Direct Foreign investment is an investment made by an individual or a company in another country’s business. This entity is not a resident of the nation where the investment is made. Foreign direct investment is more than just a transfer of capital; the concept of controlling ownership distinguishes it. It is therefore differentiated by direct oversight over international portfolio investment. Overseas direct investment is a vital engine of economic growth. Foreign direct investment, in addition to stock inflows, brings in management knowledge, technical know-how, new employment possibilities, upgraded infrastructure, and new technologies.

 Foreign investors have two options for investing in India: the Automatic Way and the Government Route. There is no need for prior government permission under the automated approach. The government approach, on the other hand, requires prior clearance from the government.

 According to the Economist Business Environment, India ranks 64th out of 82 nations regarding the investment climate. The government has made extraordinary reform efforts, which are especially laudable given the size of the country’s economy. Yet, the government still has various foreign investment restrictions, enormous bureaucracy, and high levels of corruption. Yet, given India’s expanding population and its massive e-commerce and technical sectors, activity in both areas is projected to increase in the coming years. Among recent significant investments, we have seen the USD 1.575 billion mergers of Sony Pictures Networks India, a subsidiary of Sony Pictures Entertainment Inc., and Zee Entertainment Enterprises.

 The Indian government gives tax and non-tax investment incentives in certain industries (electronics) and areas (Northeast region, Jammu & Kashmir, Himachal Pradesh and Uttarakhand). It has also provided incentives for industrial firms to establish themselves in Special Economic Zones (SEZ), National Investment & Manufacturing Zones (NIMZ), and Export Oriented Units (EOUs). Furthermore, each state government has a policy that provides extra investment incentives, such as subsidised land prices, attractive interest rates on loans, lower electric power supply tariffs, tax breaks, etc. State industrial development and central government development banks provide medium to long-term loans for new projects.

 It is a deeply established and extremely successful democratic regime in India that maintains a peaceful and stable political environment. A well-developed government, an independent judicial system, and a huge landscape makes the country a resource repository. India’s customer base is constantly expanding, making it one of the world’s largest manufactured goods and services markets. India’s proximity to important production sites and suppliers further minimizes development costs. These elements make it an excellent platform for multinational corporations to sell to other high-growth emerging countries. In terms of openness and compliance, “Transparency International” ranked Indian corporations first among developing market multinationals.

 The government has lately loosened FDI policy in a range of industries by increasing the foreign investment ceiling, relaxing requirements for investment and putting numerous sectors on the ‘automatic path’. Reforms to clean up the banking sector have been enacted, but they will take time and may impact credit supply. While the budget deficit and public debt remain significant, the government has tried to minimise them. The adoption of the GST (Goods and Services Tax) is the most significant of these measures to increase tax collections and make the economy more competitive in the long run.