National Journal of Advanced Research

National Journal of Advanced Research


National Journal of Advanced Research
Vol. 2, Issue 5 (2016)

A critical analysis of India’s foreign direct investment: Challenges & current status of FDI equity inflow


Chhaya Shakya, Dr. Manoj Kumar Jatav

FDI FULL FORM is Foreign Direct Investment. It is an investment in a business by a company in another country. It is a controlling ownership in a business by an entity that is in another country. In India, FBI was introduced in 1991 under FEMA (Foreign Exchange Management Act) that is made by finance minister Mr. Manmohan Singh. Foreign direct investment (FDI) is direct investment into production in a country by a company located in another country, either by buying a company in the target country or by expanding operations of an existing business in that country. Foreign direct investment is done for many reasons including to take advantage of cheaper wages in the country, special investment privileges such as tax exemptions offered by the country as an incentive to gain tariff-free access to the markets of the country or the region. Foreign direct investment is in contrast to portfolio investment which is a passive investment in the securities of another country such as stocks and bonds.
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