Foreign Direct Investment in INDIA

H ow is India in the Top 10 economies in the world, even after being a developing
country? This is because, India’s service sector is the world’s fastest-growing sector,
adding to its economy by 30 percent.

FDI plays a major role in the development of these sectors. As India is a developing country,
it cannot raise adequate funds alone. So the Government Of India (GOI) has initiated FDI. It
started in India due to 1991 Economic crisis. The Indian trade balance was in deficit at a time
when the government was running on a large fiscal deficit. The government took an
emergency loan of $2.2 billion from the International Monetary Fund pledging 67 tons of
gold reserve as security.

But what exactly FDI do? Foreign companies invest directly in fast growing private Indian
businesses to take benefits of cheaper wages and changing business environment of India.
This helps the Indian companies with adequate funds and allows the business to grow. Not
only are the Indian companies benefited but also the companies which invest earn profits.

The government of India has amended FDI policy to increase FDI inflow. In the year 2014,
the Indian government launched “Make in India” initiative. Under this scheme, the
government wanted to increase the manufacturing sectors in India. This led to a large amount
of Foreign Investments by the year 2015. Foreign companies saw potential of the Indian
market and started investing in large numbers.

FDI has led Indian companies expand their business throughout the nation. This has resulted
in increase of employment rate in past 5 years and also an increase in the international trade.

India is at 5th position in world’s Economy. And one of the biggest reason for this is FDI.
It is hard to believe that it wouldn’t have been possible, if Dr. Manmohan Singh (22nd
Minister of Finance 1991-1996) wouldn’t have initiated FDI in India. We always called him
as “The Puppet” but the truth is he is “The Father of Indian Reforms”.

“India happens to be a rich Country

Inhabited by very poor people”
-Manmohan Singh