“Many Multinational Corporations (MNCs) have recently shifted their production from China to India, which has boosted the ‘Make in India’ plan.”

Assuming other factors being constant, discuss the effects of the given statement on foreign exchange rates with reference to the Indian economy.

Assuming all other factors constant, the investments by Multinational corporations (MNCs) to boost ‘Make in India’ plan is likely to improve the situation of Balance of Payments (BoP) of India as it may increase the domestic production and promote net exports. This may lead to greater inflow of foreign exchange, thereby leading to appreciation of domestic currency.