FDI in India? Its Pros and Cons

The Foreign Direct Investment abbreviated as (FDI) can be defined in a single sentence as “investment made by a foreign company to a country. The investment is practiced either by taking proprietorship of a company in the target country or by making operation's expansion of an existing business in that country. The investment is made aiming at advantageous experience – cheaper wages, special investment privileges, for example tax exemptions, offered by the country. 

Generally, a country taking FDI implementation decision at the time of its domestic capital seems deficient for the economic growth. The investment, under the FDI, made by foreign country economically proved to be profitable at least as a temporary measure. The foreign capital considerably consists other constructive constituents such as technical and new ideas of knowing how a  business provides benefits to customers.

With the government's implementation of allowing 51% FDI in multi-brand retail in 2012, it  outcome with a storm protest across the political spectrum, and eventually forced the government to back down and suspend it. Being India a largest 3^rd world country on global ground, it looks appropriate for FDI. Here is pros and cons of FDI in the country.

Pros

·         As FDI is responsible for improvement in forex position of a country, so does in India

·         Growth in employment and production increase

·         Back up for capital formation, as it brings fresh capital

·         Introduction of innovative marketing skills, latest technologies and intellectual property

·         Competitiveness escalation in domestic market, as it comes with higher efficiencies

·         Responsible for boosting exports and increasing revenues

·         Products available at cheaper rates

Cons

·       With the latest and innovative technologies used by foreign retailers, chances are that local companies may lose their ownership

·        The domestic small enterprises may stand unparalleled to compete with the large companies and may be compelled to close their business

·        Big brand foreign retailer may experience monopoly and take over highly profitable sectors

·      Unemployment may increase because of machinery utilization of international brand rather than paying wages to local people

·      It is also believed that government will have less control over such companies, as they usually perform as completely owned subsidiary of an overseas company.