The Role of Private Foreign Capital in the Growth and Development of Developing Economies with Special Reference to India: Some Key Issues and Policy Options

Factors that attract foreign capital inflows are analysed. These are free repatriation of dividends and profits, protection of dividends property rights and guarantees against uatioualisatio11. Indian foreign investment policies compare well with most Asian countries except in two things; one is the absence of Intellectual Property Rights Laws and the other is bureaucratic red tapism. To tackle these two hurdles, the Government of India has taken numbers of steps. It has been observed that to set up a power project, 42 approvals are required from various Central and State Agencies. The cooperation between states and centre in terms of FDI approval is lacking. Finally it is worth noting that in case of many, foreign controlled companies more than 3/4th of foreign equity is made up of bo111ts shares to the foreign pro11wters with the result that exchange outgo exceeded by 1988 its inflow.