Shaping Foreign Direct Investment (FDI) Policy 2022 through “Tax Incentives” in India
Keywords:
Tax incentive, Foreign Direct Investment, MNCs & Allowances, IT Act 2000Abstract
Foreign Direct Investment (FDI) is vital to a country's economic growth and development in the current globalised environment. Tax holidays, investment tax exemptions, depreciation allowances, and other incentives have been provided by the Indian government to spur economic growth and entice foreign direct investment. Foreign investors are often interested in capitalising on disparities in tax rates across nations. This has heightened the rivalry among governments to attract foreign investment via tax incentives. Some studies find that developing nations do not need to give tax incentives to attract Foreign Direct Investment (FDI) since the choice to invest in a country relies on its overall investment environment and other criteria. On the basis of a review of theoretical and empirical results, this study seeks to assess the impact of using various corporate tax incentives on Foreign Direct Investment in India. Through an in-depth research, it is possible to conclude that, despite the lack of empirical evidence about their efficacy, tax incentives play a crucial part in the policy initiatives that are used to attract foreign investors.
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