foreign direct investment

1. Foreign direct investment
NAME:-MAYURI HEMANT BHOLE
SUBJECT :- IFM
MBA 2ND YEAR 4TH SEMISTER

2. What Is a Foreign Direct Investment (FDI)?
 A foreign direct investment (FDI) is an investment made by a firm or
individual in one country into business interests located in another
country. Generally, FDI takes place when an investor establishes
foreign business operations or acquires foreign business assets in a
foreign company. However, FDIs are distinguished from portfolio
investments in which an investor merely purchases equities of
foreign-based companies.

3. ADVANTAGE
 1. Causes a flow of money into the economy which stimulates economic
activity.
 2. Employment will increase.
 3. Long run aggregate supply will shift outwards.
 4. Aggregate demand will also shift outwards as investment is a
component of aggregate demand.
 5. It may give domestic producers an incentive to become more efficient.

4. Disadvantages
 Too much foreign ownership of companies can be a concern,
especially in industries that are strategically important. Second,
sophisticated foreign investors can use their skills to strip the
company of its value without adding any.
 They can sell off unprofitable portions of the company to local,
less sophisticated investors. Or, they can borrow against the
company's collateral locally, and lend the funds back to the
parent company.

5. Types
 1. Horizontal FDI arises when a firm duplicates its home country-based
activeities at the same value chain stage in a host country through FDI
 2. Platform FDI Foreign direct investment from a source country into a
destination country for the purpose of exporting to a third country.
 3. 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.

6. Forms of FDI incentives Foreign direct investment
incentives may take the following forms:
 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

7.  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)
 Governmental Investment Promotion Agencies (IPAs) use various marketing strategies
inspired by the private sector to try and attract inward FDI, including Diaspora marketing.

8. Conclusion

 Foreign Direct Investment (FDI) as a strategic component of investment is needed by
India for its sustained economic growth and development through creation of jobs,
expansion of existing manufacturing industries, short and long term project in the
field of healthcare, education, research and development (R & D) etc. Despite of
disadvantage of FDI the advantages are more precious. Government should design the
FDI policy such a way where FDI inflow can be utilized as means of enhancing domestic
production, savings and exports through the equitable distribution among states by
providing much freedom to states, so that they can attract FDI inflows at their own
level.Therefore for further opening up of the Indian economy, it is advisable to open up
the export oriented sectors and higher growth of the economy could be achieved. It is
the golden opportunity to attract more companies to come in India and invest here so
that economic growth can be sustain at higher level and also increases the job
opportunity.

9. Referance
 https://www.academia.edu/9905558/Foreign_direct_investment
 file:///C:/Users/Aniket/AppData/Local/Packages/Microsoft.MicrosoftEdge_8wekyb3
d8bbwe/TempState/Downloads/Foreign_direct_investment%20(1).pdf
 https://www.investopedia.com/terms/f/fdi.asp

10. THANK YOU