Question

Explain how far NEP is dependent on FDI

Answer 1

NEP stands for New Economic Policy, India has adopted the New Economic Policy (NEP) in 1991 in the wake of economic crisis.

FDI stands for Foreign Direct Investment.

Explanation:

India has shown  comprehensive approach to open door policy during the nineties when India has progressively expanded the scope for FDI by gradually increasing the number of sectors opened to FDI as well as the caps on FDI. Some of the measures included –

1-Removing the general ceiling of 40% on foreign equity under the Foreign Exchange Regulation Act, 1973 (FERA).

2-Lifting of restrictions on the use of foreign brand names in the domestic market, removing restrictions on entry and expansion of foreign direct investment into consumer goods.

3-Liberalising the terms for import of technology and royalty payments and permitting foreign investment up to 24% of equity of small scale units and reducing the corporate tax rates( Rao and Dhar 2011 ).

Answer 2

Explanation:

• NEP stands for New Economic Policy, India implemented the New Economic Policy (NEP) after the economic crisis of 1991. FDI provides for direct investment from foreign countries.
• India demonstrated a comprehensive approach to the open-door policy during the 1990s, as India slowly extended its FDI reach by growing both the number of sectors opened up to FDI and the ceilings on FDI.
• Removing the Foreign Exchange Regulation Act 1973 (FERA) general limit of 40 percent on foreign equity.
• Lifting limits on the use of international brand names on the domestic market, removing restrictions on the entrance of foreign direct investment into consumer goods and widening it.

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