Role of Foreign Direct Investment in the economic development of Indian economy

Abstract

This paper presents the role of Foreign Direct Investment in the economic development of Indian economy. Foreign direct investment (FDI) is an investment made by a company or individual in one country in business interests in another country in the form of either establishing business operations or acquiring business assets in the other country, such as ownership or controlling interest in a foreign company. Foreign direct investments are distinguished from portfolio investments in which an investor merely purchases equities of foreign-based companies. Foreign investment involves capital flows from one country to another, granting extensive ownership stakes in domestic companies and assets. Foreign investment denotes that foreigners have an active role in management as a part of their investment. A modern trend leans toward globalization, where multinational firms have investments in a variety of countries.