Essay On Foreign Direct Investment: Foreign Direct Investment (FDI), can be understood as an investment made by a company or entity based in one country, into a company or entity based in another country. Foreign Direct Investment plays an extraordinary and growing role in global business. These trans-national investments have become the major economic driver of globalization, accounting for over half of all cross-border investments.
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Long and Short Essays on Foreign Direct Investment for Kids and Students in English
Given below are two essays in English for students and children about the topic of ‘Foreign Direct Investment’ in both long and short form. The first essay is a long essay on Foreign Direct Investment of 400-500 words. This long essay about Foreign Direct Investment is suitable for students of class 7, 8, 9 and 10, and also for competitive exam aspirants. The second essay is a short essay on Foreign Direct Investment of 150-200 words. These are suitable for students and children in class 6 and below.
Long Essay on Foreign Direct Investment 500 Words in English
Below we have given a long essay on Foreign Direct Investment of 500 words is helpful for classes 7, 8, 9 and 10 and Competitive Exam Aspirants. This long essay on the topic is suitable for students of class 7 to class 10, and also for competitive exam aspirants.
Historically, FDI has been directed at developing nations as firms from advanced economies invested in other markets, with the US capturing most of the FDI inflows. While developed countries still account for the largest share of FDI inflows, data shows that the stock and flow of FDI has increased and is moving towards developing nations, especially in the emerging economies around the world.
FDIs not only provide foreign capital and funds, but also equip domestic countries with advanced commercial skill sets (due to transfer of technology and knowledge), information and expertise, job opportunities and improved productivity levels.
FDI is attracted into a country for different reasons. At a general level, in order for a country to be more attractive to investors, there is a need to create a conducive environment by reducing the so called hassle costs. An enabling environment for FDI has several components. First of all, political and macroeconomic stabilities are an absolute pre-requisite for any kind of private investment, including FDI. Numerous studies have amply demonstrated that political and ecqnomic stabilities, along with the prospect of growth, are the most important determinants for FDI. Only in extreme cases, such as the existence of crucial natural resources, would a foreign investor go to a war zone or where there is rampant inflation. Secondly, a sound policy and regulatory framework and efficient supporting institutions to enforce the relevant laws and regulations are imperative for FDI to enter and thrive.
Especially in a globalised competitive market, the difference between countries in how conducive their investment climate may be, including how an investor is received, how many administrative and regulatory obstacles an investor has to overcome to enter and operate, and how commercial disputes are handled through the judiciary system have a huge impact on where the investor will go and how much contribution the investment will make to the host economy. Finally, an adequate physical and social infrastructure complements a good policy and regulatory framework to create the necessary environment for attracting FDI. These include the quantity and quality of roads and communication systems, skilled labour, as well as the efficiency with which public services are delivered. They are also important if the full potential benefits of FDI presence are to be realized.
There are mainly three major modes through which firms undertake foreign direct investment (FDI) – merger and acquisition , joint venture , new plant. Mostly, the investment is into production by either buying a company in the target country or by expanding operations of an existing business into that country.
FDI was introduced in India in 1991 under the Foreign Exchange Management Act(FEMA) as a part of the new economic policy. An Indian company may receive Foreign Direct Investment under the two routes namely Automatic route OR Government route. In automatic route, FDI is allowed under the automatic route without prior approval either of the Government or the Reserve Bank of India in all activities/sectors as specified in the consolidated FDI Policy, issued by the Government of India from time to time. Whereas in the Government route, FDI in activities not covered under the automatic route requires prior approval of the Government which are considered by the Foreign Investment Promotion Board (FIPB), Department of Economic Affairs, Ministry of Finance.
The Indian government undertook a series of steps to open and thereby enlarge the scope of investments through FDI. In 1997 , FDI in cash and carry (wholesale) with 100% rights allowed under the government approval route; In 2006 , FDI in cash and carry (wholesale) was brought under automatic approval route, upto 51% investment in single brand retail outlet permitted, subject to Press Note3 (2006 series). In 2011 100% FDI in Single Brand Retail allowed’. In 2012 government approved, the allowance of 51 percent foreign investment in multi-brand retail, [It also relaxed FDI norms for civil aviation and broadcasting sectors].
Short Essay on Foreign Direct Investment 200 Words in English
Below we have given a short essay on Foreign Direct Investment is for Classes 1, 2, 3, 4, 5, and 6. This short essay on the topic is suitable for students of class 6 and below.
However, FDI in multi-brand retail continues to be a bone of contention amongst policy makers and political parties. Today, FDI is approved in all sectors except atomic energy,lottery business,gambling and betting,business of Chit Fund,Nidhi Company,agricultural (excluding Floriculture, Horticulture, development of seeds, animal husbandry, pisciculture and cultivation of vegetables, mushrooms, etc. under controlled conditions and services related to agro and allied sectors) and plantations activities (other than tea plantations),housing and Real Estate business (except development of townships, construction of residential/commercial premises, roads or bridges to the extent specified in notification,trading in Transferable Development Rights (TDRs),manufacture of cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco substitutes.
India is the third largest economy of the world in terms of purchasing power parity and thus looks attractive to the world for FDI. Even Government of India, has been trying hard to do away with the FDI caps for majority of the sectors, but there are still critical areas like retailing and insurance where there is lot of opposition from local Indians/Indian companies. The fear that small domestic retailer will be pulverized due to the entry of foreign players, leaves the Indian Parliament divided on the decision of whether to open FDI in those sectors.
For growth, FDI is essential for India which is also an attractive destination for the same because of cheap labour here and it being an intensively consumer FDI based economy. The government also welcomes FDI and has instituted many measures to encourage foreign investment via tax exemptions and increasing or removing caps and ceilings.
Foreign Direct Investment Essay Word Meanings for Simple Understanding
- Entity – a thing with distinct and independent existence.
- Equip – supply with the necessary items for a particular purpose.
- Expertise – expert skill or knowledge in a particular field.
- Conducive – making a certain situation or outcome likely or possible.
- Hassle – irritating inconvenience
- Acquisition – an asset or object bought or obtained
- Consolidation – to bring together (separate parts) into a single or unified whole
- Contention – heated disagreement.
- Pulverised – to reduce to nothing
- Instituted – established