Justify the need for FDI for the development of the Indian economy. Why there is gap between MOUs signed and actual FDIs? Suggest remedial steps to be taken for increasing actual FDIs in India.

Foreign Direct Investment (FDI) is a non-debt-creating, long-term inflow that brings capital, technology and management know-how. For a savings-scarce, capital-hungry economy like India, it complements domestic investment.

Need for FDI

• It bridges the savings-investment gap and finances the current account deficit without adding to external debt.
• It transfers advanced technology, best practices and global market access, raising productivity.
• It creates employment and strengthens infrastructure and manufacturing under initiatives like Make in India.

Why MoUs and actual FDI diverge

• MoUs are non-binding expressions of intent; many lapse at the implementation stage.
• Delays in land acquisition, environmental and other clearances stall projects.
• Policy uncertainty, retrospective taxation fears, poor infrastructure and contract-enforcement delays deter conversion.

Remedial steps

• Single-window clearance and time-bound approvals, as advanced by the National Single Window System.
• Stable, predictable tax and regulatory policy; faster commercial dispute resolution.
• Investor facilitation cells, plug-and-play infrastructure and improved logistics.

Conclusion

Closing the MoU-to-realisation gap needs less about signing more MoUs and more about ease of doing business, so that investment intent translates into projects on the ground.