FDI refers to direct investment into a foreign country by buying an existing company or expanding operations. It contrasts with portfolio investment in public stock/bonds. Horizontal FDI duplicates home activities abroad. Platform FDI exports to third countries from a host. Vertical FDI moves through different value chain stages. FDI can bring equipment, technology, jobs, and contribute to exports, but may also crowd local industry and conflict with laws/culture. Investors acquire foreign companies through shares, mergers, joint ventures, or subsidiaries. Host countries use tax breaks, zones, loans to attract FDI based on profitability, costs, economic conditions, and policies.

1. FDI is a direct investment into production or
business in a country by an individual or company
in another country, either by buying a company in the
target country or by expanding operations of an
existing business in that country. Foreign direct
investment is in contrast to portfolio investment which
is a passive investment in the securities of another
country such as stocks and bonds.

2. 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.

3. • Inflow of equipment and technology
• Competitive advantage & innovation
• Financial resources for expansion
• Employment generation
• Contribution to exports
Advantages

4. • Crowding of local industry.
• Conflicts of laws
• Effect on natural environment
• Loss of control
• Effect on local culture

5. The foreign direct investor may acquire voting power of an enterprise in an economy
through any of the following methods:
 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
 by incorporating a wholly owned subsidiary or company
anywhere

6.  Low corporate tax and individual income tax rates
 Tax holidays
 Other types of tax concessions
 Preferential tariffs
 Special economic zones
 Epz – export processing zones
 Bonded warehouses
 Maquiladoras
 Investment financial subsidies
 Soft loan or loan guarantees
 Free land or land subsidies
 Relocation & expatriation
 Infrastructure subsidies
 R&d support
 Derogation from regulations (usually for very large projects)

7.  Profitability: Attract where return on investment is
higher
 Costs of production: Encouraged by lower costs of
production like raw materials, labor .
 Economic Conditions: Market
potential, infrastructure, size of population, income
level etc
 Government policies: Policies like foreign
investment, foreign
collaboration, remittances, profits, taxation, foreign
exchange control, tariffs etc.
 Political factors: Political stability, nature of important
political parties and relations with other countries.

8. • We are the second highest producer of fruits and
vegetables in the world but still we are not able to utilize
is properly because of inadequate infrastructure
facilities.
• It will reduce pre-harvest wastage/losses and thus help
control food inflation.
• It will create 1.5 million more jobs in 5 years. Apart
from the huge number of indirect employment.
• It will increase competition which is always beneficial
for the customer.
• It will remove the middleman from the equation. It will
reduce costs which in turn will reduce prices.

9. • At least 10% of shares of Co; needed to qualify
as FDI.
• Mauritius has been the largest direct investor
in India.(US$20 billion)
• The United States is the second largest investor
in India.(US$6 billion)
• U.S is the worlds largest recipient of FDI.

10. By vishal rana
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