Changes in FDI policy for smoothening of investment

The Foreign Direct Investment (FDI) scenario in India is currently witnessing a gradual shift with liberalized reforms over the last few years and an attractive investment climate making a positive impact on the inflow. With a steady increase in volume of FDI, India has attracted more than 90 countries till 2010 (29 countries in 1991) across the globe to invest in India, making it one of the top investment destinations in the world. Investment into India could mostly follow the automatic route with no licenses or permissions required bypassing the current practice of many investments needing to be approved by Foreign Investment Promotion Board. The policy of FDI liberalisation has proved beneficial to provide diversification and sustainable development to the Indian economy and specifically retail sector, which is considered to be one of the significant pillars of economy. Furthermore, for continuous growth of the economy, it seems vital to encourage more investment in other sectors by liberalising the restrictive policies. This paper tries to identify the historical and current situation of FDI inflows to India. Also, some areas which need improvement are also highlighted so that it can open gates for more and more investors to invest in India through FDI two that India could become and remain as a favourite destination of FDI investment across the globe.