why Foreign Investment In India is critical for the economy




  • The Indian economy is notably affected by the concept of foreign direct investment. It has reached higher levels and has influenced Indian society in all the social aspects. Here is a critical analysis FDI has had in different social factors. The most significant of all is the political scenario of India today. The political approach is the determining factor of the economy and operation of the entire nation. After the integration of globalization, liberalization and privatization in business, Indian culture, the society and realm of polity are highly influenced as well apart from business operation and policies. As it is for any other country, the political decision plays a significant role in the adoption of different measures so that the implementation of these schemes is made perfectly.

    Reasons to adopt

    Indian polity has adopted Foreign investment in India with open arms for its benefits. There are different reasons why such a change in policy and business scenario is made. Foreign direct investment creates a lot of job openings due to the mutual cooperation between different countries. The host nation of such investment is also benefited by the promotion of sharing of governmental aids between the involved nations. This also results in peace, political cooperation and visa based regulations. All these are made for the collective benefit of both the countries. The most significant effect of foreign direct investment in India is in the public sector undertakings. These sectors now have a new challenge and are inspired to be strong enough to compete with the foreign companies that are highly efficient and effective.

    Establish trade friendly relationship

    Foreign investment has become an integral part of Indian politics and administration. These investments open up the door to form a trade-friendly relationship with the specific region or nation. This eventually helps India to prove these particular countries or regions with privileged status. You will be surprised to know that foreign direct investment is also a leading factor for the nations involved to take initiatives in a collaborative manner to combat and condemn any terrorist activates. Apart from that, the government can keep up to the meaty needs of employment thanks to the foreign direct investment. It helps in building better infrastructure and to create a better standard of life across all the strata of the society.

    CSR and economic factor

    Foreign direct investment also plays a significant role in sharing the mutual liability of the two governments to perform keeping up to the form of Corporate Social Responsibility or CSR. It also helps in determining the success of a government. In a developing nation like India, you will always find huge demands that need to be met with by the government. There is an abundance of resources available that can be used regularly to honor the liability. Therefore, the successful attempts of the government to procure such foreign direct investments will ensure the future prospects and fate of the ruling political party as well as ensure the sound political health of the nation.

    Transfer of funds

    It is the liberal political scenario and the economic factors in India that have provided the opportunities for FDI for Companies in India with complete peace in mind. These companies can now engage in the easy and active transfer of funds from one country to another thereby eliminating the chances of a shortage of funds and enabling in better financial management. That, in turn, results in establishing a more beneficial bond between the two countries for mutual financial assistance. In short, foreign direct investment promotes the business environment and at the same time helps it to meet international standards of business.