Question

why india considered hot destination for FDI in this pandemic ?​

Answer 1

Explanation:

The course of history is often shaped by unexpected shocks, and the outbreak of COVID-19 is one such epoch-defining event that is resetting the international trade order and global supply chains. In the process of global companies, particularly Multi-National Corporations (MNCs), hedging against future production shocks, India has emerged as an attractive and important alternative link in the existing global supply chains.

The larger geopolitical scenario, India’s liberal FDI policy, sectoral schemes and structural reforms undertaken by the government, both at the Centre and at the state levels, and India’s large and rapidly enormous consumer market are among the several factors that underline India’s attractiveness as an FDI destination

In the post reforms era, India’s strength in attracting FDI has been growing steadily. India’s FDI inflows rose from $4.02 billion to $73 billion in the years 2000-2020. Additionally, the average growth rate of FDI inflows has also increased significantly in the last five years. On an average, the inflows increased at a rate of 1.25% from 2010 to 2014. However, from 2015 to 2020, the inflows grew at a stellar pace of 12.83%. Moreover, in 2019-20, they have grown at 18%.

Additionally, the growth rate of FDI captured in the FDI to GDP ratio has also shown a quantum leap. A comparison of FDI to GDP ratio of the BRICS countries from 2000 to 2018 shows how India’s FDI inflow has doubled from .77% of GDP to 1.55% of GDP. Moreover, during the same time period Chinese FDI inflow as a percentage of their GDP has fallen from 3.48% to 1.50%.

Answer 2

Answer:

A stable government, strong economic growth, robust domestic demand, economic reforms and a young workforce are just some of the reasons that FDI investments are growing in India.

Foreign direct investments into India means that companies overseas set up manufacturing facilities here, provide services and produce goods and do business here that earns them revenues, creates local jobs and provide tax inflow to the government...

FDI inflows into India have been rising over the last four years and in FY18, it stood at $44.86 billion according to

The top ten countries investing in India are Mauritius, Singapore, Japan, U.K., the Netherlands, United States, Germany, Cyprus, France and the UAE[1]. Some of the best investments are the services sector, which was at the top in terms of FDI at $6.7 billion, followed by telecoms at $6.2 billion and computer hardware and software at $6.2 billion.

The reason for the rise in FDI and its sustaining at the high levels is not far to seek. India’s macro fundamentals have improved. There is an upward pressure on inflation but that is due to rising crude prices. The economic growth at 7%-plus makes it one of the fastest growing economies in the world. For the last four years, there has been a stable government at the centre and major economic reforms have been pushed through. Foreign investors are betting on India as a long term investment.

That is the broad overview of the economy. Now let us look at some of the other major government initiatives that are attracting foreign investors and making them look at India as an attractive investment destination.

Relaxation in FDI norms:

☆In real estate broking services, the government has done away with the need for approvals up to 100%.

☆Department of Revenue approvals will no longer be required for FDI proposals, easing the mechanism for FDI, which will now be cleared in 10 weeks of application

☆The government has allowed 100% FDI in single brand retail through the automatic route.

☆FDI in defence is further sought to been enhanced to 51% through the automatic route from 49% now.

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