Theme T130 · Indian Economy

Liberalisation & FDI: retail, defence, Indian firms vs MNCs

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What UPSC asks

UPSC asks why India needs FDI and why MoUs don't become investment, FDI in defence and multi-brand retail, and whether Indian firms compete with MNCs after liberalisation.

Prepare these

• FDI policy: automatic vs government route
• MoU–actual FDI gap: land, approvals, policy uncertainty
• FDI in defence and multi-brand retail: caps and effects
• Liberalisation effects on Indian firms

Answer writing

• Pros, cons, reforms

Directive words in these PYQs: Discuss (2), Justify (1), Suggest (1), Why (1), Examine (1).

Linked themes

Builds on: study these first

These come earlier in the roadmap. Questions in this theme use them.

Syllabus lines covered

• GS3-L8 — Effects of liberalization on the economy, changes in industrial policy and their effects on industrial growth.

All 4 PYQs, newest first

1. GS32016GS3-ECO-05-M2016-S01

   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.

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2. GS32014GS3-ECO-05-M2014-S01

   Foreign Direct Investment (FDI) in the defence sector is now set to be liberalized. What influence this is expected to have on Indian defence and economy in the short and long run?

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3. GS32013GS3-ECO-05-M2013-S01

   Examine the impact of liberalization on companies owned by Indians. Are they competing with the MNCs satisfactorily? Discuss.

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4. GS32013GS3-ECO-05-M2013-S02

   (a) Discuss the impact of FDI entry into Multi-trade retail sector on supply chain management in commodity trade pattern of the economy. (b) Though India allowed Foreign Direct Investment (FDI) in what is called multi-brand retail through the joint venture route in September 2012, the FDI, even after a year, has not picked up. Discuss the reasons.

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