FOREIGN DIRECT INVESTMENT (FDI) : REVISION CARD
INTRODUCTION:
Definition Based
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FDI means investment through capital instruments by a person resident outside India in an unlisted Indian company; or in 10% or more of the post issue paid-up equity capital of a listed Indian company.
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FDI Inflow (Fact Based)
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India continues to be an attractive destination for foreign investment, ranking as world’s 7th largest FDI recipient in 2021 (UNCTAD), attracting highest ever FDI of >$85 billion in 2021-22.
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FORMULA BY theIAShub
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↑ FDI = ↑ Economic Growth + ↑ Job Creation + ↑ Export Potential ↑ FDI = ↑ Global Partnership + ↑ Technological Transfer + ↑ Innovation ↑ FDI = ↑ Infrastructure Development + ↑ Productivity + ↓ Trade Deficit |
SPEECH BY PROMINENT PERSONALITIES (PM, PRESIDENT, UN OFFICIAL et. al)/RECOGNITION IF ANY:
PM MODI
- FDI is a responsibility for Indians & an opportunity for the World. For the people of India, it means 'First Develop India'.
- FDI is a testament to global trust in India's growth story.
- We welcome foreign investors with open arms, as partners in India's journey towards prosperity and progress.
CURRENT DEVELOPMENT:
- Ministry of New & Renewable Energy (MNRE) has issued an order to set up a project development cell to attract investment in renewable energy.
- National E-Commerce Policy to encourage FDI in marketplace model of e-commerce.
DATA/FACT:
World Investment Report 2023 (UNCTAD)
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10% increase in FDI, making India third-largest host country for greenfield project and the second-largest for international project finance deals.
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FDI after LPG reforms (1990-91)
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Increased from $97 Mn in 1991 to $85 bn in 2021-22. (Economic Survey 2022-23)
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Top contributors to India's FDI
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Singapore > Mauritius > USA
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Top Sectors receiving FDI
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Computer SW & HW > Services Sector > Automobile
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Top FDI recipient states
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Maharashtra > Karnataka > Delhi
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KEYWORDS:
- BODY: Bright spot in the global economy; 4 ‘I’s of investment (Infrastructure, Integrity, Inclusive Development and International Outlook); Engine/Chariot of Growth;
- CONCLUSION: From International Funding to Economic Partnership; Triveni: Demography, Democracy and Diversity; Naya Bharat, Naye Avsar, Nayi Samridhi (New India, New Opportunities, New Prosperity)
COMMITTEES RECOMMENDATIONS/NATIONAL OR INTERNATIONAL REPORTS:
- Aravind Mayaram committee: it recommended simplifying and rationalizing FDI regulations, streamlining sectors, and raising sectoral caps to promote ease of doing business and attract investments.
- Niti Ayog panel: Advised easing FDI norms, promoting strategic sectors, improving investment climate, simplifying approval processes, and enhancing transparency to attract FDI and foster economic growth.
GOVT SCHEMES, POLICIES AND INITIATIVE:
- To ease Investment: Foreign Investment Facilitation Portal; Empowered Group of Secretaries (EGoS); Project Development Cells (PDCs), National Single Window System (NSWS)
- To Boost FDI in Manufacturing: FDI Make in India; PLI Scheme; National technical Textile Mission,
- National Digital Communications Policy, 2018 with a target of increasing FDI inflows in telecommunications sector
- Other initiatives: PM Gati Shakti, single window clearance, reducing corporate tax rates, enhancing the ease of doing business, and implementing reforms in the FDI policy and the establishment of a GIS-mapped land bank.
EXAMPLES/CASE STUDIES:
National
- FDI spurred India's IT boom, auto manufacturing hub, and modernized retail sector, stimulating economic growth, employment, and innovation.
International
- China's open-door policy: FDI-driven shift: agrarian to global manufacturing dominance via open-door policy.
- New Zealand (Regulatory Ease): Efficient business registration process has positively impacted its FDI attractiveness.
CONCLUSION
- Amidst world's gaze on India's FDI potential, now's the time to accelerate ‘structural reforms.’ This ‘turbocharges FDI inflow,’ maximizing the chance to harness unparalleled growth prospects.
- The Government of India has established an ‘open & transparent FDI policy,’ granting automatic entry to numerous sectors. This approach fosters a liberal environment for foreign investors seeking business opportunities in India.
- With the active implementation of EoDB initiatives and the NSWS portal for approvals, and with a skilled workforce, digitisation, the robust legal system and a competitive tax system, India is set to become a major global hub for FDI.
FOREIGN DIRECT INVESTMENT (FDI) : MICRO DIAGRAMS
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