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Submitted byAnukrati Gupta BBM Sec A Sem v ICG/2010/10271

especially between countries of relatively equal economic stature.  .  Foreign investment typically works both ways.  It denotes that foreigners take a somewhat active role in management as a part of their investment.Flows of capital from one nation to another in exchange for significant ownership stakes in domestic companies or other domestic assets.

foreign capital is required as a temporary measure.  .  Foreign capital also brings with it other scarce productive factors like technical know how.Domestic capital is inadequate for the purpose of economic growth  During the period in which the capital market is in the process of development. business experience and knowledge.

•Liaison office / representative office : liaison office acts as a channel of communication between the principal place of business or head office and entities in India •Project office :Foreign Companies planning to execute specific projects in India can set up temporary project/site offices in India •Branch office :Foreign companies engaged in manufacturing and trading activities abroad areallowed to set up Branch Offices in India .

Home grown demand  Population  Business protection  Well regulated and deep capital markets  .

Foreign direct investment Foreign portfolio investment .

. It refers to cross-border investment made by a resident in one economy (the direct investor) with the objective of establishing a lasting interest in an enterprise that is resident in a country other than the direct investor.

 . Investments may be made directly or through institutional investments (say FIIs).  Such investments can be in the form of bonds (convertible and non-convertible) as well as equity (say in the form of ADRs/ GDRs).Portfolio investment represents purchases and sales of foreign financial assets such as stocks and bonds that do not involve a transfer of management control.

Countries Mauritius Others Singapore 43% USA UK 3% 3% 4% 4% 5% 8% 9% 21% Netherlands Cyprus Japan Germany .

.Brazil  European countries like Norway. UK.  . Switzerland  Mexico  Saudi Arabia  China  South Africa and many more.