7 Benefits Of Foreign Investment In India

  • According to a report by the Financial Times, India, after a significant Economic Liberalisation in 2015, has defeated China and US in the field of Foreign Investments. With the advent of the ‘Make in India’ scheme, this FDI inflow reached a record margin of 48%. The country has always been the most famous market for the ever-growing trade of international marketing giants. Several states are investing directly in the Indian market and its growing businesses. As a result, our country’s economic development is closely linked to Foreign Investment in Indian Companies.

     

    It is because of the fact that India is one of the fastest-growing economies across the globe with a liberal outlook on such investments. The low labour wages with a skilled but unemployed human capital plays a significant role too, in attracting foreign investments. The physical location of the nation is also a productive and cost-effective way to cover the markets of South East Asia, the Middle East and certain figments of Europe.

     

    What are these Investments?

     

    The term Foreign Direct Investment is given to such an economic settlement where a foreign state or company invests in the firms and businesses of a different country. FDI in India is one of the main reason behind the strengthening of economic and monetary developments. The foreign companies are directly and indirectly investing in several Indian Sectors. The domain of these companies are increasing with every advancement in the field and FDI in India as per the data of 2015 has already gained access to the government cum private sectors such as Infrasturue, Automotives, Pharmaceuticals, Railway, Chemical, Textiles and other services.

     

    Benefits of FDI in India

     

    The foreign investment in India is not limited to the monetary investments but also in developing several socio-economic factors such as skills, processes, management, advancement in the field of technology, human capital etc.
    There are several benefits of Foreign Investment in India which led to the further expansion of the Indian market across the world. Here are the seven significant benefits of FDI in India:

     

    1. EMPLOYMENT

     

    The youth of the nation is highly benefited from such investments. The FDI in India offers a wide range of job opportunities, thereby boosting economic growth. The disguised unemployment in the secondary sector is the major crisis Indian skilled or unskilled labour is facing, foreign investments prove themselves, a benefactor for their cause. FDI has boosted job- creation and increased job options leads to increased income which ultimately leads to an increase in the expansion of the Indian Economy.

     

    2.HUMAN CAPITAL

     

    Human Capital refers to the talents and brainpower in the form of the human resource of a country. India is fortunate enough to have a great human resource in the way of its youth. Lack of education, skill development and job opportunities mar such resources. FDI in India bridges the gap between social capital and better job options.

     

    3.STABLE EXCHANGE RATE

     

    The foreign exchange in India has improved drastically with the inflow of Foreign Investments. Hence, the central bank of India maintains a stock of several international exchanges in bulk. This stabilises the exchange rate thereby building a stable foreign monetary policy

     

    4.ADVANCEMENT OF BUSINESS AND TECHNOLOGY

     

    The state, businesses or firms receiving FDI in India are given access to a vast horizon of open markets and trade in any part of the world. These foreign companies provide all the modernised tools and technologies along with modern financial techniques for the all-round profit of the business.

     

    5.ECONOMIC GROWTH

     

    Apart from generating jobs and better financial conditions, foreign investment is also a significant source of revenue collection in India. Whenever a company launches a new tie-up or opens a new hub in the Indian Market, a large portion of its profit is deducted as a revenue. Hence, the external capital inflow is increased, and the Indian Economy grows.

     

    6.NEW INDUSTRIAL CENTRES

     

    Foreign Investments in India plays a vital role in converting a rural and socio-economically backward area into an emerging industrial town. India being a developing economy, offers the availability of land and labour at a very reasonable cost and in return, better job opportunities and upliftment of the area is done.

     

    7.BREAKS DOMESTIC MONOPOLY

     

    By creating a healthy competition among several domestic marketplaces, FDI in India has broken the norms of a single market giant. This benefits the consumer strata of the country as they are offered a wide variety of options of a single product at their budget price. The companies are compelled to improve the quality of their product as per the current trend of the market.

     

    India is a developing country, and foreign investment proved itself to be an aid in strengthening the growth rate of the Economy. Markets across the world are now opened for us, and most of them are looking forward to investing and benefit our country. Hence, our country is the fourth-largest economy in the world and is endeavouring to soar higher.