What is full form of FDI?
FDI FULL FORM: Foreign Direct Investment
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. After knowing FDI full form , now let us discuss about importance of fdi that are as follow:
Important of FDI:
- FDI boots economy of nation:
FDI investment has one of the biggest advantages for the nation which is that it boosts the economy of that nation. Foreigner invest money in markets and industries that boots profit and revenue for that nation. By the help of extra revenue, now invested industry or company have more capital that can use more resources that bring more production. In this way, it is helpful to boost the nation economy.
- Employment generation:
Foreign direct investment plays one of the biggest roles in the process of employment generation. Foreign company invests in domestic market of that nation that needs more manpower or employee to fulfill the workload. In this way, it generates the employment for people.
- It increases competition that brings efficiency in work:
it si another advantage of FDI investment in our nation, which is that it increase competition in the markets that brings efficiency in work. Now companies have competition against each other. They try to make a good product at a low cost that is benefited for the customer point of views. Now customer can buy the same product at low price.
- It increases tax revenue:
FDI is very helpful for the nation in which it is invested because it creates decent tax revenue for the government. Foreign companies invest in domestic market and they have to pay tax on that amount. Even if they earn profit, they have to pay tax according the rules of investment country.
- It brings foreign capital in the country:
FDI is one of the best means to bring foreign capital in the country. In this way, it is very helpful by the nation to maintain the foreign capital in the country. it also helpful for the touristic department because foreign who came in India for traveling . They need foreign money for exchanging purpose.
Disadvantage of FDI:
- Lack of control:
It is one of the biggest disadvantage of FDI which is that government cannot control the investment by foreign in domestic market in full way. If I tell about you the restriction rules for FDI in India, government have made some rule like foreign company can only invest up to 49% in the share of domestic company so that they could not get all the control on domestic market. Here foreign company tries to monopoly and takes over the highly profitable sector.
- It increases competition for domestic company:
FDI full form is Foreign Direct Investment. It has one of the disadvantages of FDI which is that it increases competition for the domestic company. In this situation, domestic company thinks, they may loss their position in front of overseas company. In this regard, government has made some rules in which some sectors are restricted by government for investment by the foreign company.
Other FDI full form:
♦Feeder Distribution Interface
♦Floppy Disk Image
♦Fujirebio Diagnostics Inc
♦Foreign Depository Interest