What is FDI :-
- FDI ( Foreign Direct Investment ) is the investment by a foreign companies in domestic companies.
- The host company and the company that is investing together form a ‘multinational corporation’ (MNC).
- Through FDI the investing company will have control over the host company.
In Favor :-
- FDI helps in the economic development of the host country, where the investment arrives.
- For origin and host countries, FDI provides access to new technologies, products, skills and organizational and management strategies.
- Employment opportunities increases in the host country.
- Origin country, which means the country that makes the investment also develops economically through profits earned.
- Competition increases. With competitive spirit, every company improves to its best.
- Through FDI in production companies, price reduction is possible.
- FDI is a boon for the small companies to become more actively involved in international business activities.
- Dominance of foreign companies over Indian companies can sometimes be detrimental to domestic interests.
- Inflation (the rise in prices over a period of time) may increase.
- With the FDI in retail sector, small companies and merchants will suffer.
- Technological dependence on foreign technology sources.
FDI is beneficial for any country to develop it’s economy and technological talent. But, FDI’s share should be limited to 49% to avoid foreign companies’ dominance over Indian companies.
Do you think FDI is good for India? Express your thoughts in the comment section below.