Originally posted 2022-01-19 12:12:35.
The full form of FDI is Foreign Direct investment. It is the type of investment that a company makes to generate assets and ownership of other companies present in another country. Moreover, It is namely the direct investment because of its nature to directly deal with the equity investment. It is different from the foreign portfolios as in that case the foreign company invests in the stock exchange of another country. In FDI the MNC seeks Direct equity stakes on other companies. Additionally, direct ownership gives several benefits to the companies as well as investors. It gives them a place on the board of directors snd the voting power too.
FDI means Foreign Direct investment. Generally, it is the type of asset that a business makes to produce and assets and possession of other companies present in another country. However, it is dissimilar from the foreign groups as, in that case, the foreign company invests in the stock conversation of another country.
Furthermore, people invest in foreign countries to reduce the cost of labor and increase productivity. This allows them to get cheap labor from across the world and build better relationships. Moreover, when we invest in foreign companies we can also use their valuable resources like fossil fuels, gas, and petroleum at a much cheaper price. This reduces the overall cost and increases the profits for an organization. The two types of FDIs are namely: Greenfield FDI and Brownfield FDI. There are certain rules and regulations for trading in another country. Every company must adhere to these laws.
how many types of foreign direct investment are available?
There are 3 types of FDI:
*Horizontal FDI.
*Vertical FDI.
*Conglomerate FDI.
Who is the controller of FDI in India?
Reserve Bank of India controls FDI in India.
Current FDI rate of India
FDI in India archived 13% to record $49.98 billion in 2019-20. Singapore emerged as the biggest source of FDI in India during the last fiscal with $14.67 billion investments.
There are three types of Foreign Investment (FDI) Horizontal FDI, Vertical FDI, Conglomerate FDI. FDI is a subset of international factor movements. FDI has a beneficial impact on developing host countries. Some of the benefits of Stimulation of Economic Development, Increase in Exports, Exchange Rate Stability, Improved Capital Flow, etc.
Example: A company from Country 1 opens a retail company in Country 2.
Now let us have a look at the drawbacks of FDI. Many times investing foreign country can have a very strong impact on the host country. For eg: Country 1 can have too much influence on Country 2.
| Term | Full Form |
| FDI | Foreign Direct investment |
FAQ’s
It is the type of investment that a company makes to generate and assets and ownership of other companies present in another country.
FDI is short form of Foreign Direct investment.
Foreign Direct investment is full form of FDI.
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