INTRODUCTION<br />No country in the world is self sufficient .<br />Each nation or even a state or a city is dependant on other regions.<br />So for fulfilling the needs of each other all the nation of the world has come together.<br />The government of all countries do not have self sufficient funds or finance.<br />Any government in today’s world can’t rely on loans from other nation or other bank. This is because it create debt only.<br />In today’s world the largest need is of FDI<br />FDI MEANS Foreign Direct Investment. <br />
Meaning<br />Direct investment from one country to the other .<br /> FDI: Net inflows of investment to acquire a lasting management interest in an enterprise operating in an economy other than that of the investor.<br /> It is the sum of equity capital, reinvestment of earnings, long and short-term capital.<br /> FDI is viewed as a major stimulus to economic growth in developing countries. Its ability to deal with two major obstacles, namely, shortages of financial resources and technology and skills.<br /> Only a few of these countries have been successful in attracting significant FDI flows.<br />
Importance of FDI<br />It is now a competitive requirement that businesses invest all over the globe to access markets, technology, and talent. <br />It includes corporate activities such as businesses building plants, subsidiaries in foreign countries, buying controlling stakes or shares in foreign companies. <br />It facilitates globalization of economies. <br />It is conventionally thought of in terms of branch plant or subsidiary company operations that are controlled by parent companies based in another country. <br />
Determinants of FDI<br />Size of market : large, medium, small<br />Openness : economy is open or close<br />Labour cost and productivity: high or low<br />Availability of natural resources<br />Government policies : supportive or not<br />Infrastructure: have or not.<br />Privatization<br />
Objectives of FDI<br />Expansion Strategy : companies start investing because they want to make their product world available.<br />New Source of demand : In many situations growth is restricted in the home country because of intense competition or due to unfavorable market conditions.<br />Low cost production : In many countries the cost of production is low because of raw materials, availability of man power etc.<br />Economies of scale : if a large scale of a production is done than the ratio of wastage comes down and the cost reduces.<br />
Factors influencing FDI<br />Political Climate of the country: If climate is favorable than there is more FDI and vice versa.<br />Government policy: if government supports business there are more FDI <br />Business concession: if provided more FDI<br />Trade and tariffs policies: if favors more FDI <br />Infrastructure:available than mare FDI<br />Market: if market is large more FDI’S <br />
Foreign company’s bring superior technology<br />Foreign investments increases competition in the host.<br />Foreign investment typically results increase in domestic investments<br />Foreign company can aid in bridging a host country’s foreign exchange gap.<br />Benefits of FDI<br />
Problems of FDI<br />Local trader’s looses their business: In front of MNC’s the local trader in market cannot survive for a long period<br />Unemployment: This is because <br />Poverty : local traders would loose their business through <br />Recession in foreign market would bring recession in host country<br />Exploit the consumers.<br />Pollution<br />Inequality<br />
INDIA BEFORE FDI (1948 – 1990)<br />India got its independence in the year 1947, in which the government of India started conservative policy for FDI which disallowed FDI to invest in India.<br />This was because the traditional thought of losing the country’s independence was one of the major concern for the political leaders of the country.<br />This is the reason for which the country did not progress a lot in this period and the progress was mainly in agricultural sector which did not earn India a large amount of foreign exchange. <br />
INDIA INTRODUCES FDI(1990-91)<br /><ul><li>In 1990 – 91India was suffering financial crisis because of its conservative policy.
So the prime minister of India opened the economy of the country for FDI’s known as LPG.</li></ul>Liberalization<br />Privatization<br />Globalization<br /><ul><li> This was the period which give boost to Indian economy. </li></li></ul><li> India After Introducing FDI (1991And onwards)<br />After introducing FDI Indian sector started having income not only from agricultural but also from service and industrial sector.<br />It also started having foreign technologies and foreign investment which helped Indian economy to rise.<br />It also helped in reduction of price of the goods which helped the consumers to buy a better product Eg. Electronic goods<br />All service sectors were in perfect boost after the introducing of FDI.<br />
Comparisons of FDI in India and China<br />INDIA<br />In India the government is democracy.<br />The labour charges are cheaper.<br />Experts says FDI are more interested in investing in India.<br />In India there is a lot of paper work but the Government to a certain extent has given many opportunities to the FDI. <br />CHINA<br />In China the government is communist.<br />The labour charges are quite higher than in India.<br />Experts says FDI are not so interested as in investing in India.<br />In China the paper work is reduce to the largest extent but there is lot of Government restrictions. <br />
FDI will give boost to Indian economy if proper uses are made i.e. introducing FDI in those sectors where India has not expanded and is lack of technology.<br />This will increase the competition in the market in which customer would get the customers a good quality product at reasonable price.<br />Introduction of the modern technology, superior quality and designs of infrastructure.<br />Backward area would progress a lot which would benefit India to be a developed country from developing country.<br />Rise in national income would give to rise GDP. <br />Conclusion <br />
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