In the New Industrial Policy 1991, Direct foreign investment upto _____% of equity in high priority industries was allowed.

The correct answer is 51%.

Key Points

• The New Industrial Policy of 1991 was a significant shift in India's economic strategy towards liberalization and globalization.
• It allowed direct foreign investment up to 51% of equity in high priority industries.
• This policy aimed to attract foreign investment and modern technology to boost industrial growth.
• The move was intended to make Indian industries more competitive globally.
• This policy also marked the beginning of the end of the License Raj system in India.

Additional Information

• License Raj
  • The term refers to the elaborate system of licenses, regulations, and accompanying red tape that were required to set up and run businesses in India between 1947 and 1990.
  • It was characterized by extensive government control and regulation of the economy.
• Liberalization
  • Refers to the relaxation of government restrictions, usually in areas such as social, political, and economic policies.
  • Economic liberalization often includes measures like reducing tariffs and trade barriers to allow for a free flow of goods and services.
• Globalization
  • It is the process by which businesses or other organizations develop international influence or start operating on an international scale.
  • It aims to foster global economic integration and interdependence.
• Foreign Direct Investment (FDI)
  • FDI refers to an investment made by a firm or individual in one country into business interests located in another country.
  • It is a critical driver of economic growth and employment generation in the host country.