Foreign Direct Investment Scenario In Infrastructure India

foreign direct investment scenario in infrastructure


Foreign direct investment scenario in infrastructure India- Since time immemorial there has been an unbreakable bond and connection between infrastructure and economic development of a country. It is something which is not a one-time affair but an ongoing process. As the infrastructure of a country progresses, the economic development of that country also grows. There are some of the most important sectors of infrastructure. They have been inflows of FDI. India is assumed to be one of the fastest-growing economies globally and expectedly in a few years, India will grow at a good rate of and this growth is going to increase demand for infrastructural services.

The word infrastructure includes mining, exploration, refining, cold storage, railway, road, airport, telecommunication, etc.

The exclusive jurisdiction of infrastructure was only with the public sector. So the Government came up with the new policy to include the private sector for delivering services of infrastructure. Since then, the private sector has become more very much involved in the delivery of infrastructural services and also takes care of the financing.


Most of the infrastructure depends on huge amount of capital investments. The Government of India has fame such policies as to attract both the foreign and local capitalists to invest in the domestic infrastructural market. Such policies have helped the domestic infrastructure market to be an attractive destination for foreign investors. After China in 2007, India was ranked second as the most beautiful location for investments in global FDI according to the world investment report of UNCTAD. In order to increase inflows of FDI, there are certainly no policies that have been changed by the Indian Government. For example allowing 100% FDI under automatic route in some of the main sectors of infrastructure. The rest of the sectors which need prior approval minimum of 6 to 8 weeks must be kept in hand. Below are the main three sectors which play an important role for the economic development of a country:-

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  1. ROADS AND HIGHWAYS India has 3.34 million kilometers of road network which makes it second-largest in the world and it also provides opportunities for foreign direct investments. The policies of the Government in relation to road sector have been simplified in order to attract more of foreign direct investments. The government also provides various incentives for investors of this sector. Under automatic route 100% FDI is allowed by the Government of India in sectors like Highway bridges, toll roads, vehicular tunnels, cargo handling and construction and maintenance of roads.

FDI in construction all sectors amounted to 6.4 % of the total inflows of FDI according to DIPP. Since 100% FDI is allowed Anna road sector so most of the foreign investors in India are trying to participate in the development of the projects of road sectors in the country. As a result, most of the construction companies are being provided large order books. To allow the private sector to participate in the Government made several reforms in the policy which provides incentives to those sectors. Some of the incentives are that the Government will bear the expenses of the project, duty-free import and modern equipment for road construction, declaring the road sector as an industry, simple rules for borrowing, and complete exemption from customs duties.

  1. TELECOMMUNICATIONS India has more than 903 million users of mobile phones which amounts to the second-largest globally. It also has no more than 121 million users of the internet which amounts to the third-largest globally. India is rapidly growing as a telecom market and giving a very tough competition. This contributes to 2% of the Indian GDP. The telecommunication sector is regarded as an important source for the growth of the economy. This sector also creates huge job opportunities for our youth. Indian telecom sector needs huge amount of capital investment. This sector have achieved a very great development during the last few years and it will surely continue to do so in the near future. The FDI inflows in the sector is a rapidly increasing year by year. In 2000-2001 FDI inflow in the sector was rupees 784.16 crores and it increased to rupees 3938.46 crores in 2001-2002. FDI investors in Indian telecommunication sector was Mauritius on top with more than 66.28 percentage and the next was Singapore with 14.32 percentage. The Government has approved 100% FDI in this sector.
  2. POWER Huge amount of power generation capacity have lead India to stand as fifth globally and the demand for power is growing year after year. Having an abundant supply of power production, India accounts for nearly two-thirds of the power produced in India. It consists of gas, liquefied fuel, and coal. There are some of the reserves for thermal power generation, which are 775 million metric tons of oil reserves, natural gas reserves of 1074 billion cubic meters and reserves of 59 billion tons of mineable coal. Wind, solar, hydro, nuclear, biomass, Industrial waste, etc. are some of the other important sources of power. India has one of the largest reserves for nuclear fuel for nuclear power. 100% FDI under automatic route is allowed by the Government in this sector for power trading, for distribution of electrical energy to household, for non-conventional energy generation and distribution, etc.


After independence, more than 60 years have elapsed but still India is regarded as a developing country for long term growth attitude. however, there are some barriers to disclose such as an enhancing inequality between modern India, urban India, and backward rural India. This behavior is put under control that is if India code distributes equally its resources among rural, urban, and coastal areas India would be regarded as the most powerful country. Provided a better improvement in infrastructure, this economic growth will be easier for India to attain in the near future. It must improve rail, road, electricity, port, and telecommunication skills as it has tremendous potential to do so. The budget passed by the Government must include support to the above sectors so as to improve can add value to the economy of the country. Having attained a valuable position globally, India must not feel satisfied because so more needs to be done in order to ensure that in the near future India will pause a world-class infrastructure. Foreign Direct Investment Scenario In Infrastructure India

Thus we can say that FDI is an important part of economic F a country. Allowing every I FDI investment in infrastructure can attract major FDI inflows in the economy that will help in increasing employment opportunities and decreasing optimum returns and expanding output. The influence of FDI in the infrastructural sector can be used to fill the investment gap and relaxing exercise workforce in the country. Thus the economy of a country can generally receive benefits of globalization and particularly FDI for utilization of investments in the infrastructural sector and filling the investment gaps. FDI infrastructural sector can help the country to acquire advanced technological knowledge and apply it to the infrastructure and generating capital.

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