Tinkering with FDI

In an ideal situation, the government's policy on foreign direct investment (FDI) should seek to achieve at least two clear objectives. One, the policy should be able to channel more investment flows into the country in greenfield or existing projects. Two, the rules under the policy should be transparent and non-discretionary. It is, therefore, surprising and disturbing that a key change introduced in the government's FDI policy early this month is unlikely to achieve either objective.

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