Foreign capital has a very significant
role to play in every
economy, regardless of its level of
Foreign capital is necessary...........
To support the sustainable development
, in the case of developed countries.
To increase the rate of investment and
capital accumulation, in the case of
to accelerate the economic growth , in the
case of less developed countries
to create stable growth of GDP , in the
case of underdeveloped countries
to solve the economic problem , in case of
less developed countries.
FORMS OF FOREIGN
Foreign aid commercial borrowings
foreign private investment
non-resident investment and deposits
ROLE OF FOREIGN
Initial stage of development
Underdeveloped capital market
Balance of payment problems
Multi-national Corporations is a recent
form of business organization which
undertakes business activities in more
then one country. it is also called as
Global Enterprise and MNC.
"a multinational corporation is a
corporation, which operates, in addition
to the country, in which, it is
incorporated, in one or more other
E.g.:- Hindustan lever ltd, P& G India ltd,
Philips, Sony etc
FEATURES OF MNC
research and development
foreign direct investment (FDI)
ADVANTAGES OF MNCs
rapid industrial growth
breaks domestic monopolies
change favorable trade
brings the world closer
optimum utilization of resources
DISADVANTAGES OF MNCs
adverse balance of payments
political influences and interferences
misuse of natural resources
Foreign direct investment (FDI) is
investment directly into production in a
country by a company located in another
country, either by buying a company in the
target country or by expanding operations
of an existing business in that country.
FDI is channeled mainly through
multinational corporations. these
investments bring with them benefits like
market access, technology , management
FDI IN INDIA
Starting from a baseline of less than $1
billion in 1990, a recent UNCTAD survey
projected India as the second most
important FDI destination (after China) for
transnational corporations during 2010–
As per the data, the sectors which attracted
higher inflows were
services, telecommunication, construction
activities and computer software and
Mauritius, Singapore, the US and the UK
were among the leading sources of FDI.
According to Ernst and Young, foreign
direct investment in India in 2010 was
$44.8 billion, and in 2011 experienced an
increase of 13% to $50.8 billion.
The world’s largest retailer Wal-Mart has
termed India’s decision to allow 51% FDI in
multi-brand retail as a “first important step”
and said it will study the finer details of the
new policy to determine the impact on its
ability to do business in India.
However this decision of the government is
currently under suspension due to
opposition from multiple political quarters.
RISING FDI IN
Source of technology.
Low cost opportunities.
No barriers or permission.
The foreign exchange management act 2000 defines
foreign portfolio investment as buying and selling of
shares, convertible debentures of Indian companies,
and units of domestic mutual fund at any of Indian
Starting up of FPI
In 1992,india opened up its economy and allowed
foreign portfolio investment in its domestic stock
since then , FPI has emerged as a major source of
private capital inflow in this country.
India is more dependent upon FPI as a source of