ABOUT FOREIGN DIRECT INVESTMENT

Foreign direct investment (FDI) is an investment in the form of controlling ownership in a firm in one nation by a company headquartered in another. The concept of direct control distinguishes it from a foreign portfolio investment. Foreign direct investment is broadly defined as "mergers and acquisitions, new facility construction, reinvestment of earnings gained from abroad activities, and intra-company loans." As indicated in the balance of payments, FDI is the total of equity capital, long-term capital, and short-term capital.

FDI often entails management engagement, joint ventures, technology transfer, and expertise transfer. The stock of FDI is the net cumulative FDI (i.e., outbound FDI minus inbound FDI) for any given time. Direct investment does not include investments made via the purchase of stock (if that purchase results in an investor controlling less than 10 percent of the shares of the company).

TYPES OF FOREIGN DIRECT INVESTMENT (FDI)

Horizontal and vertical FDI are the most common forms of FDI. Conglomerate and Platform FDI, on the other hand, have developed as new forms of FDI
1. HORIZONTAL FDI:
This form of FDI involves a company expanding its inland operations to another nation. The company engages in the same operations, but in a different nation.
2. VERTICAL FDI:
In this scenario, a company grows into another nation by moving up the supply chain. As a result, the company engages in a variety of operations abroad, all of which are connected to the primary business.

THERE ARE TWO WAYS FOR INDIA TO GET FDI

1. Automatic Route: Under this method, FDI is permitted without the need for previous clearance from the government or the Reserve Bank of India.
2. Government Route:
This route requires prior clearance from the government. The application must be submitted via the Foreign Investment Facilitation Portal, which will allow for single-window clearance of FDI applications under the Approval Route. The application will be submitted to the relevant ministries, who will act on it in accordance with standard operating procedure. [10] The Foreign Investment Promotion Board (FIPB), which was in charge of overseeing this route, was decommissioned on May 24, 2017. Its most recent meeting was conducted on April 17th, and it was the 245th meeting of the Board. The Union Government abolished the Foreign Investment Promotion Board on May 24, 2017. The work relating to the processing of FDI applications and the approval of the Government thereon under the existing FDI Policy and FEMA will now be handled by the concerned Ministries/Departments in consultation with the Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce, which will also issue the Standard Operating Procedure (SOP) for the processing of applications.

According to the UN Conference on Trade and Development's (UNCTAD) World Investment Report 2020, India was the 9th largest recipient of FDI in 2019, with $51 billion inflows during the year, an increase from $42 billion inflows in 2018, when India ranked 12 among the top 20 host economies in the world. India was one of the top five FDI host economies in the "Development Asia" area. According to the research, global FDI flows are expected to fall by up to 40% in 2020, from a value of USD 1.54 trillion in 2019.

According to the Financial Times, India surpassed China and the United States as the biggest FDI destination in 2015. In the first half of 2015, India garnered $31 billion in investment, compared to $28 billion and $27 billion from China and the United States, respectively. According to data for 2019-2020, the services industry drew the most FDI equity inflows of US$7.85 billion, followed by computer software and hardware at US$7.67 billion, telecommunications at US$4.44 billion, and trading at US$4.57 billion.