DMPQ: FDI is good for a Country like India. But FDI is also not immune from criticism. Discuss the ill effect of FDI.

Foreign direct investment (FDI) is an investment made by a company or individual in one country in business interests in another country, in the form of either establishing business operations or acquiring business assets in the other country, such as ownership or controlling interest in a foreign company.


Concerns with FDI:


FDI has always been a controversial economic subject in India with strong voices of both support and opposition assiduously defending their respective cases. FDI is a double edged sword with both merits and demerits.

  • The threat to the small and medium industries because of advanced technology and huge investment position of multinational would become very strong in the market.
  • Unbalanced development of country foreign investor always looking to invest in that territory which is already developed and because of this attitude major industries get concentrated in the particular territory of the country.
  • Fear of establishment of monopoly if any foreign company which is technically and financially strong enter in Indian market then there is the possibility that Indian companies may not able to compete with that foreign company and it could establish its monopoly in the particular sector.
  • It has also been argued that FDI would not result in job creation for illiterate and semiliterate people. The number of such people in India is high which gives credence to such arguments.
  • It is also pointed out that the big retail companies like Walmart are only going to move the jobs from the unorganized to the organized sector without any significant enhancement in the number of jobs.
  • Disincentive to the development of indigenous technology we are always looking towards a foreign company or foreign country for the acquisition of advanced technology.
  • Many critics of the FDI have argued that the entry of big foreign companies in India would place the farmers completely under their control.


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