India's role as an engine for global growth has been limited by the still relatively closed nature of its economy. As the ceiling rates are not increased, FDI in the financial sector is not getting a viable environment. But the foreign investment is finding its own way to enter the Indian economy.
Foreign Direct Investment (FDI) is seen as an important source of non-debt inflows, sought as a vehicle for technology flows and as a means to attain competitive efficiency by creating a meaningful network of global interconnections.
FDI plays a vital role in the economy because it not only provides opportunities to host countries for enhancing their economic development but also opens new vistas to home countries to optimize their earnings by employing their ideal resources.
The 1990s have witnessed a sustained rise in annual inflows into India. Since 1991, after a decade's cautious attitude, with a much liberal policy, India has sought to increase its FDI inflows. Basically, opening of the economy after 1991 does not leave much choice to attract the foreign investment, as an engine of dynamic growth, especially in view of the fast—paced movement of the world's forward liberalization, privatization and globalization. |
