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this articles page no 91 The adoption of the market economy heralded a new era
in which States came to occupy a strategic position in Indias market led
economy. The Centre has even gone to the extent of encouraging states to
negotiate loans / FDI with overseas banks / institutions directly since the
1990s. With the Centres grants in aid no longer being seen as the only source
for financing their expenditure States compete to attract FDI. And positively
so the Centre is not being seen as an obstacle but as a facilitator. Still approval
for FDIs is centralized with the DPIIT being the nodal Ministry at the centre
for FDI approvals. In many cases the DPIIT has to transfer the proposal for FDI
licensing to the other central Ministries in whose Rules of Business the
subject matter of proposal may fall . In proposals where land border issues or
security issues arise the concurrence of other nodal ministries may also be
sought. Paradiplomacy by the States Foreign economic policy is no longer a
central preserve with the emergence of paradiplomacy by the States. Economic
globalization has made it possible for the States to interact with respective
investors in foreign countries in a de facto sense if not in a de jure sense.
Investment promotion activities abroad indicate this fact. Such initiatives
have helped some states in their economic development and reduced their
financial dependence on the Centre. The decision of the Gujarat Government in
2014 to set up international desks independently in USA China Japan for
facilitating “INVEST IN VIBRANT GUJARAT” by overseas investors is perhaps the
first attempt by any state to start overseas facilities to attract FDI
directly. However such enterprise may also raise issues for the sovereignty or
security of the country considering that India is largely surrounded by
neighbours who are hostile and we face the challenge of reconciling the demands
of opening up further in a globalised economy with related security concerns. Competition
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