Question

what steps have been taken by the government to attract foreign investment and why?

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

Number of steps have been taken by the government to attract foreign investments in India. These are:

# Industrial zones, called the Special Industrial Zones (SEZs) have been set up. These have world class facilities: electricity, water, roads, transport, storage, recreational and educational facilities.

# Companies who set up production units in the SEZs do not have to pay taxes for an initial period of five years.

# Government has also allowed flexibility in the labour laws to attract foreign investment. For example, instead of hiring workers on a regular basis, companies hire workers ‘flexibly’ for short periods when there is intense pressure of work. This is done to reduce the cost of labour for the company.