Impact of Fdi in Indian Retail Sector
FDI
Foreign direct investment (FDI) or foreign investment refers to the net inflows of investment to acquire a lasting management interest (10 percent or more of voting stock) in an enterprise operating in an economy other than that of the investor. In other words, FDI or Foreign Direct Investment is any form of investment that earns interest in enterprises which function outside the domestic territory of the investor. It is the sum of equity capital, reinvestment of earnings, other long-term capital, and short-term capital as shown in the balance of payments. It usually involves participation in management, joint-venture, transfer of technology and expertise.
Consistent economic growth, de-regulation, liberal investment rules, and operational flexibility are all factors that influence the inflow of Foreign Direct Investment, or FDI.
FDIs require a business relationship between a parent company and its foreign subsidiary. Foreign direct business relationships give rise to multinational corporations. For an investment to be regarded as an FDI, the parent firm needs to own at least 10 percent of the ordinary shares of its foreign affiliates. The investing firm may also qualify for an FDI if it owns voting power in a business enterprise operating in a foreign country.
Types of FDI
FDIs can be broadly classified into two types: outward FDIs and inward FDIs. This classification is based on the types of restrictions imposed, and the various prerequisites required for these investments.
An outward-bound FDI is backed by the government against all associated risks. This form of FDI is subject to tax incentives as well as disincentives of various forms. Risk coverage provided to the domestic industries and subsidies granted to the local firms stand in the way of outward FDIs, which are also known as 'direct investments abroad.'
Economic factors encourage inward FDIs including interest loans, tax breaks, grants, subsidies, and the removal of restrictions and
Foreign direct investment (FDI) or foreign investment refers to the net inflows of investment to acquire a lasting management interest (10 percent or more of voting stock) in an enterprise operating in an economy other than that of the investor. In other words, FDI or Foreign Direct Investment is any form of investment that earns interest in enterprises which function outside the domestic territory of the investor. It is the sum of equity capital, reinvestment of earnings, other long-term capital, and short-term capital as shown in the balance of payments. It usually involves participation in management, joint-venture, transfer of technology and expertise.
Consistent economic growth, de-regulation, liberal investment rules, and operational flexibility are all factors that influence the inflow of Foreign Direct Investment, or FDI.
FDIs require a business relationship between a parent company and its foreign subsidiary. Foreign direct business relationships give rise to multinational corporations. For an investment to be regarded as an FDI, the parent firm needs to own at least 10 percent of the ordinary shares of its foreign affiliates. The investing firm may also qualify for an FDI if it owns voting power in a business enterprise operating in a foreign country.
Types of FDI
FDIs can be broadly classified into two types: outward FDIs and inward FDIs. This classification is based on the types of restrictions imposed, and the various prerequisites required for these investments.
An outward-bound FDI is backed by the government against all associated risks. This form of FDI is subject to tax incentives as well as disincentives of various forms. Risk coverage provided to the domestic industries and subsidies granted to the local firms stand in the way of outward FDIs, which are also known as 'direct investments abroad.'
Economic factors encourage inward FDIs including interest loans, tax breaks, grants, subsidies, and the removal of restrictions and