(1) According to an essay published on the Government of India's Ministry of Finance website, in recognition of the importance of Foreign Direct Investment (FDI) in stimulating economic growth, the government of India has been reforming laws to make India a less restrictive and more attractive place for FDI. The economic reforms that started in 1991 have brought dramatic changes in international investment in India. The rupee is completely convertible. Customs duties have been reduced. These reforms are intended to foster rapid and sustainable economic growth in India. Policy reforms have reduced the complexity of licensing requirement and removed certain restrictions on FDI. The government of India is making an effort to attract and retain foreign investment from non residents including Overseas Corporate Bodies.
These drawbacks include political instability and uncertainty, a large and complex government bureaucracy, occasional power outages and certain infrastructure deficiencies. Nevertheless, many investors believe that India represents a virtually untapped market with significant potential for foreign investors. India is also starting to develop a reputation for encouraging foreign investors.
On a broader scale, India is one of the most heavily populated countries in the world. As a result, there is significant domestic demand for products.
Globally, India is considered to be one of the emerging economies. While India falls far behind China in terms of its appeal to foreign investors, it remain attractive to some investors willing to do careful research and make an informed decision about investing in India today based on the potential for long term growth rather than on expectations of short term profits and rapid sales revenue growth.
According to the Ministry of Finance essay, Foreign Direct Investment (FDI) is permitted in the following forms: (a) As a financial collaborations, (b) As a joint ventures o...