An Overview on Foreign Direct Investment in India

From the last 2 decades developing countries especially Asian countries have become the destination for foreign direct investment. Appreciable market potential and liberal policy of India attract foreign investors as favorable terminus. By comparing to other East Asian countries, India is the late arrival in the FDI picture. Foreign direct investment fills the gap between saving and investment. Capital from the foreign countries is invested in a country to raise its production capacity. Foreign direct investment may be in the form of subsidiary or joint venture or merger or acquisition. It plays a key role in the developing and underdeveloped countries for employment generation, infrastructural development and also rapid economic development. According to the Department of Industrial Policy and Promotion (DIPP), the total foreign direct investment inflows was US $ 44.9 billion in financial year 2015 i.e. rose by 24.5 percent as compared to foreign direct investment of US$ 36.0 billion in previous year. Services, telecommunication, construction activities, computer software and hardware & automobile are major sectors which attracted higher foreign direct investors in India.