Foreign Direct Investment (FDI)

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Overview:

According to EY- Confederation of Indian Industries (CII) report, India to attract FDI worth $475 billion in 5 years.

About:

  • The report titled ‘Vision—Developed India: Opportunities and Expectations of MNCs’, added that 71% of MNCs working in India consider the country an important destination for their global expansion. The optimism is driven by both short-term as well as long-term prospects.
  • FDI in India has seen a consistent rise in the last decade, with FY 2021-22 receiving FDI inflow of $84.8 billion despite the impact of the COVID-19 pandemic and geopolitical developments on investment sentiment.
  • India is seen as an emerging manufacturing hub in global value chains, as a growing consumer market and as a hub for ongoing digital transformation.
  • Over 60% of MNCs in the report stated improvement in the business environment in the last three years. 
  • According to the survey, top expectations from the government include enhanced effectiveness of the national single window for approval / clearances; greater tax certainty, and stronger contract enforcement mechanism, among other measures.

Foreign direct investment (FDI):

  • Foreign direct investment (FDI) is an investment from a party in one country into a business or corporation in another country with the intention of establishing a lasting interest.
  • With FDI, foreign companies are directly involved with day-to-day operations in the other country.
  • FDI enters in India through either of the two routes:
    • Automatic route
      • The non-resident or Indian company does not require prior nod of the RBI or government of India for FDI.
    • Government-approval route
      • The government's approval is mandatory and the company will have to file an application through Foreign Investment Facilitation Portal.

 


Source : The Hindu