Page 561 - SSB Interview: The Complete Guide, Second Edition

continue to be a frontrunner in shaping India’s foreign policy response
in the neighbourhood. The quiet outreach by India to all its neighbours

has largely gone unnoticed by the global community.

18. FOREIGN DIRECT INVESTMENT (FDI) IN

DEFENCE SECTOR OF INDIA

India is looking for a breakthrough in its defence sector by attracting foreign
companies to invest in India using the FDI policy under the ‘Make in India’
initiative led by the NDA Government. By this policy, foreign companies are

able to invest in Indian companies by establishing foreign business
operations, acquiring business assets, establishing ownership or controlling
interests of the company. The salient feature of FDI is that it is not only a

capital investment, but also the exchange of manpower, technology and
assets.

FDI and Background

Way back in the 1970s, China adopted a new way of attracting foreign
investments into their closed economy to meet its investment needs and to

speed up the growth of its economy. Those investments played a major role
in China’s development as we see today. This type of investment is the result
of two components, Foreign Direct Investment (FDI) and Foreign

Institutional Investment (FII), which is now referred to as Foreign Portfolio
Investment (FPI). From there on, many countries started using the policy of
FDI to increase their economic security.

Strategies of Implementation

There are two strategies to implement FDI in a country:

Greenfield investment