India is a suitable place for investment as FDI? How Govt. is encouraging investor & India's benifit

2. Q.Do you think India is a suitable place for investment as FDI? How Govt. is encouraging investors and how India will be benefited by this?

Investment is one of the most important determinants of economic growth and when we speak of India internationally, it has become one of the most suitable place for invest as FDI.

There are various reasons why investors get interested in FDI in India –

i. India has stable government, Strong economic growth, and robust domestic demand.

ii. Govt. had provided many benefits for new investment in budget 2020 such as:

Govt. slashed the corporate tax rate to 20% from 30% for existing companies & for new companies tax rate has been reduced to 15% from 25%.

iii. Many relaxation in FDI norms encourages FDI..

iv. Youth and cheaper labour force encourages FDI.

v. The domestic market size of India is huge that’s why all MNCs are committed to the Indian market.

vi. The domestic economy of India is strong enough to sustain demand and inflation. This economic performance encourages FDI.

Benefit of India from FDI:

i. Increase employment and economic growth(GDP)

ii. Human Resource development.

iii. Development of backward areas in the country.

iv. Increasing exports.

v. Exchange rate stability maintains.

vi. Improve capital flow and creation of competitive market.

The output of FDI is profitable from both side, India is earning revenue (Tax) whereas the MNC’s are earning profit from Indian market.


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