ARYABHATTA INSTITUTE OF MANAGEMENT

Foreign Direct
Investment

Submitted By:
Parneet Walia
95202239175
MBA
 What is mean by FDI
Foreign direct investment (FDI) or
foreign investment refers to long term
participation by country A into country B.
It usually involves participation in
management, joint-venture,
transfer of technology and expertise. FDI
is made to serve the business interests of
the investor in a company, which is in a
different nation distinct from the investor's
country of origin.
 An FDI May be
 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 social
institution; or
 any combination of the above.
 Types of FDI

Inward Outward Horizontal Vertical

 Reasons of FDI
 Capital resources.
 Markets.
 Cheap Cost of resources.
 To promote the business.
 Govt. policies.
 For the Growth of the Country.
 Methods of FDI
 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
 Licensing and technology transfer.
 Reciprocal distribution agreements. 
 Portfolio investment.
 Benefits of FDI
 Economic development of the host
 Transfer of technology
 Development of human capital resources
 Creation of jobs
 Opening export window / Trade
 Development of HR of an organization.
 Provides finance.
 Disadvantages of FDI
 Company may lose ownership.
 Difference in language and culture .
 Policies adapted may not be appreciated
/lack of control.
 Adverse effects on competition.
 Local market is affected badly.
 Technological disadvantage.
 Conclusion

Although FDI have so many disastrous

affects upon host country but it has so
many advantages to both the countries .
In previous years we had seen large no. of
FDI in India because of liberated policies
of Govt. So, govt. should adopt corrective
measures to promote FDI.