FDI IN DEVELOPING COUNTRIES ; A DOUBLE EDGED SWORD

 

Foreign Direct Investment refers to the investment made by a company or individual in a foreign country , either by establishing a business or acquiring assets in that country . It can take various forms, such as setting up a new business or acquiring an existing business , investing in infrastructure , or purchasing real estate.

FDI can bring numerous benefits to the host country, including the transfer of technology , management skills, and access to new markets. It can also create employment opportunities and contribute to the development of local industries.

However FDI can also have some potential draw backs. For example, it can lead to the loss of domestic control over certain sectors, and  it may also result in the displacement of local workers if foreign companies bring their own personnel.

In order to attract FDI, government often offer incentives such as tax breaks and reduced regulations. At the same time , they may also impose restrictions on FDI on certain sectors to protect domestic industries or national security.

The United Nations Conference on Trade and Development ( UNCTD) and the World  Investment Report (WIR) are two key sources of information on global FDI trends.

FDI IN INDIA

India has a liberalized policy regime for FDI , which allows foreign direct investors to invest in various sectors of economy. The government has allowed 100% FDI in most sectors under automatic route, which means that foreign investors do not need prior government approval to invest in these sectors. Some sectors such as defense and atomic energy, have been kept out of the purview of FDI , while others such as retail, have certain restrictions. For example, FDI in retail is allowed only in case of single brand retail and subject to certain conditions.

India has attracted significant FDI in recent years, with the country being among the top destinations for FDI globally.

The major sectors tat attracted FDI in India during this period were services, computer software and hardware, telecommunications and trading. The top sources of FDI for India were Singapore, the United States and Mauritius.

SOURCES OF DATA AND REPORTS ON FDI

1. Department of industrial policy and promotion ; The DIPP is a government agency under the Ministry of commerce and industry that is responsible for formulating and implementing the Country's Industrial policy . It publishes annual data on FDI inflows into India. Annual publication - FDI statistics
2. Reserve Bank of India : RBI is the central bank of India and is responsible for regulating the country's monetary policy. It publishes data on FDI inflows into India in its Handbook of statistics on the Indian Economy and Annual report.
3. World Investment Report ( WIR) : The WIR is a publication of the United Nations Conference on Trade and Development that provides annual data on FDI trends and flows globally . It includes data on FDI trends and flows globally. It includes data on FDI inflows into India as well as outflows from India.
4. International Monetary  Fund : The IMF is an international organization that provides financial assistance to member countries - Publications - World Economic Outlook and Direction  of Trade Statistics yearbook.
5. World Bank : The world bank is an international financial institution that provides loans, grants, and technical assistance to developing countries. It publishes data on FDI inflows to India in its report global developmental finance.