The recent policy reforms by Government of India have now further liberalized Foreign Direct Investments (FDI) in the country. In this article I intend to provide a very basic understanding of FDI.
In today’s global scenario, where investors look at alternate avenues to invest their money, India is one of the few countries across the world to provide foreign companies with a highly potential market and a low manufacturing cost opportunity. FDI provides a situation where both the host and the foreign nations derive some mutual benefit. The foreign countries want to take the advantage of the vast markets opened by industrial growth. Whereas the host countries get to acquire resources ranging from financial capital, entrepreneurship, technological know-how and managerial skills which assist it in supplementing its domestic savings and foreign exchange.
What drives a lot of foreign interest in India’s favor is its demographics, where a young population provides a huge consumer base that can be tapped. Adding to this are other relevant factors such as a growing middle class population, increased urbanization, greater penetration of internet and rising disposable incomes. FDI brings better technology and management, access to marketing networks and offers competition, the latter helping Indian companies improve, quite apart from being good for consumers.
Mentioned below is how FDI shall help benefit our people and sectors:
|Increases domestic competition||Reduction in prices|
|Allows domestic companies an opportunity of providing better services and technology by upgrading to international standards||Improved services|
|Provides sectors with financial assistance||Better infrastructure and deeper penetration of internet and mobile communication|
|Increased job-creation||Increased employment|
|Improved overall efficiency and growth||New product categories and access to global brands|
|Better organizational and management practices||Improved customer service|
I hope to see a multiplier effect to the overall progress and development of our country. Jai Hind!