Department of Industrial Policy and Promotion (DIPP) was set up in 1995. DIPP, now chaired by Raman Roy, falls under the Ministry of Commerce and Industry (Suresh Prabhu is the Cabinet Minister heading it). One of the functions of DIPP is monitoring and promoting Foreign Direct Investment or FDI. FDI is long term investment by a foreign government or corporate in India’s industry or business. FDI plays a strong role in a country’s development and GDP growth. China had and continues to attract huge FDI. India is also high on this list and has been consistently occupying either first or second place in this list.

According to the DIPP data for the year 2017-18, India has received USD 44.85 b of FDI. This is a growth of only 3% over the year 2016-17.

This growth rate in FDI of only 3% is the lowest in the last five years. It is a matter of concern for the nation. Now let’s see why FDI inflows are important for us:

1. FDI infusion in the domestic industry works as a trigger for the domestic investment in economy.

2. FDI also works as a trigger for the government spending.

3. Increasing FDI inflows give a positive signal to the international markets about the business and economic environment of that country.

4. It positively impacts a country’s international rating.

5. It helps a country assimilate best practices.

6. Higher FDI inflows serve as an indication that the policies of the recipient country are open, transparent and forward looking.

As this is so important for us, the respective governments make conscious efforts to facilitate FDI inflows. Ease of doing business indicator where India has done well during 2017 is one such effort.

Outflows from India were USD 11 b during 2017-18.