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What is Foreign Direct Investment (FDI)? Throw light on its importance to the Indian economy.

Topic: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.

4. What is Foreign Direct Investment (FDI)? Throw light on its importance to the Indian economy. (250 words)

Difficulty level: Easy

Reference: Insights on India

Why the question:

The question is part of the static syllabus of General studies paper – 3 and mentioned as part of Mission-2023 (Revision) Secure timetable.

 Key Demand of the question: 

To write about the role played by FDI in the Indian economy.

Structure of the answer:

Introduction: 

Begin by defining Foreign Direct Investment (FDI).

Body:

Write the various aspects of FDI in emerging economies – First, international flows of capital, diversification of lending and investment, global integration of capital markets, allows the transfer of technology and can also promote competition in the domestic input market etc. Substantiate with examples.

Conclusion:

Conclude by summarising.