FOREIGN DIRECT INVESTMENT

ININDIA

What is FDIA foreign direct investment (FDI) is a controlling ownership in a business enterprise in one country by an entity based in another country.

FDI In IndiaFDI means Foreign Direct Investment which is mainly dealings with monetary matters and using this way they acquires standalone position in the Indian economy. Their policy is very simple to remove rivals. In beginning days they sell products at low price so other competitor shut down in few months. And then companies like Wall-Mart will increase prices than actual product price.

Types of FDI•Horizontal FDI arises when a firm duplicates its home country-based activities at the same value chain stage in a host country through FDI.•Platform FDI Foreign direct investment from a source country into a destination country for the purpose of exporting to a third country.•Vertical FDI takes place when a firm through FDI moves upstream or downstream in different value chains i.e., when firms perform value-adding activities stage by stage in a vertical fashion in a host country.

 

Methods of FDIThe foreign direct investor may acquire voting power of an enterprise in an economy through any of the following methods:• by incorporating a wholly owned subsidiary or company anywhere• 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

AdvantagesIncrease economic growth by dealing with different international products

• 1 million (10 lakh) employment will create in three years - UPA Government

• Billion dollars will be invested in Indian market

• Spread import and export business in different countries

• Agriculture related people will get good price of their goods

Disadvantages• Will affect 50 million merchants in India• Profit distribution, investment ratios are

not fixed• Workers safety and policies are not

mentioned clearly• Market places are situated too far which

increases traveling expenses

• An economically backward class person suffers from price raise• Retailer faces loss in business• Inflation may be increased• Again India become slaves because of FDI in retail sector

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