Sansad TV: Perspective- Record FDI Inflow | Current Affairs & Hindu Analysis: Daily, Weekly & Monthly - UPSC PDF Download

Introduction

Foreign Direct Investment (FDI) is when people from one country buy things like companies in another country. India has become a top place for investment, with money coming in increasing 20 times in 20 years. The most ever money, $83.57 billion, came in the year 2021-22. Before, it was $45.15 billion. The top three countries investing are Singapore with 27%, U.S.A with 18%, and Mauritius with 16% in the year 2021-22. The most money goes to the 'Computer Software & Hardware' area, 25% of it. Services and Automobiles get 12% each. Karnataka gets 53% of the 'Computer Software & Hardware' money. The government made rules that let most areas get 100% foreign investment, except a few important ones. In five years, 853 investment requests were handled through the Foreign Investment Facilitation Portal since the Foreign Investment Promotion Board ended.

FDI

• Foreign Direct Investment (FDI) helps economies grow and is mainly about private business choices.
• It depends on things like resources, roads, market size, and how easy it is to invest. India's government made it easy for people to invest in most areas.

FDI in Developing Countries

• Good things: FDI can fill financial gaps, make money steady, and help the economy.
• More money makes more things and jobs.
• Money can help when a country spends more than it makes.
• Long-term money is safer than short-term.
• For example, during a money shortage, banks might take away short-term money, but not long-term money.
• Learning: Countries can learn from foreign companies.
• Jobs: FDI makes jobs in services and tech.
• Foreign money might raise pay and work conditions.
• Building: FDI in construction and transportation can make big projects.
• Stronger banking: FDI can make banking better and help with other money activities.
• This can help more companies start.
• It also helps the country's stock market.

Actions:

• The government's rules change a lot.
• They're making more things open for foreign investment.
• In 2020, they started plans to attract foreign money for making electronics.
• In 2019, they said foreigners can invest 100% in coal mining.
• They also allowed 26% in digital areas. This is good because lots of people use tech in India.
• Making things is already open 100% to foreign investment, but in 2019, they said even making things for other companies is OK.
• Making for Others: When one company makes things but puts another company's name on them.
• The Foreign Investment Facilitation Portal (FIFP) is where investors talk to the government. It helps with FDI. It's run by the Department for Promotion of Industry and Internal Trade.

Conclusion

• Foreign Direct Investment (FDI) helps India a lot and is a big way it grows.
• The government should make it easy to invest in India. After COVID-19, and because India is big, more investments should come.