The concept of a Foreign Directed Investment is a very important part of the Indian Economy because Economic liberalization had varying effects on the behavior of economic factors and therefore on the evolution of various economic sectors and the Indian economy as a whole. Liberalizing reforms were intended to have a strong impact on the investment process. The method of allowing FDI started in the 1990’s, when the economy was liberalized, thereby allowing foreign goods to this paper tries to examine the developments in both economic and political aspects, relating to the growth in the FDI. We also evaluate and try to establish whether there is any relation between the FDI and the economic growth and prosperity across the various Indian states. In other words, has the link between the economic growth of a state and the amount of FDI become stronger in the aftermath of the reforms? Another point to notice is that there appears to be a large amount of regional income disparity between the states due to the larger amounts of association of FDI.
Table of Contents
- Abbreviations
- Introduction
- Historical Roots
- INDIA'S OVERALL FDI VIEW
- FDI INFLOWS Trends: 2000-2011
- Relevance of FDI in India
- Economic Liberalisation: Role of FDI in shaping the three sectors of Economy
- India's Specific Sector Analysis
- A. Telecommunications
- B. Automobiles
- C. IT/ITES
- Economic Liberalisation: Challenges Ahead
- CONCLUSION
Objectives and Key Themes
This paper aims to assess the impact of Foreign Direct Investment (FDI) on the Indian automobile, telecommunications and IT sectors. The paper explores the historical roots of FDI in India, highlighting the initial uneven growth due to various factors including the Balance of Payments (BOP) crisis, public sector opposition, and political opposition to economic liberalization.
- The role of FDI in shaping the Indian economy
- The historical context of FDI growth in India
- The impact of FDI on specific sectors (telecommunications, automobiles, and IT)
- Economic liberalization and its influence on the three sectors
- The challenges faced by India in its pursuit of economic liberalization
Chapter Summaries
The paper starts with an introduction to FDI, defining its role and importance in economic development. It then delves into the historical roots of FDI in India, highlighting the challenges faced during the initial phases of economic liberalization.
The chapter on “INDIA'S OVERALL FDI VIEW” analyzes the overall FDI inflows into India from 2000 to 2011, examining trends and highlighting the relevance of FDI for the Indian economy. The chapter on “Economic Liberalisation: Role of FDI in shaping the three sectors of Economy” discusses the broader impact of economic liberalization and the significant role played by FDI in shaping the telecommunications, automobile, and IT sectors.
The “India's Specific Sector Analysis” section provides a detailed look at each of these three sectors, discussing their performance, the outcomes of the FDI policy, and specific challenges faced. The paper concludes with an overview of the challenges ahead for India in continuing its economic liberalization journey.
Keywords
The key terms and concepts explored in this paper include Foreign Direct Investment (FDI), economic liberalization, telecommunications, automobiles, IT/ITES, Balance of Payments (BOP), and the Indian economy. The paper analyzes the impact of FDI on specific sectors and the challenges faced by India in its pursuit of economic liberalization.
How did economic liberalization affect FDI in India?
Liberalization reforms in the 1990s were intended to boost investment by allowing foreign goods and capital to enter the Indian market, significantly shaping sectors like telecommunications and automobiles.
What are the key sectors influenced by FDI according to this paper?
The paper provides a specific analysis of the Telecommunications, Automobile, and IT/ITES (Information Technology Enabled Services) sectors.
What were the historical challenges to FDI in India?
Growth was initially uneven due to factors like the Balance of Payments (BOP) crisis, opposition from the public sector, and political resistance to economic reforms.
Is there a link between FDI and regional income disparity?
Yes, the paper notes that larger associations of FDI in certain states have contributed to regional income disparities across India.
What was the trend of FDI inflows between 2000 and 2011?
The paper examines a period of growth and development in FDI inflows, evaluating how it relates to general economic growth and prosperity in various Indian states.
