Page 1 of 10

European Journal of Business &

Social Sciences

Available at https://ejbss.org/

ISSN: 2235-767X

Volume 07 Issue 02

February 2019

Available online: https://ejbss.org/ P a g e | 558

FDI - Opportunity or Challenge in India

SANJEEV KUMAR

M.COM,

UGC-NET

ABSTRACT

Foreign Direct Investment (FDI) helps in the improvement in the economy

as a number of foreign currencies come into the treasure of the nation. FDI

is needed to boom the sectors which seem to be moving downward as in

most of the cases, it is observed that a trend of moving in upper direction is

seen in the sectors influenced by the FDI.

FDI can be seen as an opportunity as well as challenge as it provides a lot

of scope for the growth of a number of sectors which is needed for the

smooth movement of the domestic market as well. Foreign direct

investment was first introduced in the year 1991 in India. Since then, FDI

is permitted in a number of sectors after observing positive feedback by

Indian government. FDI helps in achieving the final goal of a sector and

motivates the investors about the further deals. The current study

highlights the various aspects of foreign direct investment.

KEYWORDS:

FDI, Sector, Market, Economy

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European Journal of Business &

Social Sciences

Available at https://ejbss.org/

ISSN: 2235-767X

Volume 07 Issue 02

February 2019

Available online: https://ejbss.org/ P a g e | 559

INTRODUCTION

A sense of positivity is observed in the sectors where FDI is implemented.

FDI is regarded as the primary source of non-debt financial medium

through which a large amount of the foreign currencies can be employed.

The basic objective of foreign direct investment in a particular sector is to

create the opportunity for a number of employments in that sector.

Hence, in case, if the government finds that any particular sector is not

yielding the results as expected then government allows the FDI in that

sector and it depends on the government committee that how much

percentage of FDI they want to permit for a particular sector. The

percentage of allowance of FDI may vary from between sectors as the

requirements of each and every sector tend to vary according to the size

of the sector.

In some cases, government permits little percentage of FDI and in some

cases, government may also allow 100% of FDI. Hence, it can be said

that it depends on the nature of the sector about the level of FDI. The

best outcome of FDI is that it has the potential to create a number of

opportunities of employment.

After the introduction of FDI in a particular sector, the level of percentage

of employment in that sector tends to move upward in most of the cases.

Page 3 of 10

European Journal of Business &

Social Sciences

Available at https://ejbss.org/

ISSN: 2235-767X

Volume 07 Issue 02

February 2019

Available online: https://ejbss.org/ P a g e | 560

Hence, FDI plays an important role in achieving the basic need of the

concerned sector.

FDI also opens the door for the development in the country as a lot of

money obtained as a result of FDI is spent on building the basic infra

structure where a number of roads and other transportation projects are

accomplished.

This development fulfills the basic need of the investors and

consequently, the economy tends to grow up. FDI is also like a challenge

for the market as it depends on the higher authorities to utilize this FDI

in favor of the development.

In some cases, the higher authorities are not much concerned about the

development through FDI and they use the investment for their personal

needs which is not beneficial for a nation. Hence, the biggest challenge

after the introduction of FDI is to implement the effective strategies to

proper make use of this investment so that the root cause of this big

investment can be fulfilled.

India is a developing country and lots of things are here to be achieved

yet. The population of the country is also increasing rapidly. For further

development, there is requirement of foreign direct investment so that

every sector of the nation can grow as expected otherwise, it would be

very difficult to fulfill the basic needs of a sector.