9.11. Gaps Between MoUs and FDI

♤ In recent years, foreign investors have shown a lot of interest in Indian economy owing to its large market size and have signed many MoUs with India to bring in the investment. However, many of these MoUs did not get converted into actual FDI due to plenty of drawbacks.

o Poor ease-of-doing-business scenario in India leading to unsuitable investment climate.

o Lack of robust physical infrastructure such as road-rail connectivity

o Complex labour and contract enforcement laws

o Perception of tax terrorism.

o High Fiscal deficit and policy paralysis post 2009-10.

♤ Understanding the need of FDI in country, Governments at every federal level has formulated and implemented incremental reforms to attract FDI.