An Analysis of Foreign Direct Investment on Indian Economy
INTRODUCTION
It is the stated intent and objective of the Government of India to attract and promote foreign direct investment in order to supplement domestic capital, technology and skills, for accelerated economic growth. ―Foreign Direct Investment, as distinguished from portfolio investment, has the connotation of establishing a lasting interest in an enterprise that is resident in an economy other than that of the investor.
FDI (FOREIGN DIRECT INVESTMENT) :
FDI is defined as investment by a resident entity in one economy that reflects the objective of obtaining a lasting interest in an enterprise resident in another economy. The lasting interest implies the existence of a long-term relationship between the direct investor and the enterprise and a significant degree of influence by the direct investor on the management of the enterprise.
Prior to 2006, India prohibited FDI in both single brand and multi brand retail. In the second month of 2006, government decided to open retail sector for FDI which was subject to certain conditions. At that time government provided 51 percent FDI in single brand retail. There have been recommendations to further liberalize the Indian government‘s policy regarding FDI in retail trading, including to increase the permissible level of FDI in single-brand retail operations and to open up the multi-brand retail sector to FDI. The government of India on January 12, 2012 allowed 100 percent FDI in single brand retail and still there was no FDI in multi brand retail in the country.
The Indian government has opened the retail sector to FDI slowly through a series of steps, In 1995, World Trade Organization’s General Agreement on Trade in Services, which includes both wholesale and retailing services, came into effect then in 1997,FDI in cash and carry (wholesale) with 100% rights allowed under the government approval route. Later in 2006, FDI in cash and carry (wholesale) brought under the automatic route. Up to 51 percent
It is the stated intent and objective of the Government of India to attract and promote foreign direct investment in order to supplement domestic capital, technology and skills, for accelerated economic growth. ―Foreign Direct Investment, as distinguished from portfolio investment, has the connotation of establishing a lasting interest in an enterprise that is resident in an economy other than that of the investor.
FDI (FOREIGN DIRECT INVESTMENT) :
FDI is defined as investment by a resident entity in one economy that reflects the objective of obtaining a lasting interest in an enterprise resident in another economy. The lasting interest implies the existence of a long-term relationship between the direct investor and the enterprise and a significant degree of influence by the direct investor on the management of the enterprise.
Prior to 2006, India prohibited FDI in both single brand and multi brand retail. In the second month of 2006, government decided to open retail sector for FDI which was subject to certain conditions. At that time government provided 51 percent FDI in single brand retail. There have been recommendations to further liberalize the Indian government‘s policy regarding FDI in retail trading, including to increase the permissible level of FDI in single-brand retail operations and to open up the multi-brand retail sector to FDI. The government of India on January 12, 2012 allowed 100 percent FDI in single brand retail and still there was no FDI in multi brand retail in the country.
The Indian government has opened the retail sector to FDI slowly through a series of steps, In 1995, World Trade Organization’s General Agreement on Trade in Services, which includes both wholesale and retailing services, came into effect then in 1997,FDI in cash and carry (wholesale) with 100% rights allowed under the government approval route. Later in 2006, FDI in cash and carry (wholesale) brought under the automatic route. Up to 51 percent