What is FDI? | A study on Foreign Direct Investment In India

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The FDI is called Foreign Direct Investment. The UDCs (Under Developing countries) like India is very much depend on foreign capital for financing their development programmes. In today’s article we are going to know about A study on Foreign Direct Investment In India (FDI). So let’s discuss in details.

What is Foreign Direct Investment In India?

The FDI full form is Foreign Direct Investment. FDI is the most important source of foreign investment. Under this scheme the foreign investors invest their capital or technology in the host country. Globalization police provides a new space to increase FDI.

Need of FDI or Role of Foreign Direct Investment in India

• Scarcity of the resources – Indian economy is suffering from poor capital formation due to low per capita income. Thus the economy faces the problem of resource scarcity. This scarcity can be overcome through the FDI in the most productive sector.

• The Technological Gap – The technological knowledge in India is outdated. It is one of the most important reasons for its backwardness. The technological upgradation can be possible through FDI.

• Initial Risk – In order to start any project a country is facing certain risks, such as lack of man power, lack of technology, lack of capital, etc. Generally, these initial risks are undertaken by the foreign investors.

• Building Infrastructure – Indian economy is suffering from adequate infrastructural facilities. FDI can provide necessary support towards building different infrastructural facilities in the country.

• Associated assistance – FDI brings with it other factors like technical knowledge, business, experience, R & D facilities, etc. These facilities are considered equally important for economic development.

• Use of Opportunity – Several laws are closely associated with FDI. The introduction of globalisation policy gives several opportunities to use the business prospect, copyright and patent are the two important laws which are associated with the business.

• BOP Support – In order to meet the BOP crises it is necessary to increase the resource position. The FDI can offer a temporary solution to the problem.

• Contribution to NI – The flow of foreign capital in the form of FDI is contributed a huge portion of income to the national income (NI) of a country.


So friends, this was the concept of Foreign Direct Investment In India. Hope you get the full details about it and hope you like this article.

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Hi, this is Eusub Ali Khan, Author & Owner of KhanStudy.in. I am a Content Writer, blogger and professional web-designer. I love to share my educational knowledge with people.

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