Treatise 2010

Foreign direct investment (FDI) is now widely perceived as an important resource for expediting the industrial development of developing countries in view of the fact that it flows as a bundle of capital, technology, skills and sometimes even market access. Most of the developing countries, therefore, offer a welcoming attitude to multinational enterprises (MNEs) that are usually associated with FDI. India’s case is a typical in this context. After following a somewhat restrictive policy towards FDI, India liberalized her FDI policy regime considerably since 1991. This liberalization has been accompanied by increasing inflows. The liberalization has also been accompanied by changes in the sectoral composition, sources and entry modes of FDI. The increasing recognition of India’s locational advantages in knowledge-based industries among MNEs has also led to increasing investments by them in software development and in global R&D centres set up in India to exploit these advantages….

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