Foreign Direct Investment (FDI) has been a hot subject in economic sphere, especially in international height. Foreign direct investment is an investor’s investment in a business from another country over which the foreign depositors or investors have power over the company purchased.
The objective of the FDI is to establish a lasting interest in the entity. With the flow of globalization in business, FDI becomes familiar for big companies to extend its interest and invest money in companies placed in the countries. It leads ways to Stock Market investment and Stock trading. Generally the foreign investment in a country is a good role since it guides to increase in jobs and income. As more foreign portfolio Investors (FPI) emerges into a country, FDI can show the way to bigger investments at par with the economical stability.
As far as the benefits of the Foreign Direct Investment are concerned, it can be noted that FDI possibly improves the Forex position of the country. It is also a factor to improve the employment opportunities across countries, as it lends a hand in conveying new technologies employments skills, inter-personal growth of the individuals etc. Moreover, FDI facilitates in increasing the volume of exports and stocks and thereby the tax revenue increases simultaneously.
At the same time, it is also analyzed that in Foreign Direct Investment outlines domestic companies turning out of their self confidence as they fear that they may lose their ownership to the companies abroad. Since the small enterprises have the limited capacity to win with world class giants, they may eventually be edged out of business. Government has also not much concern over the functioning of the companies, since they work as wholly owned subsidiary of an overseas company.
However, the Foreign Direct Investment has a great relevance and scope in India on the ground that India is the third largest economy of the world where it's purchasing power looks attractive to the world for FDI. Foreign Direct Investment can be effective in India through which financial team works well whereby FDI becomes familiar for big companies to extend its interest and invest money in companies placed in the countries.