The Sensible Arya

By The Sensible Arya Foreign Direct Investment (FDI) is often celebrated in India as a symbol of economic progress—bringing in foreign capital, modern technology, and employment. However, beneath this optimism lies a critical economic risk. Unchecked FDI can damage sovereignty, destabilize currency, create monopolies, and weaken domestic innovation. While India opened its doors wide with minimal checks, China carefully engineered its FDI policy to extract maximum benefit without surrendering control. This article explores the often-ignored dangers of FDI and how China strategically avoided them while India fell into the very traps FDI critics have long warned about.   Common Disadvantages of FDI There are several dangers associated with unchecked or mismanaged FDI. The most obvious one is capital flight —foreign investors bringing in dollars, converting them into rupees via the RBI, and later demanding those dollars back along with profits. If done en masse, this causes a foreign e...