Journal of International Business Operations and Trade Policy

Author: R. Suriya

Abstract: The Indian government’s favourable policy regime and robust business environment have ensured that foreign capital keeps flowing into the country. The government has taken many initiatives in recent years such as relaxing foreign direct investment (FDI) norms across sectors such as defence, oil refineries, telecom, power exchanges, and stock exchanges. Apart from being a critical driver of economic growth, FDI is a major source of non-debt financial resource for the economic development of India. Foreign companies invest in India to take advantage of relatively lower wages, special investment privileges such as tax exemptions. Data for FY2015 indicates that the increase in the FDI inflows was primarily driven by investments in infrastructure and services sector. Within Infrastructure, Oil & Gas, Mining and Telecom witnessed higher FDI inflows. Most recently, the total FDI inflows for the month of September 2015 touched US$ 2.9 billion as compared to US$ 2.5 billion in the same period last year. FDI in India witnessed an increase of 13 per cent and reached US$ 16.63 billion during April-September, 2015 as compared to US$ 14.69 billion in the same period last year.