Marketing
Volume | 3 Issue | 2
A Study on FDI Inflows and Reasons for Low FDI Inflows in India
ISSN | 2319-5576
A Study on FDI Inflows and Reasons for Low FDI Inflows in India
*Ms. Svetlana Patel
**Mr. Dhvanish Mehta
Abstract: The FDI inflow into India has been moderately expanding in the recent years. This paper analyses the trends in the inflow of FDI in India, the countries from which the major proportion of FDI investment is done, comparing the inflow of FDI in India with some developing Asian Economies and finding out reason behind low inflows of FDI in India. This paper argues that the flow of FDI was not so encouraging during the years 2000-2006. But thereafter there was a huge increase in the Investment amount due to major changes in the FDI policy of India. The major portion of FDI inflow to India comes from Mauritius. The reason behind this is the treaty on double tax avoidance regime between India and Mauritius. The main reasons behind low FDI inflows compared to some developing Asian economies were poor infrastructure, rigidity in the Labour market, Crime and terrorism, etc.
Key Words: Foreign Direct Investment, Infrastructure, Corruption
INTRODUCTION
Foreign direct investment (FDI) in India has played an important role in the development of the Indian economy. FDI in India has, in a lot of ways, enabled India to achieve a certain degree of financial stability, growth and development. This money has allowed
India to focus on the areas that may have needed economic attention and address the various problems that continue to challenge the country. India has continually sought to attract FDI from the world‟s major investors. In 1998 and 1999 the Indian national government announced a number of reforms designed to encourage FDI and present a favorable scenario to investors.
FDI investments are permitted through financial collaborations, through private equity or preferential allotments, by way of capital markets through Euro
A Study on FDI Inflows and Reasons for Low FDI Inflows in India
ISSN | 2319-5576
A Study on FDI Inflows and Reasons for Low FDI Inflows in India
*Ms. Svetlana Patel
**Mr. Dhvanish Mehta
Abstract: The FDI inflow into India has been moderately expanding in the recent years. This paper analyses the trends in the inflow of FDI in India, the countries from which the major proportion of FDI investment is done, comparing the inflow of FDI in India with some developing Asian Economies and finding out reason behind low inflows of FDI in India. This paper argues that the flow of FDI was not so encouraging during the years 2000-2006. But thereafter there was a huge increase in the Investment amount due to major changes in the FDI policy of India. The major portion of FDI inflow to India comes from Mauritius. The reason behind this is the treaty on double tax avoidance regime between India and Mauritius. The main reasons behind low FDI inflows compared to some developing Asian economies were poor infrastructure, rigidity in the Labour market, Crime and terrorism, etc.
Key Words: Foreign Direct Investment, Infrastructure, Corruption
INTRODUCTION
Foreign direct investment (FDI) in India has played an important role in the development of the Indian economy. FDI in India has, in a lot of ways, enabled India to achieve a certain degree of financial stability, growth and development. This money has allowed
India to focus on the areas that may have needed economic attention and address the various problems that continue to challenge the country. India has continually sought to attract FDI from the world‟s major investors. In 1998 and 1999 the Indian national government announced a number of reforms designed to encourage FDI and present a favorable scenario to investors.
FDI investments are permitted through financial collaborations, through private equity or preferential allotments, by way of capital markets through Euro