The QWERTY Path for FDI in India?

Abstract

The paper examines the issue of FDI in relation to a path dependence that is expressed in distinctly different policies and effects of economic liberalisation in India and elsewhere. Looking at India, where it has taken over forty years of independence and the imperatives of a financial crisis, mainly the balance of payment deficit, to undertaking its own package of liberalisation, the paper argues that the FDI scene in India presents both smart adaptation to changing global financial environment and habitual indifference to inherited internal imbalances. The question of FDI in retail trade is then examined in the light of regional disparities to account for the lack of consensus among the states in India. Recognising that FDI has a wide range of impact on the country’s economic policy the paper identifies the necessities of enlarging the diversity of FDI, besides its growth, and of proactive measures on the part of the government to address regional disparities in infrastructure sector’s requirements to derive healthy spill over benefits of FDI in India.