Foreign Direct Investment (FDI) and Ease of Doing Business in India

Foreign direct investment (FDI) is a strategic instrument of development policy in India. It is envisaged to play an important role in the long-term economic development of the country by augmenting availability of capital, enhancing competitiveness of the domestic economy through transfer of technology, strengthening infrastructure, raising productivity, generating new employment opportunities and boosting exports. Since the economic liberalisation policy initiated in 1991, the Government of India has taken several measures to encourage FDI in almost all sectors of the economy. However, the emphasis has been on inflows in the development of infrastructure and technological upgradation of industry. With a vast reservoir of skilled and cost-effective manpower, India is now recognized as one of the most attractive investment destinations by reputed international rating organisations. Under the current policy regime, there are three broad entry options for foreign direct investors: (a) in a few sectors, FDI is not permitted, (b) in another small category of sectors, foreign investment is permitted only till a specified level of foreign equity participation and (c) in all other sectors, foreign investment up to 100 percent of equity participation is allowed. In the World Bank’s Doing Business Report, 2015, India was placed at 142 among 189 countries in terms of ease of doing business. India ranked even below Pakistan which occupied 128th rank and much below China which secured 90th rank. Encouragingly, India was ranked at 130 in the 2017 Report and at 100 and 77 in the 2018 and 2019 Reports respectively. Presently, it is the highest-ranked South Asian country. The present book deals with almost all aspects of FDI in India. It particularly focuses on current policies, conditions and procedures for FDI inflows into India. It also records and reviews current policies and programmes to improve business environment in India.

Dr. H.S. Madhusudana is presently Associate Professor and Head, Department of Economics at Government First Grade College. He has more than 25 publications in national and 20 publications in international peer-reviewed journals of repute, as well as 3 books on various aspects of the Indian economy.