FDI Full Form

Let’s discuss what is the full form of FDI. FDI stands for Foreign Direct Investment. It is an investment made by a company in one country into a company in another. It differs from portfolio flow, in which a foreign company invests in equities listed on a country's stock exchange.

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Because the investor seeks control or influence over a company or entity of a country, it is referred to as a direct investment. Foreign direct investment is typically directed toward countries with open economies, high growth prospects, and a skilled labour force at a low cost.

In this article, we are going to discuss FDI full form in India, FDI full form in English as well as FDI full form in banking.

Where is FDI Made?

Foreign Direct Investment (FDI) is frequently made in open economies with a skilled labour force and growth prospects. FDIs bring not only money, but also skills, technology, and knowledge.

FDI in India

FDI full form in India is Foreign Direct Investment is a vital source of funds for India's economic development. Economic liberalisation began in India in the aftermath of the 1991 crisis, and FDI has steadily increased in the country since then. India is now a member of the top 100-club for Ease of Doing Business (EoDB) and ranks first in the world for greenfield FDI.

Routes Through Which India gets FDI

During the period April to March 2021, India received a total FDI inflow of ＄76.30 billion. It is the highest ever for the first ten months of a fiscal year and is up 19 percent from 2019-20 (＄62.72 billion). India is the world's fifth-largest recipient of inflows.

FDI inflows into India totalled ＄67.54 billion from the month of April to December. It is the highest ever for the first nine months of a fiscal year and is 22% higher than the first nine months of 2019-20 (＄55.14 billion).

Total FDI inflows into the country in the last 21 years (April 2000 - March 2021) have been ＄763.5 billion, while total FDI inflows received in the last 5 years (April 2014 - September 2019) have been ＄319 billion, accounting for nearly half of total FDI inflows in the last 20 years.

Total FDI inflows of ＄58.37 billion during FY 2020-21, a 22 percent increase over the first eight months of 2019-20. The amount of FDI equity inflows received from April to November 2020 is ＄43.85 billion, which is 37% more than the amount received from April to November 2020 (＄32.11 billion).

Automatic Route: For FDI, a non-resident or Indian company does not need the RBI's or the government of India's prior approval.

Govt Route: The approval of the government is required. The company needs to submit an application through the Foreign Investment Facilitation Portal, which allows for single-window clearance. The application is then forwarded to the appropriate ministry, which will approve or reject it in consultation with the Ministry of Commerce's Department for Promotion of Industry and Internal Trade (DPIIT). The DPIIT will issue the Standard Operating Procedure (SOP) for the processing of applications under the current FDI policy.

Importance of FDI

FDI full form is Foreign direct investment is critical to a country's economic development. Foreign capital inflows enable India to strengthen infrastructure, increase productivity, and create job opportunities. Furthermore, FDI serves as a channel for the acquisition of advanced technology and the mobilisation of foreign exchange resources. The presence of foreign exchange reserves in the country enables the RBI (India's central banking institution) to intervene in the foreign exchange market and control any adverse movement in order to stabilise foreign exchange rates. As a result, it creates a more favourable economic environment for Indian economic development.

Benefits of FDI

We already know FDI stands for Foreign Direct Investment. FDI has a number of advantages; some of the most significant advantages are listed below:

• It creates jobs in the country.

• It brings in new capital to the country.

• It strengthens the country's currency position.

• It infuses a country with new skills and technologies.

• It encourages exports and raises tax revenues.

• It grants the investor company access to a country's foreign market.

• If labour is cheap in the target foreign market, the investor company can reduce production costs.

• The investor company can make use of a country's natural resources such as metals, fossil fuels, and so on.

Types of FDI

There are several types of FDI; two of the most commonly discussed types of FDI are listed below:

Greenfield FDI: This is FDI in which a foreign company establishes a new company as its subsidiary rather than investing in an existing company in a country. Google, Facebook, and Amazon, for example, have established branches in India.

Brownfield FDI: This is FDI in which a foreign company invests in a country's existing business. It does not create a new office or manufacturing facility. It buys an existing production facility in a country in order to expand the existing business. Vodafone, for example, purchased Hutch.

FDI Full Form in English

Let’s discuss FDI full form in banking. Foreign direct investment (FDI) is an investment in the form of controlling ownership in a business in one country by a company based in another. The concept of direct control distinguishes it from foreign portfolio investment.

The origin of the investment has no bearing on its classification as an FDI: the investment can be made "inorganically" by purchasing a company in the target country or "organically" by expanding the operations of an existing business in that country.