{"id":24665,"date":"2024-02-01T07:02:19","date_gmt":"2024-02-01T07:02:19","guid":{"rendered":"https:\/\/edukemy.com\/blog\/?p=24665"},"modified":"2024-02-01T07:02:21","modified_gmt":"2024-02-01T07:02:21","slug":"justify-the-need-for-fdi-for-the-development-of-the-indian-economy-why-there-is-gap-between-mous-signed-and-actual-fdis-suggest-remedial-steps-to-be-taken-for-increasing-actual-fdis-in-india-150-w","status":"publish","type":"post","link":"https:\/\/edukemy.com\/blog\/justify-the-need-for-fdi-for-the-development-of-the-indian-economy-why-there-is-gap-between-mous-signed-and-actual-fdis-suggest-remedial-steps-to-be-taken-for-increasing-actual-fdis-in-india-150-w\/","title":{"rendered":"Justify the need for FDI for the development of the Indian economy. Why there is gap between MOUs signed and actual FDIs? Suggest remedial steps to be taken for increasing actual FDIs in India. (150 Words 10 Marks)"},"content":{"rendered":"<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-full\"><a href=\"https:\/\/edukemy.com\/upsc\/upsc-gs-advance-and-mentorship-program-ampcsat?utm_source=Blog&amp;utm_medium=Link&amp;utm_campaign=GS+Advanced\" target=\"_blank\" rel=\"noreferrer noopener\"><img fetchpriority=\"high\" decoding=\"async\" width=\"1280\" height=\"300\" src=\"https:\/\/edukemy.com\/blog\/wp-content\/uploads\/2024\/07\/Attempt-our-Daily-Weekly-Current-Affairs-Quiz-now-8.png\" alt=\"\" class=\"wp-image-43397\" srcset=\"https:\/\/edukemy.com\/blog\/wp-content\/uploads\/2024\/07\/Attempt-our-Daily-Weekly-Current-Affairs-Quiz-now-8.png 1280w, https:\/\/edukemy.com\/blog\/wp-content\/uploads\/2024\/07\/Attempt-our-Daily-Weekly-Current-Affairs-Quiz-now-8-1170x274.png 1170w, https:\/\/edukemy.com\/blog\/wp-content\/uploads\/2024\/07\/Attempt-our-Daily-Weekly-Current-Affairs-Quiz-now-8-585x137.png 585w\" sizes=\"(max-width: 1280px) 100vw, 1280px\" \/><\/a><\/figure><\/div>\n\n\n<p>Foreign Direct Investment (FDI) plays a pivotal role in fostering the economic development of India, serving as a catalyst for growth, employment generation, and technological advancement. The infusion of foreign capital not only supplements domestic investments but also brings in expertise, technology, and managerial skills that contribute to the overall enhancement of the Indian economy. Despite the signing of Memorandums of Understanding (MOUs) indicating potential foreign investments, a noticeable gap exists between the commitments made and the actual FDIs received. This divergence can be attributed to bureaucratic hurdles, regulatory complexities, and concerns related to the ease of doing business in India. To address this issue and attract more actual FDIs, the government should focus on streamlining regulatory procedures, simplifying tax structures, and improving infrastructure. Additionally, proactive measures to enhance the business environment and address investor concerns will be crucial in bridging the gap between MOUs and actual FDIs, ensuring a more robust and sustainable economic development trajectory for India.<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\"><p><strong>Tag: <\/strong>Investment models.\u00a0\u00a0<\/p><\/blockquote>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_73 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<label for=\"ez-toc-cssicon-toggle-item-6a1f90403d7f6\" class=\"ez-toc-cssicon-toggle-label\"><p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-cssicon\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a1f90403d7f6\"  \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/edukemy.com\/blog\/justify-the-need-for-fdi-for-the-development-of-the-indian-economy-why-there-is-gap-between-mous-signed-and-actual-fdis-suggest-remedial-steps-to-be-taken-for-increasing-actual-fdis-in-india-150-w\/#Decoding_the_Question\" title=\"Decoding the Question:&nbsp;&nbsp;&nbsp;\">Decoding the Question:&nbsp;&nbsp;&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/edukemy.com\/blog\/justify-the-need-for-fdi-for-the-development-of-the-indian-economy-why-there-is-gap-between-mous-signed-and-actual-fdis-suggest-remedial-steps-to-be-taken-for-increasing-actual-fdis-in-india-150-w\/#Answer\" title=\"Answer:&nbsp;\">Answer:&nbsp;<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/edukemy.com\/blog\/justify-the-need-for-fdi-for-the-development-of-the-indian-economy-why-there-is-gap-between-mous-signed-and-actual-fdis-suggest-remedial-steps-to-be-taken-for-increasing-actual-fdis-in-india-150-w\/#_Need_of_FDI_for_developement_of_the_Indian_Economy\" title=\"\u00a0Need of FDI for developement of the Indian Economy:\u00a0\">\u00a0Need of FDI for developement of the Indian Economy:\u00a0<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/edukemy.com\/blog\/justify-the-need-for-fdi-for-the-development-of-the-indian-economy-why-there-is-gap-between-mous-signed-and-actual-fdis-suggest-remedial-steps-to-be-taken-for-increasing-actual-fdis-in-india-150-w\/#The_reason_behind_the_gap_between_MOU_signed_and_actual_FDIs\" title=\"The reason behind the gap between MOU signed and actual FDI\u2019s:\u00a0\u00a0\u00a0\">The reason behind the gap between MOU signed and actual FDI\u2019s:\u00a0\u00a0\u00a0<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/edukemy.com\/blog\/justify-the-need-for-fdi-for-the-development-of-the-indian-economy-why-there-is-gap-between-mous-signed-and-actual-fdis-suggest-remedial-steps-to-be-taken-for-increasing-actual-fdis-in-india-150-w\/#Remedial_steps_to_increase_actual_FDI\" title=\"Remedial steps to increase actual FDI:&nbsp;\">Remedial steps to increase actual FDI:&nbsp;<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/edukemy.com\/blog\/justify-the-need-for-fdi-for-the-development-of-the-indian-economy-why-there-is-gap-between-mous-signed-and-actual-fdis-suggest-remedial-steps-to-be-taken-for-increasing-actual-fdis-in-india-150-w\/#In_case_you_still_have_your_doubts_contact_us_on_9811333901\" title=\"In case you still have your doubts, contact us on 9811333901.&nbsp;\">In case you still have your doubts, contact us on 9811333901.&nbsp;<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/edukemy.com\/blog\/justify-the-need-for-fdi-for-the-development-of-the-indian-economy-why-there-is-gap-between-mous-signed-and-actual-fdis-suggest-remedial-steps-to-be-taken-for-increasing-actual-fdis-in-india-150-w\/#Visit_our_YouTube_Channel_%E2%80%93_here\" title=\"Visit our YouTube Channel &#8211;&nbsp;here\">Visit our YouTube Channel &#8211;&nbsp;here<\/a><\/li><\/ul><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Decoding_the_Question\"><\/span><strong>Decoding the Question:&nbsp;<\/strong>&nbsp;&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>In the Intro, try to start your answer with defining FDI.<\/strong>\u00a0\u00a0<\/li><li><strong>In Body,\u00a0<\/strong>\u00a0\u00a0<\/li><li><strong>Discuss the need of FDI in the first part of the answer in brief.<\/strong>\u00a0\u00a0<\/li><li><strong>In the second part of the answer, you need to discuss the reasons behind the gap of MOU signed and the actual FDI.<\/strong>\u00a0\u00a0<\/li><li><strong>Suggest measures for the realising of MOU signed FDI.<\/strong>\u00a0\u00a0<\/li><li><strong>Try to conclude <\/strong>as per the context of the question.\u00a0\u00a0<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Answer\"><\/span><strong>Answer:<\/strong>&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Foreign Direct Investment (FDI) refers to capital inflows from abroad that are invested in or to enhance the production capacity of the economy. Generally, FDI takes place when an investor establishes foreign business operations or acquires foreign business assets in a foreign country. FDIs are distinguished from portfolio investments in which an investor merely purchases\u202fequities of foreign-based companies.&nbsp;&nbsp;&nbsp;<\/p>\n\n\n\n<p>The growth of FDI in India will boost the economic growth of the country. FDI in an economy helps in relaxing the domestic savings constraints. It helps to overcome the foreign exchange barrier thereby increasing capital flow and provides risk-sharing capital financing.&nbsp;&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"_Need_of_FDI_for_developement_of_the_Indian_Economy\"><\/span>\u00a0<strong>Need of FDI for developement of the Indian Economy:<\/strong>\u00a0<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul class=\"wp-block-list\"><li>Private investment from the domestic sector has been constrained because of Non-Performing Assets.\u00a0\u00a0\u00a0<\/li><li>Induction of advanced technology and technical know-how.\u00a0<\/li><li>Improves efficiency and competition.\u00a0<\/li><li>Increases consumer choice.\u00a0<\/li><li>Sustain and enhance growth, which in turn will ameliorate poverty.\u00a0<\/li><li>Better than Foreign Portfolio Investment, which is hot money (Fly by night money)\u00a0<\/li><li>Need for non-debt investments.\u00a0<\/li><li>Increase employment opportunities.\u00a0<\/li><\/ul>\n\n\n\n<figure class=\"wp-block-image size-full\"><a href=\"https:\/\/edukemy.com\/upsc\/upsc-essay?utm_source=Blog&amp;utm_medium=Banner&amp;utm_campaign=Essay\" target=\"_blank\" rel=\"noreferrer noopener\"><img decoding=\"async\" width=\"1280\" height=\"300\" data-src=\"https:\/\/edukemy.com\/blog\/wp-content\/uploads\/2024\/06\/10.png\" alt=\"\" class=\"wp-image-42412 lazyload\" data-srcset=\"https:\/\/edukemy.com\/blog\/wp-content\/uploads\/2024\/06\/10.png 1280w, https:\/\/edukemy.com\/blog\/wp-content\/uploads\/2024\/06\/10-1170x274.png 1170w, https:\/\/edukemy.com\/blog\/wp-content\/uploads\/2024\/06\/10-585x137.png 585w\" data-sizes=\"(max-width: 1280px) 100vw, 1280px\" src=\"data:image\/gif;base64,R0lGODlhAQABAAAAACH5BAEKAAEALAAAAAABAAEAAAICTAEAOw==\" style=\"--smush-placeholder-width: 1280px; --smush-placeholder-aspect-ratio: 1280\/300;\" \/><\/a><figcaption><a href=\"https:\/\/edukemy.com\/upsc\/upsc-essay?utm_source=Blog&amp;utm_medium=Link&amp;utm_campaign=Essay\">UPSC Essay Course<\/a><\/figcaption><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"The_reason_behind_the_gap_between_MOU_signed_and_actual_FDIs\"><\/span>The reason<strong> behind the gap between MOU signed and actual FDI\u2019s:\u00a0<\/strong>\u00a0\u00a0<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Ease of Doing Business: I<\/strong>nfrastructural and regulatory bottlenecks such as, dealing with construction permits, registering properties, availability of electricity, paying taxes, trading across borders, corruption, strict labor laws etc. delay project implementation, sometimes rolling back investment decisions. For example, POSCO signed a preliminary agreement of investment of more than $5 billion dollar but on the issue of securing mining rights and regulatory clearance\/litigations, it decided to pull out.\u00a0\u00a0<\/li><li><strong>Land Acquisition: <\/strong>Land acquisition is the biggest hurdle in achieving desired level FDI inflow. As major infrastructure projects and Industrial clusters need concessional land, delay in land acquisition leads to increased cost of projects.\u00a0\u00a0\u00a0<\/li><li><strong>Red tape: <\/strong>Increasing corruption and maladministration in granting all the required permissions for investments have been not addressed. This restrictive behavior resulted in the realization of a signed MOU and the actual inflow of FDI.\u00a0\u00a0<\/li><li><strong>Vested interests: <\/strong>Several reports by GoI have pointed towards the role of some NGOs obstructing the course of projects by playing with popular sentiments. Such tactics not only delay implementation but also create a negative image of India as a business destination to attract FDI<strong>.<\/strong>\u00a0\u00a0<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Remedial_steps_to_increase_actual_FDI\"><\/span><strong>Remedial steps to increase actual FDI:<\/strong>&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul class=\"wp-block-list\"><li>Stable, predictable tax regime.\u00a0<\/li><li>Reliable, fair, transparent, rules-based policy making.\u00a0<\/li><li>Phasing out of Foreign Investment Promotion Board.\u00a0<\/li><li>Expediting clearances and facilitating fast decision-making.\u00a0<\/li><li>More FDI should be allowed through automatic routes.\u00a0<\/li><li>Fair and rule-based intellectual property regime.\u00a0<\/li><li>Diluting precondition for sectors with restrictions.\u00a0<\/li><li>Management and control by domestic players should be retained only in strategic sectors.\u00a0<\/li><li>Protect and facilitate beau acts for bonafide actions.\u00a0<\/li><li>Decrease discretionary powers of bureaucrats.\u00a0<\/li><li>Empower bureaucrats to make decisions without fear or favors.\u00a0<\/li><\/ul>\n\n\n\n<p>FDI is the need of the hour for further development of the Indian economy. By making it more competitive, it also holds the key to making India part of the Global supply chain. GoI along with respective state governments must engage the global community to attract more and more FDI and prioritize their implementation.\u00a0\u00a0<\/p>\n\n\n\n<figure class=\"wp-block-image size-full is-resized\"><a href=\"https:\/\/edukemy.com\/upsc\/upsc-essay?utm_source=Blog&amp;utm_medium=Banner&amp;utm_campaign=Essay\" target=\"_blank\" rel=\"noreferrer noopener\"><img decoding=\"async\" data-src=\"https:\/\/edukemy.com\/blog\/wp-content\/uploads\/2024\/06\/UPSC-Essay-Course-1280\u00d7300-1-3.svg\" alt=\"\" class=\"wp-image-42688 lazyload\" width=\"781\" height=\"182\" src=\"data:image\/gif;base64,R0lGODlhAQABAAAAACH5BAEKAAEALAAAAAABAAEAAAICTAEAOw==\" style=\"--smush-placeholder-width: 781px; --smush-placeholder-aspect-ratio: 781\/182;\" \/><\/a><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"In_case_you_still_have_your_doubts_contact_us_on_9811333901\"><\/span><strong>In case you still have your doubts, contact us on 9811333901.<\/strong>&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>For UPSC Prelims Resources,&nbsp;<a href=\"https:\/\/edukemy.com\/upsc-cse-prelims-resource-centre\" target=\"_blank\" rel=\"noreferrer noopener\">Click here<\/a><\/p>\n\n\n\n<p>For Daily Updates and Study Material:<\/p>\n\n\n\n<p>Join our Telegram Channel &#8211;&nbsp;<a href=\"https:\/\/t.me\/WithEdukemy4IAS\" target=\"_blank\" rel=\"noreferrer noopener\">Edukemy for IAS<\/a><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>1. 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Mains Answer Writing Practice &#8211;&nbsp;<a href=\"https:\/\/bit.ly\/3mZuVxl\" target=\"_blank\" rel=\"noreferrer noopener\">here<\/a><\/li><\/ul>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Visit_our_YouTube_Channel_%E2%80%93_here\"><\/span>Visit our YouTube Channel &#8211;&nbsp;<a href=\"https:\/\/www.youtube.com\/@ShabbirsEduKemyforIAS\" target=\"_blank\" rel=\"noreferrer noopener\">here<\/a><span class=\"ez-toc-section-end\"><\/span><\/h4>\n","protected":false},"excerpt":{"rendered":"<p>Foreign Direct Investment (FDI) plays a pivotal role in fostering the economic development of India, serving as a catalyst for growth, employment generation, and technological advancement.<\/p>\n","protected":false},"author":17,"featured_media":24666,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_eb_attr":"","om_disable_all_campaigns":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_uf_show_specific_survey":0,"_uf_disable_surveys":false,"_lmt_disableupdate":"","_lmt_disable":"","footnotes":""},"categories":[1524],"tags":[1629,177,142,232,145,140],"class_list":["post-24665","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-upsc-mains-solved-paper-gs-3","tag-fdi","tag-general-studies-3","tag-previous_year_questions","tag-upsc","tag-upsc-mains-question-paper","tag-upsc_preparation_strategy"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/posts\/24665","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/users\/17"}],"replies":[{"embeddable":true,"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/comments?post=24665"}],"version-history":[{"count":1,"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/posts\/24665\/revisions"}],"predecessor-version":[{"id":24667,"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/posts\/24665\/revisions\/24667"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/media\/24666"}],"wp:attachment":[{"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/media?parent=24665"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/categories?post=24665"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/tags?post=24665"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}