Abstract
This article evaluates the extent to which the legislative changes relating to foreign exchange that have taken place in India within the last few decades, and in particular after 1991, have made an impact on the presence of foreign firms in the economy. The data cover the period 1957–1958 to 2001–2002, and include the entire population of India’s corporate sector. In the period after reforms commenced in 1991, the number of foreign firms in India has increased very substantially. The transformation of the foreign exchange regulation act (FERA) to the foreign exchange management act (FEMA) in 1999 has had a positive effect in inducing foreign firms to India. The FEMA legislation simplifies the maze of controls, procedures and bureaucratic minutiae that have to be observed by all those undertaking to set up and operate a business in India. The changes in the legislative regimes make India attractive as an investment destination for foreign firms.
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Notes
In keeping with the trend shown, foreign direct investment levels have substantially increased to annualized levels equal to the $11 billion mark, by 2007, with an attribution for this achievement made to changing legislative rules and routines and administrative procedures. In addition, a single investment of $12 billion in India was recently announced by Pohang Steel Company of South Korea, the world’s largest steel manufacturer, to be spread over a 5 year period and to be used for establishing a giant steel plant on India’s eastern coast.
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Majumdar, S.K. Foreign exchange legislation transformation and enterprise demography in India. Eur J Law Econ 25, 39–56 (2008). https://doi.org/10.1007/s10657-007-9037-3
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DOI: https://doi.org/10.1007/s10657-007-9037-3
Keywords
- Corporate demography
- Economic reforms
- Foreign direct investment
- Foreign exchange management act (FEMA)
- Foreign exchange regulation act (FERA)
- Indian industry
- Institutional change
- Transactions environment