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Fdi Related Issues
2/21/13

What is FDI - Issues Relating to FDI in Retail in India

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FDI in India by Rajesh Goyal For Knowledge Level I : What is the full form of FDI : The full form of FDI is Foreign Direct Investment. What is the meaning of FDI ? The Foreign Direct Investment means “cross border investment made by a resident in one economy in an enterprise in another economy, with the objective of establishing a lasting interest in the investee economy. FDI is also described as “investment into the business of a country by a company in another country”. Mostly the investment is into production by either buying a company in the target country or by expanding operations of an existing business in that country”. Such investments can take place for many reasons, including to take advantage of cheaper wages, special investment privileges (e.g. tax exemptions) offered by the country. Why Countries Seek FDI ? (a) Domestic capital is inadequate for purpose of economic growth; (b) Foreign capital is usually essential, at least as a temporary measure, during the period when the capital market is in the process of development; (c) Foreign capital usually brings it with other scarce productive factors like technical know how, business expertise and knowledge What are the major benefits of FDI : (a) Improves forex position of the country; (b) Employment generation and increase in production ; (c) Help in capital formation by bringing fresh capital; (d) Helps in transfer of new technologies, management skills, intellectual property (e) Increases


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