Foreign Investment And Its Impact on Indian Economy

Abstract

After the new economic reforms of 1991, the foreign policy was made more liberal to attract foreign investment. These changes were necessary to reduce our dependence on the foreign debt for capital generation and to bring rapid and sustained improvement in the quality of life of people of India. Foreign investment generally take place in any economy which has the high prospect of growth and also a skilled workforce. Foreign investment in India has had a significant impact on its economy. The influx of foreign investment has spurred economic growth, contributing to increased production, job creation, and infrastructure development. The technology transfer from foreign companies has enhanced the efficiency of domestic industries, promoting innovation and skill development. India's integration into global markets through foreign investment has boosted exports, improving the country's balance of trade. The foreign capital has also supported the diversification of industries, making the economy more resilient. However, the impact of foreign investment on India is a dynamic interplay of opportunities and challenges. Foreign investment has been instrumental in driving economic growth, job creation, and technological advancement. The infusion of foreign capital has enabled the integration of Indian companies into the global marketplace, enhancing profits and expanding export capabilities. Additionally, foreign investment has catalysed infrastructure development and the partnerships have facilitated the transfer of advanced technologies, contributing to the overall modernization of industries.