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have taken front seat for the world and in future exploration
of natural resources will in tandem with environment
protection. Here Foreign Investment has to play a two-fold
role of providing resources for exploration of resources and
develop such a technology that environment can also be
endangered.

4-Investment in High-Risk areas
Investment in untapped and new areas may be a risky
proposition for the domestic investors due to various reasons
like unavailability of required, state of the art technology
and absence of assessment for high risk and resources as
well. Since the FDI gives investors high rate of return and
they have high class technology to pass on to these deregulation of economic trade practices, allow international
countries, these Investors always ready to invest in those trades and investments, control inflation level. The policy of
areas. FDI under liberalization, privatization and globalization was
introduced. Initially, very few sectors such as manufacturing,
5-Impacting Balance of payment position mining were liberalized, but later, more sectors like service,
India had experienced a BOP crisis in 1991, when its foreign telecommunications & retail were liberalized. The
reserve had dried up for the payment of bills for merely 15 liberalization is prone to affect various industries, and these
days. Developing nations have often face BOP crisis due to effects may vary immensely across industries.
lack of resources to earn more foreign funds, the inflow of
FDI will help in improving the balance of payment. Investors In 1997, the government of India had approved 100% FDI
in wholesale cash-and-carry market with automatic
which feel that goods produced in India will have a low cost
with high quality, will produce the goods and export the approval. Later in 2006, FDI of up to 51% in single-brand
retail was allowed by the government subject to prior
same to other country which helps in increased export. FDI
approval. It was a vital decision and brought huge
has helped not only India but the entire developing world
transformation for the Indian economy and retail sector as
to accomplish stability as well as economic growth with the
help of investments in different sectors. It also helps in well. Between the year 2006 and 2010, 94 proposals had
generating employment to the unemployed, generating been received, out of which 57 were accepted and
revenues in the form of tax and income, financial stability implemented for single-brand retailing. The flow of FDI had
to the government, development of infrastructure. increased heavily due to the liberalization of the economy
with FDI of $1.8 billion between 2000 and 2010 through
Chronology of events regarding FDI of retail sector alone.
post reform period (after 1991) According to the CII-EY survey on "FDI in India - Now, Next

In 1990-1991, India's inflation rate was 12% with current and Beyond, Reforms and opportunities" India can expect
account deficits of 3.1%. During that period, China was an to attract US$120 billion to US$160 billion of FDI annually
attractive destination for foreign investors due to policy by 2025 if it manages to increase the FDI to GDP ratio
corrections. In mid-1991, Indian government's foreign between 3% to 4% range by 2025. This can aid in bringing
exchange was very low, only having enough dollars for two back India's GDP growth rate to 7%-8% range. The above
weeks' worth of import. To overcome the problem, India had growth will be stimulated by the recent structural reforms,
pledge tons of gold to Bank of England and Union Bank of raising of the FDI limits in multiple sectors and the
Switzerland. Atmanirbhar Bharat strategy of the Government of India.
The report, based on a CII-EY Survey to gauge the market
After the disaster of 1991, neo-liberal reforms were sentiment amongst the Indian as well as non-Indian
introduced which was never previously allowed; by opening companies, notes that India has emerged as one of the top
the economy to initiate privatization, changes in tax-reforms, three choices for overseas investments in the next 2-3 years.

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