FOREIGN DIRECT INVESTMENT: Foreign direct investment is an investment that is done a business firm of foreign country in another country in order to get long-lasting interests.
IMPORTANCE OF FDI: Key Points
• When FDI is done from a foreign country to another the relation between both the countries flourishes.
• FDI give opportunities for employment.
• The labours of countries get to learn new skills by working under the Collaboration of another country.
• The native country’s currency gets integrated by foreign currency.
The FDI helps small and developing countries to grow and give the opportunity to trade with foreign countries.
CONDITIONS OF COMPANIES TO DO FDI
When a foreign country invests in another country, what they are looking…..
1. Flexible policies
2. Tax rates
3. Availability of resources
4. Number of labours
5. Rates of wages
6. Availability of transportation and infrastructure
WAYS TO DO FDI
There are usually four ways to do FDI with a country.
•By investing in the companies of other countries.
•By establishing joint ventures.
•By initiating subsidiary firms in foreign countries.
There are two ways to do FDI with India..
- Automatic way: in this way,the foreign companies can invest without
taking permission of the Indian government.
- Governmental way: in this way the foreign companies have to take
permission of the government of India & sign an application with them.
MAJOR FDI RECIPIENT COUNTRIES
By the recent data, USA and China are top two major FDI recipient countries. Our India is at 8th position around the globe.
• in September 2014 India surpassed US and China and became the the
most FDI attractive country in 2015 this happened because of the
initiative of Indian government I.e. ‘MAKE IN INDIA’. by MAKE IN INDIA
INITIATIVE LOTS OF FOREIGN COMPANIES GOT ATTRACTED BY THE THE
FLEXIBLE POLICIES OF INDIAN GOVERNMENT AND THIS INCREASED THE
FOREIGN DIRECT INVESTMENT IN INDIA.
FOREIGN DIRECT INVESTMENT IN DEFENCE
Recently our finance Minister enhanced the FDI in defence sector from 49 % to 74%. Apart from these major decisions are taken for improving the defence sector.
•Those weapons and ammunition will not be imported in India that can be
made in India.
•The OFB will be modernised And will work for making more ammunition in
•The events like defence expo will be promoted more for attracting foreign companies to invest in the defence sector.
• Now countries can invest in the defence sector in India by the automatic way of FDI.