Foreign direct

investment

Presented by
Ishu priya
Introduction

 Foreign direct investment (FDI) or foreign

investment refers to long term participation by
country A into country B.

 Foreign Direct Investment is any form of investment

that earns interest in enterprises which function
outside of the domestic territory of the investor.

 FDI stocks now constituting28% of the global GDP

Types

 A foreign direct investor may be classified in

any sector of the economy
 an individual;
 a group of related individuals;
 an incorporated or unincorporated entity;
 a public company or private company;
 a group of related enterprises;
 a government body;
 an estate (law), trust or other societal organization or
 any combination of the above.
Methods

 by incorporating a wholly
owned subsidiary or company
 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
Advantages of FDI

 Economic development of the host

 Transfer of technology
 Development of human capital resources
 Creation of jobs
 Opening of export windows
Disadvantages of FDI

 Company may lose ownership

 Difference in language and culture
 Policies adapted may not be appreciated
 Country trade secrets may be disclosed
FDI in INDIA

 A recent UNCTAD (United Nations

Conference on Trade and Development.)
survey projected India as the second most
important FDI destination (after China) for
transnational corporations during 2010-2012

 telecommunication, construction activities

and computer software and hardware.
FDI is prohibit in following cases

 Gambling and betting

 Lottery business
 Atomic energy
 Housing and real estate
 Agriculture ( with certain exception) and
plantation ( other than tea plantation)
FDI in INDIA in 2011
 India’s food processing minister Subodh Kant Sahay said
he is hopeful of Asia’s third-largest economy opening up
foreign direct investment in multi-brand retail in 2011
 The government has also relaxed FDI norms
 India currently allows 51 per cent FDI in single-brand retail,
but none in multi-brand
 Hundred per cent FDI would be the solution for all
constituents and stakeholders in the retail sector, Wal-Mart
Stores Inc. (WMT) Chief Executive Officer Michael Duke
FDI and developing THE WORLD

 Foreign investment can be a significant driver of

development in poor nations.
  It provides an inflow of foreign capital and funds, in
addition to an increase in the transfer of skills,
technology, and job opportunities. 
 Many of the East Asian countries such
as China, South Korea, Malaysia,
and Singapore benefited from investment abroad.
Reference

 https
://www.cia.gov/library/publications/the-world-factbook/docs
/notesanddefs.html?countryName=Iran&countryCode=ir&re
gionCode=me#2198
 http://www.bea.gov/international/xls/table1.xls

 UNCTAD - Division on Investment and Enterprise

 UNCTAD - FDI Statistics
Thank you