largely. India is a labor-surplus economy with a scarcity of production capital. Maintaining a balanced source of investment is crucial for the industrial development of the country and productive growth. India’s Foreign Direct Investment has observed significant growth in November 2020.

According to the Commerce Ministry, FDI in November 2020 raised to 81% to %10.15 billion from $5.6 billion in November 2019. India has captivated a total FDI inflow of $58.37 billion from April to November 2020. It is the highest ever in the eight months of the financial year in comparison to the eight months of November 2019-2020. FDI equity inflow acquired during the FY2020-21 is $ 43.85 billion.

FDI is the major source of economic development of India, the government has attempted to legalize investor-friendly FDI policy. The objective behind design the FDI policy is to eliminate the policy bottleneck that has been hampering the investment flow in the country. The initiative taken was fruitful and is perceptible from the ever-rising volume of FDI inflow received in the country. Steps were taken by the government on FDI policy reform and ease of doing business has evolved in rising in FDI inflow in the country.

Overall India’s Investment Incorporation with the world

India’s external financial assets and liabilities have increased by over 1 per cent of GDP in 1990 to more than 30 per cent in 2017. Outward FDI has become crucial in the last decade, although portfolio investment is negligible. Outward FDI flow is lower as compared to the inward FDI but growing in the significant sector such as mineral and energy. In the last two decades, capital inflow in crucial sectors such as telecommunication, transport infrastructure and information technology.

This played a significant role in enhancing productivity and raising employment opportunities through the transfer of technology and skills. Administrative improvement has supported the trends; foreign investor now can invest in various domains with low government policy barriers. Investment in government and corporate bonds has been denationalized in the last few years.

Foreign Direct Investment is managing the ownership of the business in another country. FDI has become worldwide, the global inflow of FDI has increased from $ 59 billion in 1982 to $ 651 billion in 2002. Captivating FDI is crucial for all stage of development of the country. It plays a crucial role in lowering saving rates and enhance income level.