Foreign direct investment (FDI) in India has played an important role in the positive development of the Indian economy.

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Foreign Development Investment in India

Foreign direct investment (FDI) in India has played an important role in the positive development of the Indian economy. The Indian government has been trying so hard to turn India to become an attractive international investors friendly place, they tend to encourage and promote a favorable business environment for foreign investors. It seemed that their hard work is paying back. There has been a big increase on the number of FDI and FDI inflow in India, from year to year (graph 1).  It rose by more than 100%, while the cumulative amount of FDI equity inflows is about US$205.96 billion from April 2000 to May 2011. India is also rank 2 in global foreign direct investments published by the United Nations Conference on Trade and Development (UNCTAD).  They also forecasted that India would be one of the top 5 attractive destinations for foreign investors during 2011 – 2012. In the 2010 European Attractiveness Survey done by a global consultancy firm Ernst & Young, India is named fourth as the most attractive FDI destination (with a share of 22%).  It also forecasted that in the next 3 years, India would become more attractive and ranked second with a proportion of 61%. This rising level of attractiveness is good for India, as FDI has in a lot of ways enabled India to achieve a certain degree of financial stability, growth and development.

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FDIs are permitted through financial collaborations. The Ministry of Commerce and Industry of India, has allowed FDI in all sectors including the services sectors (except a few sectors that does not permit FDI beyond a ceiling, such as arms, coal and mining industries). Almost all FDI regarding activities are brought in through the Automatic Route that is powered by the Reserve Bank for India, which makes it easier for investors. The remaining activities usually have to go through the Government for approval where it will be analyze by the Foreign Investment Promotion Board. Some ownership limits for FDI does exist ...

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