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Anubhav Singh Chauhan

Amber Petersen

English – 100

15 November 2018  


Foreign Direct Investment in India: Is It Important?

    From many centuries, trades in India have slowly evolved and become a very important part of Indian culture. Foreign Direct Investment (FDI) is one of the ways of trading in India. Foreign Direct Investment is the Investment made by an institute or a foreign individual in another country for the purpose of business. Foreign Direct Investment is one of the most powerful economic boosters in assisting a country to develop trade. Foreign Direct Investment There is a direct investment in the production of the country, and it can be done in two ways. First, it can be done by purchasing the desired business in another country. Second, businesspeople can establish their own business in other countries. FDI gives an opportunity to the global brands to enter a new market so that they can increase their business profit. I am researching the importance of Foreign Direct Investment in India and how it contributes to the trade industry. This research is important because it will help to determine if investment from foreign countries is beneficial for India or not. In this essay, I will argue that Foreign Direct Investment in India is very beneficial. I will support this argument by explaining FDI's impact the employment rate of a country increases, its effects on consumers and farmers, and the ways it has helped Indian Government to increase the economic growth of the country.

The first, Foreign Direct Investment help to increase the employment rate of the country. This help to make the country more developed. FDI has made people more skilled and productive, and it has raised up the employment in different sectors (Kandpal & Kavidayal, 571). Most of the skilled workers are from the “service sector” with high wages. Banking and insurance are the two sectors which are the backbone of the Indian economy and develop the “foreign exchange system” in the country (Kandpal & Kavidayal, 571). As Foreign Direct Investment increases in the country, businesspeople those who have invested their money in India will establish different types of organizations. After the organizations have been established, they need the skilled worker, who can work in the company. Thus, they will hire more and more skilled workers, in order to meet the demands of the organization, and this will increase employment in the country. Furthermore, if the employment in the country is increased there will also be an increase in the employment rate of that nation. As the inflow of Foreign Direct Investment increase, it ensures different sectors in the nation grow simultaneous. But “service sector” is rapidly increasing, because people of that country are becoming service orientated which is valuable since there are many people who want a different kind of services. Moreover, Foreign Direct Investment is the reason behind the banking and insurance sector that has become so important for the nation, because it connects to every single citizen from millionaires to common people.

The second benefit of FDI is the effect on farmers and consumers due to the Foreign Direct Investment. India is growing at a tremendous speed but most of the people are still employed in the farming sector in India. Due to the increase in the Foreign Direct Investment, both the farmer and consumer are getting benefits. Supporters of the Foreign Direct Investment firmly believe that Foreign Direct Investment in India is helping the farmers in “retail” to build the new infrastructure, removal of the mediator and make a proper “supply chain” (Arora, 10). People who buy from the “modern outlets” have explained that they get a better “quality product” at a cheaper price and have a better experience shopping (Arora, 10). Foreign Direct Investment has also helped the farmer a lot because Foreign Direct Investment has large organizations which can buy all of the farmer' product at a better price. This not only helpful for the farmer but also encourages them to grow different kinds of products in their land. The foreign direct investment, there are a lot of new “foreign outlets” opened in India. Thus, because there is a lot of competition between outlets which has decreased the price of the products which have helped the customer a lot. Now, consumers can buy products of good quality at a cheap price.

The last argument is that the way in which India Government is increasing the economic growth of the country is because of the foreign direct investment. Foreign direct investment help to bring a lot of monetary value to the country, which helps the country to grow economically in the globe. That is the reason Foreign Direct Investment is important in India. Foreign Direct Investment has a positive and direct relationship with the “Gross Domestic Product Trade (GDPT)” which plays a very crucial role in developing the Indian economy (Soni, 24). As India is moving from developing to the developed nation, there are a lot of changes that India is going through.  Especially, there is a lot of improvement in making Indian economically stable. The economic growth increases if there is an efficient use of the resource like land, labour, and capital in a proper way. If the economic growth increase there will be an increase in Foreign Direct Investment in India and investors may like to invest their capital in India. Therefore, if there are the more foreign investment in India it will help to grow “Gross Domestic Product Trade” of  India because there is a direct relationship between them. If there is more trade, it will give more opportunity to domestic people, new and better infrastructure can be built and it will make a good relationship between the two different nations. Thus, the foreign direct Investment significant help to grow the economic growth.

In today's contemporary world every nation wants to become economically stronger. Foreign Direct Investment is one of the way to increase the economic growth of the country. FDI plays a very important role in the overall growth of the nation. It helps to make people more skilled and employable which directly help the Indian government. As there will be the number of the worker which directly increase the government tax. More tax means the government can use that money for building new infrastructure and provide good service to the public. Furthermore, Foreign Direct Investment also give assistance to the farmer so, the intermediate person who usually buys the thing from farmer do fraud with the farmers. This helps the farmers to get appropriate price and farmers is assured of their income and sufficient returns. Buyers companies often provide the best technology and good training to the farmer, that the product comes out to be the best. Moreover, it also provides the better service to the consumer of that nation. Some of the ways of providing the better service are like provide fresh vegetable and fruits at very cheaper. Because of this, most people can buy the basic necessity of their life, and this may reduce the hungry population in India. The last argument is that there is an increase in the economic development of the country with the help of Foreign Direct Investment in India. It helps the host country a lot, by let them decrease there a financial crisis, by permitting the transfer of technology from one country to another. Today, India has become the IT power Industry, because of the transfer of technology through FDI in a different country.

Work Cited

Kandpal, Dr. Vinay. Kavidayal, P C. “An Overview of the Impact Of Tax Incentives on Foreign Direct Investment in India ” Journal Of Commerce & Management Thought vol. 5-4, 2014, pp 557-573

 Arora, Reetika. “ FDI in Multi Brand Retail in India ” Journal Of Retail Marketing & Distribution Management, vol. 1 ,2017 , 7-12p

Soni, Subhash Chandra. “Impact Of Foreign Direct Investment in India Economy” International Journal Of Research in Commerce & Management, vol. 8, 2017 , 21-26p


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