This document discusses foreign direct investment (FDI). It defines FDI as an investment made by a firm in one country into business interests located in another country, with the intent to manage the foreign asset. Countries seek FDI for reasons such as supplementing inadequate domestic capital, gaining access to technical skills and knowledge from foreign firms, and taking advantage of tax incentives. The document outlines different types of FDI, common methods used to conduct FDI, potential advantages and disadvantages of FDI, and details about India's policies regarding FDI.

1. FDI
(FOREIGN DIRECT INVESTMENT)

2. WHAT IS FDI ALL ABOUT??

3.  FDI occurs when an investor based in one country
(the home country) acquires an asset in another
country ( the host country) with the intent to
manage the asset.
 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.

4. WHY COUNTRIES SEEK FDI ?
 Domestic capital is inadequate for purpose of
economic growth;
 Foreign capital is usually essential, at least as a
temporary measure, during the period when the
capital market is in the process of development;
 Foreign capital usually brings it with other scarce
productive factors like technical know
how, business expertise and knowledge

5. TYPES
 Horizontal FDI :
investment in the same industry
abroad as a firm operates in at home
 Platform FDI : a source country into a destination
country for the purpose of exporting to a third
country.
 Vertical FDI :
It 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

6. METHODS
The 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

7. ADVANTAGES:
 Infrastructure and technology transfer Increased
Productive efficiency due to competition from
multinational subsidiaries
 Employment
 Consumer benefit
 Increase in Savings and Investment

8. DISADVANTAGES:
 Entry of MNC supermarket and hypermarket chains
would cause severe displacement of small and
unorganised shopkeepers and traders
 Large giants of the world try to monopolise and
take over the highly profitable sectors.
 Such foreign companies invest more in machinery
and intellectual property than in wages of the local
people.

9. INDIA FDI
And

10.  It was introduced in 1991 under Foreign Exchange
management act
 Welcomes FDI , but it is not permitted in sectors like
arms & ammunition, Atomic, Railways,coal mining
and many more.
 In certain sectors some restriction are put as in
Insurance companies(26%). ,.

11. TOP 5 COUNTRIES FOR FDI INFLOW IN INDIA
Column1
Mauritius
Singapore
UK
Japan
U.S