Essay on Positive and negative impact of FDI in India

Free 521 words essay on positive and negative impact of FDI (Foreign Direct Investment) in India for school and college students.

Liberalization is a powerful tool that has helped in the development of the economy of the nation and GDP as well. There are developed countries that directly invest in developing or underdeveloped countries to pour money and get the maximum returns. FDI or we call it Foreign direct investment has both the advantages and the disadvantages.

Essay on Foreign Direct Investment

Let us look at the impact of FDI in India

Positive Impact of Foreign Direct Investment in India:


  • With the introduction of foreign direct investment in the country, market competition increases to a considerable level and local companies plus MNCs starts working to deliver their best.
  • It is good for the localities to save their money and time on upgrading infrastructure. Companies with FDI will give everything installed. Localities just need to serve them.
  • This method is considered best for the companies containing a huge amount of foreign exchange reserves.
  • FDI shakes the monopolistic nature of local companies. This is beneficial for the customers and for the sellers as well.
  • With the increasing market competition, vendors will become more active and provide their best services without any fraud.
  • Localities professional skills are enhanced when they work with foreign investors.
  • Local Employees’ productivity gets improved.
  • Developing country gets an additional benefit of working with a developed nation’s company
  • Organizations from developed countries pay tax to the local government and buy or sell raw material for designing finished products and services.
  • Best option for developing countries to present their country in a different way
  • Makes a developed country, an ultimate spot for exports of goods and services.
  • FDI is good investment trick especially for the organization making an investment in employing local employees. Their salaries are cost-effective and output quality is comparatively higher.
  • For local business, owners, FDI takes all of the hassles and they do not have to struggle with the production cost.


Negative Impact of Foreign Direct Investment in India:


  • Exploitation of workers: Introduction of FDI in developing countries like India exploits the workers. They are forced to work for long hours without any insurance coverage like facilities.
  • Good to bad shift: FDI transfers manufacturing base of a company from a developed country to an underdeveloped or developing one. This although saves their money but they end up compromising with the workplace.
  • The main purpose of introducing FDI in a country is to drain money from the local residents.
  • Net profits are transferred to the already developed nation so FDI is nothing but giving foreign companies a chance to flourish and expand their base in our country.
  • Small-business owners suffer a lot due to the introduction of FDI in their country.
  • Local companies find it difficult to exist.


Wrapping Up:
Foreign Direct Investment is a kind of blessing for countries that are looking for integrating latest technologies to earn profits. It can only be permitted, if its negative impact on the country is ignored and more focus is laid on the positive impact that it does in the country.

Tags: positive and negative impact of fdi on indian economy, positive and negative impact of fdi in india, impact of fdi on india, fdi positives and negatives

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