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Foreign Direct Investment (FDI)

Updated on March 5, 2023

FDI refers to the investment made by a person or entity of one country into another country. FDIs are usually made in foreign countries that are viewed to provide better returns or growth opportunities than investment options in the home country. FDIs can be institutional investors or individual investors that have a significant stake in the equities of companies belonging to a foreign country. FDIs can be in the form of capital investment or in the nature of providing technical and managerial advancements to the foreign company. FDIs have the ability to exert significant influence on the policy decisions of the foreign company.

Presence of FDIs can boost the reputation and thereby the stock prices of the company in the domestic markets. They also instrumental in boosting job opportunities in the foreign companies and creating a market for domestic companies on international platforms. FDIs also have the benefit of tax incentives for their investment in foreign companies.