In Today’s News:
- Foreign Direct Investment (FDI) blooms during COVID-19.
1. Foreign Direct Investment (FDI) blooms during COVID-19
“FDI equity inflow received during FY21 (April to August 2020) is $27.1 billion. It is also the highest ever for the first five months of a financial year,” the ministry said.
Prelims GS – Economic Development
FDI Inflow – Report by the Ministry of Commerce and Industry:
- From April to August 2020, the total FDI inflow of US$ 35.73 billion is received. It is the highest ever for the first 5 months of a financial year and 13% higher as compared to the first five months of 2019-20 (US$ 31.60 billion).
- FDI equity inflow received during F.Y. 2020-21 (April to August 2020) is US$ 27.10 billion. It is also the highest ever for the first 5 months of a financial year and 16% more compared to the first five months of 2019-20 (US$ 23.35 billion).
- Foreign Direct Investment takes place when an investor establishes foreign business operations or acquires foreign business assets, and establishes ownership or controls interest in a foreign company.
- FDI brings in a long term capital for the economy.
- FDI is not only bringing money but also knowledge, skills, and technology.
Routes of FDI:
- Automatic Route: Under the Automatic Route, the non-resident investor or the Indian company does not require any approval from the Government of India for the investment.
- Government Route: Under the Government Route, prior to investment, approval from the Government of India is required. Proposals for foreign direct investment under Government route, are considered by respective Administrative Ministries/Departments.
Mains GS3 – Economic Development
Benefits of FDI:
- Increased Employment and Economic Growth
- Human Resource Development
- Exchange Rate Stability
- Development of Backward Areas
- Increase in Exports
- Improved Capital Flow
- Creation of a Competitive Market
- Provision of Finance and Technology
- Stimulation of Economic Development
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