The Liberalization of Foreign Investment Policy in the 90’s Lead to a Virtual Scrapping, of FERA, 1993. Is it true? Why?

Through the dilution of FERA, 1973, the unprecedented liberalization of the foreign investment policy in India in 90’s has given an altogether new image to the country regarding the investment destination for foreign investments. There has been a remarkable upsurge in the magnitude of foreign collaboration approvals in the 90’s due to multiple increase in both technical and financial collaborations. Foreign collaborations involving foreign investment as a proportion of total foreign collaborations has increased steadily. Another development is that foreign direct investment is flowing into diversified sectors of the Indian economy.

The two major sectors which account for the bulk of foreign investment approved during 1991-96. are Telecommunications and fuels. Transportation industry, food processing industries, chemicals, electrical equipment’s, service sectors are the other major sectors attracting much of the foreign investment approved. The diversified foreign investments and collaborations may further strengthen the diversified industrial structure of Indian economy.

As far as the origin . of foreign investment is concerned in the 90’s there has been much more geographical diversification. Many more industrialized and industrializing countries are increasing tuning towards India for investment. Today India attracts foreign investments front as many as 80 countries across the world. India has been experiencing a significant increase in the magnitude, wider dispersion in-terms of origin and direction of foreign investment in the post-reform period. The actual inflow of foreign direct investment also gone up in the post-reform period. It brings out clearly that the liberalization of India’s foreign investment and collaborations in the 90’s lead to a virtual scraping of FERA; 1993.

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