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Role foreign direct investment
(How does foreign direct investment promote economic development?)
and investment are the essential pillars of economic development of every country. But theshort supply of domestic capital limit the growth of developing countries. Low GDP keeps the savingsand investment rates low, which in turn, growth. Keeping in view the pivotal role played by FDI inflows,the government of India opened the Indian economy for foreign players in 1991 when the economicreforms process was initiated. Foreign direct investment is an investment made by a foreign individual orcompany in productive capacity of another country. It is the movement of capital across national frontiersin a way that grants the investor control over the acquired asset.India's recently liberalized FDI policy permits up to a 100% FDI stake in ventures. Industrial policyreforms have substantially reduced industrial licensing requirements, removed restrictions on expansionand facilitated easy access to foreign technology and FDI.
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