Apart from being a critical driver of economic growth, foreign direct investment (FDI) is a major source of non-debt financial resource for the economic development of India. Foreign companies invest in India to take advantage of relatively lower wages, special investment privileges such as tax exemptions, etc. For a country where foreign investments are being made, it also means achieving technical know-how and generating employment.

The Indian government’s favourable policy regime and robust business environment have ensured that foreign capital keeps flowing into the country. The government has taken many initiatives in recent years such as relaxing FDI norms across sectors such as defence, PSU oil refineries, telecom, power exchanges, and stock exchanges, among others.

Market size

According to Department of Industrial Policy and Promotion (DIPP), the total FDI investments India received during April-June 2017 stood at US$ 14.55 billion, indicating that government's effort to improve ease of doing business and relaxation in FDI norms is yielding results.

Data for April-June 2017 indicates that the services sector attracted the highest FDI equity inflow of US$ 1.88 billion, followed by computer software and hardware – US$ 1.32 billion and trading – US$ 769 million. Most recently, the total FDI equity inflows for the month of June 2017 touched US$ 3.12 billion.

Investments/ developments

India has