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 FDI-Foreign Direct Investment
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FDI means Foreign Direct Investment. India Foreign Direct Investment includes investments in the infrastructure development projects including construction of bridges and flyovers, finance sector including banking and insurance services , real estate development , retail sector etc. The foreign direct investment definition says the direct investments in any productive assets in a country by any foreign company is called foreign direct investment or FDI.
FDI in India includes, FDI inflows as well as FDI outflow from India. Also FDI foreign direct investment and FII foreign institutional investors are a separate case study while preparing a report on FDI and economic growth in India. FDI and FII in India have registered growth in terms of both FDI flows in India and outflow from India. The FDI statistics and data are evident of the emergence of India as both a potential investment market and investing country. |
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The Foreign direct investment scheme and strategy depends on the respective FDI norms and policies in India. The FDI policy of India has imposed certain foreign direct investment regulations as per the FDI theory of the Government of India (GoI). These include FDI limits in India for example: - Foreign direct investment in India in infrastructure development projects excluding arms and ammunitions, atomic energy sector, railways system , extraction of coal and lignite and mining industry is allowed upto 100% equity participation with the capping amount as Rs. 1500 crores.
- FDI figures in equity contribution in the finance sector cannot exceed more than 40% in banking services including credit card operations and in insurance sector only in joint ventures with local insurance companies.
- FDI limit of maximum 49% in telecom industry especially in the GSM services
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The FDI norms in real estate sector as well as in the retail sector are also predetermined by the GoI after a careful study of the foreign direct investment pros & cons. The foreign direct investment advantages lay in the fact that equity participation form foreign investors brings larger infrastructure base for the project but the FDI disadvantages of losing the ownership rights to a foreign company makes it a cautious decision.
The FDI theories listing the FDI disadvantages include the increased liquidity and consequent inflation due to excessive FDI inflow in India. In order to absorb the FDI entering the Indian economy, the rupee is being pressurized. However the FDI benefits include better efficiency in funds management in India and thus improvisations in the quality standards.
The FDI policy 2007 ascertains regulations on the FDI stocks and this may reduce the foreign direct investment confidence as closing the doors of industrial relations with foreign investors with only hamper the FDI and economic growth in India coordination. FDI and GDP in India working together and brining the reforms to the economics in India.
Another form of foreign investment besides FDI is FPI or foreign portfolio investment that is a more easily traded form of foreign investment and less permanent. In FPI investment is made through stocks and bonds in a foreign enterprise without long-term financial relationship plans.
Steps have been taken by the government to impart technical FDI education so as to improvise the FDI database of the country. FDI and trade go hand in hand as both works in a symbiotic situation. FDI has also created more employment opportunities as FDI trends have increased the basic infrastructure of any organization thus demanding growth in terms of organizational structure as well. The foreign direct investment news in India shows the FDI notations being adopted by India, the foreign direct investment strategies, and the FDI guidelines regulating the inflow of foreign funds in India.
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