ARYABHATTA INSTITUTE OF MANAGEMENTARYABHATTA INSTITUTE OF MANAGEMENT

Foreign Direct Foreign Direct InvestmentInvestment

Submitted By:Submitted By: Parneet WaliaParneet Walia 9520223917595202239175

MBAMBA

What is mean by FDIWhat is mean by FDI Foreign direct investmentForeign direct investment ( (FDIFDI) or ) or

foreign investment refers to long term foreign investment refers to long term participation by country A into country participation by country A into country B. It usually involves participation in B. It usually involves participation in managementmanagement, , joint-venturejoint-venture, , transfer of technologytransfer of technology and and expertiseexpertise. . FDI is made to serve the business FDI is made to serve the business interests of the investor in a company, interests of the investor in a company, which is in a different nation distinct which is in a different nation distinct from the investor's country of origin. from the investor's country of origin.

An FDI May beAn FDI May be an individual; an individual; a group of related individuals; a group of related individuals; an incorporated or an incorporated or

unincorporated entityunincorporated entity; ; a a public companypublic company or or private companyprivate company; ; a group of related enterprises; a group of related enterprises; a government body; a government body; an an estate (law)estate (law), trust or other social , trust or other social

institution; or institution; or any combination of the above. any combination of the above.

Types of FDI

Inward Outward Horizontal Vertical

Reasons of FDIReasons of FDI

Capital resources.Capital resources. Markets.Markets. Cheap Cost of resources.Cheap Cost of resources. To promote the business.To promote the business. Govt. policies.Govt. policies. For the Growth of the Country.For the Growth of the Country.

Methods of FDIMethods of FDI By incorporating a wholly owned subsidiary By incorporating a wholly owned subsidiary

or company or company By acquiring shares in an associated By acquiring shares in an associated

enterprise enterprise Through a merger or an acquisition of an Through a merger or an acquisition of an

unrelated enterprise unrelated enterprise Participating in an equity joint venture with Participating in an equity joint venture with

another investor or enterpriseanother investor or enterprise Licensing and technology transfer. Licensing and technology transfer. Reciprocal distribution agreements.  Reciprocal distribution agreements.  Portfolio investment. Portfolio investment.

Benefits of FDIBenefits of FDI Economic development of the host Economic development of the host Transfer of technology Transfer of technology Development of human capital Development of human capital

resources resources Creation of jobs Creation of jobs Opening export window / TradeOpening export window / Trade Development of HR of an Development of HR of an

organization.organization. Provides finance.Provides finance.

Disadvantages of FDI Disadvantages of FDI

Company may lose ownership.Company may lose ownership. Difference in language and culture .Difference in language and culture . Policies adapted may not be Policies adapted may not be

appreciated /lack of control.appreciated /lack of control. Adverse effects on competition. Adverse effects on competition. Local market is affected badly.Local market is affected badly. Technological disadvantage. Technological disadvantage.

ConclusionConclusion

Although FDI have so many Although FDI have so many disastrous affects upon host country disastrous affects upon host country but it has so many advantages to but it has so many advantages to both the countries . In previous years both the countries . In previous years we had seen large no. of FDI in India we had seen large no. of FDI in India because of liberated policies of Govt. because of liberated policies of Govt. So, govt. should adopt corrective So, govt. should adopt corrective measures to promote FDI.measures to promote FDI.