Journal of International Relations & Foreign Policy

Role of Foreign Direct Investment (Fdi) in India’s Economic Development-An Analysis
Dr. M. Syed Ibrahim, A. Muthusamy

Abstract
Foreign Direct Investment (FDI) plays an important role in global business. It can provide a firm with new marketing channels, cheaper production facilities, access to technology transfer, product, skills and financing. With the advent of globalization and strong governmental support, foreign investment has helped the Indian economy grow tremendously. India has continuously sought to attract investment from the world’s major investors. In 1998 and 1999, the Government of India announced a number of reforms designed to encourage and promote a favorable business environment for investors. Foreign investments in the country can take in the form of investments in listed companies i.e., Foreign Institutional Investors’(FIIs) investments, investments in listed/unlisted companies other than through stock exchanges i.e., through the foreign direct investment or private equity/foreign venture capital investment route, investments through American Depository Receipts (ADR), Global Depository Receipts (GDR), or investments by Non-Resident Indians (NRIs) and Persons of Indian Origin (PIOs) in various forms. This paper attempts to review the importance of foreign direct investments in Indian economy, particularly after a decade of economic reforms and analyze the role played by the FDI in the economic development of the country. The study is diagnostic and exploratory in nature and makes use of secondary data. The study finds and concludes that the foreign direct investment in India have significantly improved and developed the economy as well.

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