Criteria For Foreign Direct Investment In India

Akash Jaiswal, BBA LLB (Hons), Alliance School of Law, Alliance University, Bangalore

Introduction

Overview

Besides being a crucial investment for India's economic growth, foreign direct investment (FDI) plays a significant role as a substantial source of non-debt financial resources for the country's development. Foreign companies invest in India to leverage factors like cost-effective labor, as well as special investment incentives such as tax exemptions. This not only benefits the investing companies but also facilitates the transfer of technological expertise and the creation of job opportunities in the host country.

The Indian government has published a favourable policy environment and a powerful business climate, ensuring a continuous inflow of foreign capital into the nation. In recent years, the government has implemented various initiatives to promote FDI, including relaxing FDI regulations in sectors such as defense, public sector oil refineries, telecommunications, power exchanges, and stock exchanges, among others.