Question

how do government attract foreign investment? explain different ways? ( 4 points)

Answer 1

Government attracts foreign investment in the followings ways
(i) Special Economic Zones have been set up to have world-class facilities such as cheap electricity, roads, transport, storage, etc.
(ii) The companies set up their units in SEZs which are exempted to pay tax for initial period of five years.
(iii) Labour laws are made flexible.
(iv) Instead of hiring workers on a regular basis, companies hire workers flexibly for short period when there is intense pressure of work.

Answer 2

Ans

Government try to attract more foreign investment because

• It strengthens the economy of the country
• It increases foreign currency reserves so that payment of imports can be met.
• It enhances foreign exports
• It results in creation of more jobs
• Local companies will be benefitted from the increased competition. They invest in newer technology and production methods and raise their production activities.