Foreign Direct Investment Fdi Policy

Foreign Direct Investment refers to the type of investment into a country that is characterized by the inflow of funds from a foreign source that can be in the form of ownership such as stocks, bonds, infrastructural presence, etc. by the element of ‘control’. FDI is defined as the net inflows of investment to acquire a management interest (10 percent or more of voting stock) in an enterprise operating in an economy other than that of the investor.

Foreign direct investment (FDI) is investment that gains control of the foreign business or assets. It is a method of international expansion that gets a controlling interest in property, assets or companies located in other countries. FDI can also involve a business controlling resources such as mineral deposits, land and other assets in other countries. This form international expansion involves a higher level of commitment by the business because it usually involves a transfer of money, personnel and technology.

The Foreign Direct Investment (FDI): is to invest and build new business in other country (Wild, 2015 ). OECD defines FDI as a key factor of enhancing and promoting the development of economy and stability of the country in the political and financial sector to improve the society as a whole (OECD , 20). Moreover, The UNCTAD explains the FDI by mentioning it as a relationship between two companies which means one company is going to do business in the other company as an investment (UNCTAD, 2007). It is making a new business, investment or company in a foreign country.

Countries agreed on three principles that govern national policies for foreign direct investment: (1) transparency and predictability; (2) proportionality; and (3) accountability. Proportionality refers to the concept that restrictions on foreign investment should be no greater than is needed to protect national security (Jackson, 2013).

Compared with other types of international capital flows, FDI is seen to be relatively more attractive as it offers a range of desirable characteristics to a host country. For example, it provides a relatively high degree of capital inflow stability that contributes to capital formation, and it offers the potential transfer of intangible assets such as technology, skills, management know-how, and entrepreneurship. FDI can also generate positive externalities.

The government is also relaxing FDI norms in other sectors for foreign investors to invest. FDI in multi-brand retail has been allowed up to 51 per cent. The minimum requirement for the FDI is US$ 100 million, of which at least 50 per cent must be invested in 'backend infrastructure' within three

Ekpo, A.H. (1995) investigated that the element like higher gain from investment, low labor and production cost, political stability, enduring investment climate, official infrastructure facilities and helpful regulatory atmosphere also serve to invite and guard FDI in the host country.Chadee and Schlichting (1997) investigated some of the aspects of FDI in the

In the last few years, the emerging market countries such as China and India have become the most favoured destinations for FDI and investor confidence in these countries has soared. As per the FDI Confidence Index compiled by A.T. Kearney for 2005, China and

FDI has broadened its meaning into the acquisition of a lasting management interest in a firm outside the investing enterprise’s home country. For the reason above, it comes in different forms which include direct acquisition of foreign companies, construction of a factory in a foreign country and investment in joint ventures. Britton and Worthington (2009) described FDI as an important aspect of globalisation as well as the activities of multinational companies.

FDI is where the MNE invests directly in production or other facilities over which it has effective control in a host economy (j &t). According to Pollan (), the definition of the terms “investment” is highly significant to Foreign Direct Investment, which can be typical comprehend as the conveyance of capital to a country. Investment can be defined as money committed or property acquired in order to gain profitable returns, as interest, future income or appreciation in value (business dictionary, 2014). The commonest definition used to understand the idea of FDI is the definition provided by International Monetary Fund’s (IMF). The IMF definition of FDI introduces systems and structures which clearly demarcates foreign direct investment from portfolio investment. According to the IMF, direct investment creates a lasting interest in an enterprise, consisting of a long-term relationship between the investor and the enterprise and that the investor has an outstanding amount of control on the management of the enterprise, while portfolio investment does not create an extended relationship and the portfolio investor is rarely directly partaking in the day-to-day management of the enterprise (Pollan,). FDI however has no comprehensive, authoritative and ubiquitous legal definition and the test for the existence of enough degree of control differs in scope depending on applicable law in a

Dr. Swapna S. Sinha swapnassinha@yahoo.com Dr. David H. Kent dkent@ggu.edu Dr. Hamid Shomali hshomali@ggu.edu Ageno School of Business Golden Gate University 536 Mission St. San Francisco, CA 94105 Tel: 415-442-6500

It could also be stated that the Indian economy is emerging in nature and provides a greater platform for the companies to enter and establish in the same. With the help of FDI in the developing countries, the nation has been experiencing an adequate growth associated with the industrial as well as infrastructural related. It has also notified that during 1990 -2000 the concept of inward FDI has gain huge prominences regarding the development of Indian economic condition. It has also observed that post-independence Indian government has continued with the application of FDI investment scheme. In the year 1991 after the launching of New Economic Policy, the concept of FDI has gained considerable importance in Indian economy.

The research aims to find out the impact of FDI on economy of the country and current trend of FDI in retailing sector of India with specific reference to E-Commerce. This section presents the discussion of various authors and researchers on the topic of research. The section start with defining concept of FDI and presenting its impact on economy. As the case of retail sector of India is considered to understand the impact of FDI , recent trend of FDI in India and its impact on economy is discussed. Further the retail sector with specific reference to E-commerce sector is discussed in light of FDI and the trends, advantages and disadvantages associated with the FDI in E-commerce sector is

FDI is defined as cross-border investment by a resident entity in one economy with the objective of obtaining a lasting interest in an enterprise resident in another economy. The lasting interest implies the existence of a long-term relationship between the direct investor and the enterprise and a significant degree of influence by the direct investor on the management of the enterprise. Ownership of at least 10% of the voting power, representing the influence by the investor, is the basic criterion used. (OECD Factbook 2013: Economic, Environmental and Social Statistics) Foreign direct investments were prohibited in India prior to 1991. Liberalization was introduced in 1991 which allowed for FDI. Defense, petroleum & gas, banking, airline, telecom, single brand retail, and multi-brand retail are fields investors can enter after obtaining approval. Below we see the investment caps for each industry (EY).

Almost all of the countries are trying to attract FDI, as inward FDI could bring host countries a number