FDI is ruling the rhetoric of business lexicon. Without much ado, let me define the term FDI. FDI signifies Foreign Direct Investment. To explain in terms of investment, it refers to the investment made by a person living in one particular country, in the gamut of entrepreneurial communities of another country or countries with the vested interest of initiating or recommencing a lasting business interest in the investee country. In a nutshell, it is nothing but the investment made by the celebrated organizations in one country by the individuals or office bearers of another country. There are several genuine reasons behind such initiatives. Nonetheless, there are a few constraints that must be met in the affirmative before leveraging on Foreign Direct Investment:

  • The minimum investment is deemed to be around USD 100 million.

  • It is left to the volition of Government to procure or not to procure lands or any other material from farmers. Thus, the decision of government officials and authorities is final. As a consequence, the investing organization should adhere to the guidelines and solicit the support of government authorities.

  • To give impetus to small and medium sized enterprises of India, the Government of India has laid a guiding principle that emphasizes that at-least 30% of the raw material has to be purchased or acquired from India.

  • Following the same vein, the Government of India propounded that at least 50% of the investment should be made in the backend infrastructure development.

  • In cities where the population is estimated to be more than 10 lakhs, investors may reinforce their marketing gambits to lay the foundations of shopping malls and its variants.

  • A particular patented product of a particular organization should be marketed and promoted with the same name and under the gamut of same brand.

  • The brand should always be a foreign investor. Third party impersonation is strictly prohibited.

FDI

Here are a few benefits of FDI in retail:

  1. Fortunately, India is the second largest producer of fruits and vegetables. Deplorably, we are not able to make the best use of this natural production of fruits and vegetables because of infrastructural incapability.

  2. FOREX is an economic indicator of foreign reserves. Due to FDI, FOREX reserves may be boosted.

  3. To control inflation and to reduce pre-harvest wastage, FDI is a handy tool present in the arsenal of Government of India.

  4. To obviate the vested interests of greedy retailers and avaricious business outlets, the importance of FDI requires a special mention.

  5. To ensure a robust competition among various business outlets and to ensure better Quality of Service to customers, FDI is always a ‘Yes.’

  6. Unemployment in India is on the rampage. To do away with unemployment and improve the percentage of working population, Government of India endorsed US based companies such as Walmart, Cox communications etc.

  7. To leverage the business expertise and technical expertise of Indian personnel, FDI is advocated.

  8. Due to FDI, lucrative revenue is always in offing. As a consequence, GDP of India is bound to receive impetus. As corporate tax is the largest source of revenue to the Government of India, India can further add quality to its glittering GDP.

To all intents and purposes, FDI should be encouraged. India is indeed an overwhelming favorite to foreign investors!