FDI is investment which occurs directly across national boundaries. It means when firm of one country buys a controlling investment in firm of another country or where a firm sets up its branch in another country. A firm that engages itself in FDI becomes a multinational enterprise (MNE).
Foreign Direct Investment (FDI) is important because it gives facility to make investments in long-term profits which are in long-term projects working in other countries. The investment is done directly by foreign investors which can be any company or a group of persons who are looking for power in excess of the foreign ventures. It is also a major source of finance where the country can obtain finance from other countries to develop itself. f.
Recently, the government announces that the retail sector is partially opened for FDI. It means the foreign investors who are interested in Indian markets can invest up to 51% in multi brand retail and 74% FDI in single-brand retail. The government decision divided experts on the problem and on its prospects. Some says the decision will decrease opportunities, and will result in wipe out of local stores. The optimists, on the other hand, have seen decision as a large range of opportunities for farm products and more opportunities for the unemployed.
FDI provide benefits to small farmers by working together to form producer companies which will directly work with corporations to get higher revenues, or small farmers must willingly move into the new jobs directly or indirectly created by FDI in sectors such as retail, food processing and supporting industries.
The FDI offers a foreign capital and funds. It also extends an economy of a particular country where the investment is being made. It permits the move of highly developed technologies from developed countries to developing countries which helps in creating fresh jobs in a particular country and in turn the salary of the employee increases. The country where investment is done increases its human capital resource. It also brings new skills in a country & possibility of innovative research increases which helps in the growth of the country.
Now, global retailers are willing to sell their products by setting their own branch or franchises in another country which will again attract foreign capital along with better quality products in a large variety and advance services for the consumers and even consumers will get access of some global brands. This will in turn increase competition in the country and expands manufacturing units. To stand in a market, these global retailers have to lower their prices of foreign goods which need them to set up their manufacturing units locally or to handover the production assignments to domestic manufacturers on their specifications which brings a large number of employments in the country.
All this opportunities make, the Indian retail market a real happening place in the days ahead while at the same time it will be offering immense business opportunities and growth to the domestic entrepreneurs. In result, the Indian market will become the part of the global market.