Foreign Direct Investment

WHAT IS Foreign Direct Investment (FDI)?

Share This Post

Foreign Direct Investment (FDI) is an investment from a party in one country into the business/corporations of another country with the intention of having a “lasting interest”. Here the “lasting interest” is determined when the investing party acquires a share of at least 10% voting right in other organisation. Therefore, the element of control is the key differentiator between Foreign Direct Investment & Foreign portfolio investment (FPI).

According to the organisation of economic co-operation & development (OECD), an investment of 10% or above in the foreign country can be termed as a Foreign Direct Investment. FDI in India is regulated by the apex bank viz. Reserve bank of India (RBI) under the Foreign exchange management act, 2000 (FEMA).   

Since the liberalisation of the Indian economy in 1991, the climate of Investment has improved exponentially. This is more or else because of ease in FDI reforms across sectors. To attract a huge chunk of investors from outside, Government of India (GOI) has made policy of FDI in India in such a way that it is more transparent & easy to understand for any investors.

 Business Setup In Dubai

Company Registration In Dubai

FDI in India is not just restricted to the movement of capital across borders but it also includes movement of other elements such as skills, technology, process & management etc.

WHAT ARE THE TYPES OF FDI?

On the basis of Investment-

  1. Horizontal FDI: When a business expands its operational activities in the same product/service to a foreign country then it is termed as Horizontal FDI. For example: If a local manufacturer in USA opens up their manufacturing branch in India, then this is a classic case of Horizontal FDI.
  2. Vertical FDI: When the style of your business activities is changed while investing in host country as compared to your home country. This could be to provide support service to their actual business or does not relate to it at all. For example: MacDonald’s opens up a meat production house in Australia to support their actual business of food restaurants in India.
  3. Conglomerate FDI: Acquiring an unrelated business in a foreign country. This is not commonly opted for because of certain barriers which are associated with this such as i) entering in a foreign country ii) unrelated industry & market iii) leaving comfort zone.

On the basis of entry routes-

These policies are different from region to region. Considering FDI in India, these are the two routes through which one can enter into Indian market.

Company Registration In China

Company Registration in China

1.Automatic route

Under this investment type of FDI in India, an entity does not need to take prior approval of the Government of India or the Reserve Bank of India, in all activities which are specified in the FEMA regulation number 16. This brings in convenience to the investors who are planning to invest in Indian market.

2. Government route

  • Activities which are not covered under the automatic route of Foreign Direct Investment require prior approval of the Government of India/Reserve bank of India.
  • A single point of contact for all government approval is being initiated by the government through a Foreign Investment facilitation portal (FIFP) under Department for Promotion of Industry and Internal Trade, Ministry of Commerce and Industry.
  • Click on the link mentioned to understand the standard operating procedure (SOP) and the approval of various ministerial departments for different categories of business {http://fifp.gov.in/Forms/SOP.pdf}

37 thoughts to “WHAT IS Foreign Direct Investment (FDI)?”

  1. obviously like your web site but you need to check the spelling on quite a few of your posts. A number of them are rife with spelling problems and I find it very troublesome to tell the truth nevertheless I will certainly come back again.

  2. My spouse and I absolutely love your blog and find the majority of your post’s to be what precisely I’m looking for. can you offer guest writers to write content in your case? I wouldn’t mind creating a post or elaborating on a few of the subjects you write related to here. Again, awesome web log!

  3. You actually make it seem so easy with your presentation but I find this topic to be actually something which I think I would never understand. It seems too complicated and extremely broad for me. I’m looking forward for your next post, I will try to get the hang of it!

  4. I updated to the last variation, and now it keeps on reaching up with that tab whenever i startup firefox. What should i do?. I bang updated it, there is a tab speech that i somebody, that is the job. It is informatory me all of the new features that this variation offers and everything..

  5. I impoverishment to start a journal on myyearbook but i cant uncovering the box on my salience.. I score prefabricated reliable i make restrained the box to take my last diary in the handle saliency boxes country.. But it works wont present up.. Satisfy aid.. Is there any different way to move the journal?.

  6. Hi. I love a blog which i installed wordpress. So far so right. Omit that wordpress stats shows me the visits and i need it to demo how some visitors visited my diary. Can anyone assist me? Thanks a lot..

  7. I am asking for my mother. She doesn’t necessarily essential to work money off them, her decide is to use her blog (once fashionable) and use it as references to maybe meliorate her get a paper article. She has a claim for one titled “Answers to Beingness’s Problems”. Where can she base blogs and they get touristy? She posted it already on WordPress but there are 3 1000000 group sign blogs hers gets wasted in the mix. Any suggestions?.

  8. I am asking for my mother. She doesn’t necessarily need to attain money off them, her design is to use her journal (formerly favorite) and use it as references to mayhap cater her get a paper article. She has a appellative for one titled “Answers to Story’s Problems”. Where can she flier blogs and they beautify fashionable? She posted it already on WordPress but there are 3 1000000 group transmittal blogs hers gets cursed in the mix. Any suggestions?.

  9. It would be eager if I could transfer matter and pics to the journal from my cadre (iPhone). Maybe regularize recording??. . I’m new at the healthy journal occurrence, so it rattling would impoverishment to be liberated and pretty soft to use.. . THANKS!.

  10. I poorness to experience how to urinate my browser deposit instant on resuscitate. Most of the clip, I only poorness the web application but it takes ages because of opposite programs burden.. . I trust to uncovering a way to charge up and get web browser unbowed up. I hump IE, and FireFox and I am travel windows xp media edition.. . Any suggestions?. . Thanks..

  11. How come I get this ? when using Firefox and when I am using Cyberspace Mortal shows what I am supposed to get, (Wed) ,as the schoolbook. If you cannot see what I put downwards it is a micro box with the numbers 26 and 20 inside of it.. Is there a fix for my job?. Thanks in front..

  12. We stumbled over here by a different website and thought I might check things out. I like what I see so i am just following you. Look forward to looking over your web page yet again.

  13. Great weblog right here! Additionally your website quite a bit up fast! What web host are you the use of? Can I am getting your associate link to your host? I desire my website loaded up as quickly as yours lol

  14. I impoverishment to be fit to write entries and add pics. I do not stingy something suchlike myspace or facebook or anything like that. I signify an actualized journal. .

Leave a Reply

Your email address will not be published. Required fields are marked *