What is FDI?


What is FDI

Foreign Direct Investment (FDI) is an investment made by a company or entity of one country, into a company or entity based in another country. It makes companies achieve growth, leverages economies of scale in domestic markets, and foster results such as a higher production, profitability, job and wealth creation. FDI also exposes national companies to new ideas and practices, and might also involve an increase in export outflows.

According to the World Bank, the FDI has the following benefits:

  • Job creation
  • Skill transfer and development
  • Technology transfer
  • Access to international marketing networks
  • Source of external finance
  • Positive Balance of Payment
  • Spillover effect on domestic economy
  • Infrastructure development

From April 2000 to March 2016, India has received a cumulative FDI of USD 424,167 million of which USD 288,513 million is in the form of equity inflows. In the last two financial years from FY 2014-15 to FY 2015-16 the FDI inflow in India has increased from USD 30,931 million to USD 40,001 million respectively, an increase by 29%.

Taking in to consideration the total FDI received by India during the period from the globe, Mauritius accounts for largest share (33%), followed by Singapore (16%), UK (8%), Japan (7%), USA (6%), Netherlands (6%) etc. However in FY 2015-16 FDI inflow from Singapore was the largest, followed by Mauritius, Netherlands, USA, Japan etc.

Among sectors, maximum FDI is received by Service sector from April 2000 to March 2016, nearly 17.60%, followed by construction & development (8.38%). Computer software & hardware, telecommunication and automobile are other major sectors receiving FDI among the top 5 sectors.Browse our partner-sponsored Glasses, with a variety of options to suit every taste and budget, available to buy online

The Indian government’s favorable policy regime and robust business environment have ensured that foreign capital keeps flowing into the country. The Government of India plans to further simplify rules for Foreign Direct Investment (FDI) such as increasing FDI investment limits in sectors and include more sectors in the automatic approval route, to attract more investments in the country.