Foreign Direct Investment

Why it matters

• Acts as a critical source of non-debt financial resources for economic development.
• Facilitates the transfer of advanced technology, management expertise, and global best practices to the host economy.
• Promotes industrialization and employment generation by integrating domestic markets into global supply chains.
• Enhances the competitiveness of the domestic industrial sector through increased capital formation.

How it is asked

Focus on the distinction between FDI and Foreign Portfolio Investment, the role of the automatic versus government approval routes, sectoral caps, and the impact of FDI on the balance of payments and domestic manufacturing capacity.