Foreign investment is one of the vital factors in the Indian economy and seems to be an input to develop and grow the economy in general. It is quite much required for bringing in the cash flow to the sectors of manufacturing, technology, and infrastructure. FDI is considered the gateway for transferring the technologies, skills, and management systems directly or indirectly leading to productivity improvement and efficiency improvement. There is employment generation followed by skill development in such cases.

Foreign investment increases the foreign exchange reserves in India and later manages stability in the currency with less dependency on external borrowing. Competition leads to better quality products and services for consumers. It also brings into the fold of global supply chains and creates opportunities for export.

Thus, problems arise. One is that too much foreign capital dependency makes the economy susceptible to external shocks. The other is that, in certain sectors showing obvious foreign dominance, questions about national interest and national security may raise their heads. In addition, foreign enterprises’ profit repatriation limits the reinvestment of domestically earned income.

Foreign investment is playing a very important role in keeping the economy of India going, but these investments have to be balanced with perfectly intelligent policies to derive maximum benefits while decreasing any risks involved.