ARYABHATTA INSTITUTE OF MANAGEMENT

Foreign Direct Investment
Submitted By: Parneet Walia 95202239175 MBA

What is mean by FDI
Foreign direct investment (FDI) or FDI) foreign investment refers to long term participation by country A into country B. It usually involves participation in management, joint-venture, management, joint-venture, transfer of technology and expertise. FDI is made to expertise. serve the business interests of the investor in a company, which is in a different nation distinct from the investor's country of origin.

An FDI May be 
      

an individual; a group of related individuals; an incorporated or unincorporated entity; entity; a public company or private company; company; a group of related enterprises; a government body; an estate (law), trust or other social (law), institution; or any combination of the above.

Types of FDI

Inward

Outward

Horizontal

Vertical

Reasons of FDI 
    

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

Methods of FDI  

  

 

By incorporating a wholly owned subsidiary or company By acquiring shares in an associated enterprise Through a merger or an acquisition of an unrelated enterprise Participating in an equity joint venture with another investor or enterprise Licensing and technology transfer. Reciprocal distribution agreements. Portfolio investment.

Benefits of FDI 
     

Economic development of the host Transfer of technology Development of human capital resources Creation of jobs Opening export window / Trade Development of HR of an organization. Provides finance.

Disadvantages of FDI 
  

 

Company may lose ownership. Difference in language and culture . Policies adapted may not be appreciated /lack of control. Adverse effects on competition. Local market is affected badly. Technological disadvantage.

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

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