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This paper examines the trends and patterns in the Foreign Direct Investment (FDI) inflows into India during the post-liberalization period. The study shows that the actual inflow of the FDI into the Indian economy had maintained a fluctuating and unsteady trend during the study period. It is found that the approvals had been slow in materializing themselves into actual inflows. The world is increasingly becoming interdependent. Goods and services followed by the
financial transactions are moving across the borders.
In fact, the world has become a borderless
world. With the globalization of the various markets, international financial flows have so far
been in excess for the goods and services among the trading countries of the world.
Of the different types of financial inflows, the Foreign Direct Investment (FDI) has
played an important role in the process of development of many economies. Further,
many developing countries consider the FDI as an important element in their development
strategy among the various forms of foreign assistance.
The FDI flows are usually preferred over the other forms of external finance, because
they are not debt creating, nonvolatile in nature and their returns depend upon the
projects financed by the investors.
The FDI would also facilitate international trade
and transferof knowledge, skills and technology.
The FDI is the process by which the residents of one country (the source country)
acquire the ownership of assets for the purpose of controlling the production, distribution
and other productive activities of a firm in another country (the host country). The FDI
comprises investments for the establishment of a new enterprise in a foreign country
either as a branch or as a subsidiary, or for the expansion of an overseas branch or a
subsidiary, or the acquisition of an overseas business enterprise (Sharan, 2000). |
