"To keep pace with industrial development, it has become necessary to create a better and more conducive atmosphere for increased inflow of foreign investment and capital in the country." Explain the statement in the con

Industrialization is a major objective of developing countries as a means to the attainment of higher levels of economic well-being of the people. Advancement of science and technology provides the stimulus to achieve faster industrial growth. After four and half decades of strongly inward oriented policies, India began opening up of its economy to foreign trade and investment with the announcement of New Industrial Policy in July 1991. The New Industrial Policy sought to prepare Indian industry for meeting the challenges of globalization. The reforms aim at generating a market orientation for the hitherto highly regulated domestic economy by deregulating the domestic economy to provide Indian industry with greater flexibility to respond to competitive pressures by reducing costs and improving quality. The New Industrial Policy has injected a substantial measure of competitive environment and market thrust to industry. Many areas earlier reserved for the public sector are now open to private sector participation. The restrictions on the expansion of large industrial houses have been removed. Licensing requirements for industries have been abolished except for a few strategic and defence industries. The policy reforms towards Foreign Direct Investment (FDI) began with a radically new approach to FDI in the very first year of the implementation of New Industrial Policy. The new regime permits FDI in virtually every sector of the economy. Foreign equity proposals need not be accompanied by technology transfer as required earlier. Royalty payments have been considerably liberalised, no restrictions on the use of foreign brand name/trademarks for internal sale. In view of the major changes introduced in the Indian economy and the liberalization of Industrial and trade policies consistent with the fast changing international economic and trade relations, it has become necessary to create a better and more conducive atmosphere for increased inflow of foreign investment and capital in the country to accelerate industrial growth and promotion of trade, with greater emphasis on export.