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FDI Foreign Direct Investment in India

FDI, which stands for Foreign Direct Investment is also referred to as foreign investment actually means the inflow of the total investments in any enterprise or ongoing business, which is operating for the growth of the country’s economy. The investments are the summation of long-term money or capital, equity capital, earnings, and also short-term money.

These investments are incorporated in the various sectors like the infrastructure developmental projects. These kinds of projects include arenas like flyovers, bridges, offices, industries and much mire. The investments in other sectors include financial sectors that incorporate insurance services and banking and also retail sector and other real estate developmental projects. Apart from these realms, the investments are included in many other different realms.

Coming to the precise definition of FDI, it is referred to the productive investments by any foreign country into any country’s productive assets. But the whole thing involves many different kinds of policies and strategies that need to be followed to understand how the Foreign Direct investment works. FDI actually involves any kind of participation in any kind of transfer of technology, management, expertise and joint-venture.

The Different Types of FDI Investors

If you are wondering who can be the FDI investor, then it can be any individual or a particular group of related people or individuals, or a big or small group of inter-dependant enterprises, any private or public company, unincorporated or incorporated entity, any government body, or a social institution, or trust or an estate. Besides, a combination of any two or three or more than that can be the real investors. It completely depends upon the situation and also the different policies.

Prior to investing, the FDI investor has to acquire proper voting power of the enterprise it is interested present in the economy. But there are certain methods through which the whole process is conveyed. The first method include that the FDI investor has to include into a totally owned company or subsidiary. Besides, the investor can also gain voting power through acquiring shares in any enterprise with which it is associated with. Apart from the above two methods, the FDI investor can gain voting power through the acquisition of various enterprises which might not be related or through shaking hands with another investor in equity kind of joint venture.

The above are some of the methods that show how a FDI investor can actually gain voting power of the different enterprise in its economical status. Now, you are going to see the FDI from the Indian perspective so as to get a clearer picture.

FDI- From Indian Perspective

The FDI statistics for a recorded duration from April, 2010 to February, 2011 shows that the total amount of the FDI flow to India has been USD 1, 93, 739 that incorporates equity inflows plus other capital plus re-investment earnings. Though, the statistical representation is on an average basis but you can rely on the number which has been the FDI in India for the latest record. The statistical record of inflow of FDI equity shows an approximate amount of USD 1,28,642. A recent survey shows that India holds the fifth place as per the investment ranking is concerned in all over the world. Besides, it is also going to remain as one of the most attractive destinations for the foreign investors as far as investments are concerned. As far as overseas investments and their prospects are concerned, India continues to give more impetus to the foreign investor’s faith.

The British companies are also finding opportunities in the Indian market and they are finding ways of relegate new business plans in here. As far as FDI is concerned in India, it just not talk about FDI inflow but also FDI outflow from India. Besides, when considering FDI, you have to remember that FDI, which stands for Foreign Direct Investment and FII, which stands for Foreign Institutional Investors are different and they incorporate different meaning in a total sense. As far as the above FDI statistics are concerned, it shows the emergence and outcome of India as a strong and potential investing country.

India- The Different FDI Policies

The policies have been discussed below:

  • The FDI is allowed upto 100 percent as far as atomic energy sectors, arms and also ammunitions and mining industries are concerned.

  • The maximum limit of 49 percent is allowed in telecom industry that is in the various GSM services.

  • It has also been estimated and referred that the FDI percentage cannot exceed 40 percent in the various banking services, which incorporate insurance sector and credit card operating sectors.

Therefore, Foreign Direct investment has to follow the above policies to ensure that the investors abide by the rules and then go for investments in the various sectors in India.

Pros and Cons with Foreign Direct Investment in India

The biggest advantage of foreign direct investment in equity sector lies with the fact that it brings with it larger scopes of infrastructural benefits. But there is a basis disadvantage attached to it. With huge investments in equity from the foreign lands, there are chances of losing rights to the foreign companies and eventually the whole issue becomes a very cautious situation.

Statistics reveal that the constant foreign direct investment inflow in the country has lead to increased liquidity and along with its subsequent strikes of inflation. Since FDI has been flowing in the Indian market with full force, there has been immense pressure on our rupees. But as you know, that there is day after night, in the same manner FDI brings with it many benefits and it ensures that there is full force of efficiency and improvisations of standards for the Indian economy as a whole.

How the FDI Trends are Improvised with newer techniques?

There have been several steps undertaken by the government to actually ensure that there is proper flow of technical education related to FDI policies to the public so that they understand and reach to the core of matter and find ways to improve the different FDI databases in India for great future prospects. Nevertheless, it has been observed that the FDI policies have enhanced the number of employment opportunities and the impetus is being received from the improved infrastructure of the organizations. As you know with large investments, it is possible to concentrate and improve the various pockets of an industrial sector. This definitely brings with it many benefits as such. Thus, foreign funds being regulated and India becoming the major concentration of foreign investors, there is a massive potential for industrial growth in the country only if the few drawbacks are properly taken care of with rightful resources and strategies.

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