Foreign Direct Investment in Strategic Sectors of India: A Study on the Role of Reforms and Sectoral Guidelines

By : Niti Bhasin

Page No: 227-234

Abstract
Since the onset of globalization, India has progressively adopted liberalized investment policies to facilitate the growth of foreign direct investment (FDI).The initial policy stimulus to FDI in India came in July 1991 when the New Industrial Policy provided, inter alia, automatic approval for projects with foreign equity participation up to 51 per cent in high priority areas. Ever since, the government has kept the momentum of reforms going with measures being announced from time to time to further facilitate and broaden the base of FDI in India. This paper analyses the FDI policy for some strategic sectors of the Indian economy, viz.,agriculture, manufacturing, defence and financial services, and examines the role of sectoral policy on FDI prospects of the economy. Realizing the importance of various strategic sectors in building a robust economy, the government has progressively put more sectors and sub-sectors on the automatic route for speedy execution of FDI proposals. Further, the FDI ceiling for many of these sectors has also been raised to generate greater interest in investing high-end technology and know-how.

Authors :
Niti Bhasin : Associate Professor, Department of Commerce, Delhi School of Economics, University of Delhi.