Foreign Direct Investment In India – Boosting Economy And Foreign Exchange
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Foreign Direct Investment in India – Boosting Economy and Foreign Exchange

Team Leader
The investment strategies for the coming years is all set to differ from the customary and common way, offered by the investors and financial planners in the present time. The investment settings have changed greatly. Till recently, you could invest in stocks and bonds to have a secure income for the future. This is the traditional strategy for investment advised by most investors. With stock funds being a risky investment and bond funds the safer one, investing half in each of them were considered to be the right way of investing. However, the year 2012 is not going to be a good one for investing in bonds and stock fund anymore, as it is more of a risk than an investment.

The reason being the slow recovery of the economy of USA and the weak economy has put a lot of pressure on the stock funds and stock markets. The low interest rates are an indication that those who have savings cannot get a proper interest income, even in safe investments. The best investment strategies include investing in stock funds should be to go along with growth and income funds that have invested in high class companies.

According to the survey conducted, the foreign direct investment in India is the highest, next only to China. After the severe recession in USA, India has taken over as the second most key destination for foreign direct investment by transnational companies from last year. USA has slipped to the fourth position as a destination for FDI. There are various reasons for multinational companies opening their offices in India. India has got a vast market and its economy is also growing very fast. Also the policy of the Indian Government towards FDI has gone a long way in attracting foreign direct investment in India.

India had a restraining policy towards FDI for a long time, which resulted in less number of companies showing an interest in investing in the Indian market. The scene has changed since 1991 with the liberalization policy of the Indian Government and from then on till now, they are making every effort to woo foreign investment by easing their policies. This has resulted in many foreign companies showing interest in the Indian market. Some of the investment strategies of companies include widening its jurisdiction of work beyond their country, which brings a lot of profit to them. This is the case of the MNC’s who are settled in India.

Other than the foreign direct investment in India, the market competition, the labor market competitiveness and the highly stable economy have influenced the foreign companies to invest here. The benefits that developing countries like India get from foreign MNCs investing here include lessening the technology gap, the natural resources are utilized in the best way, the foreign exchange gap is lessened, can begin a greater level of investment and enhancing the fundamental economic structure. The global FDI is all set to rise to USD 1.6-2.0 trillion in 2012.

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