You must be reading a lot about India's popularity as most
preferred FDI destination in the world. Let's discuss what is
FDI and how is it different from other investments.
Foreign direct investment (FDI) is an investment made by an
investor [a company, partnership or individual(s)] in one country
in business interests in another country. Such investment can be
made either in establishing new business operations by
incorporating a new entity or acquiring existing business assets in
the other country, such as ownership or controlling interest in a
foreign company.
Foreign direct investments are different from portfolio
investments - in the latter case, an investor merely purchases
securities (shares, debentures, and other financial instruments) of
foreign-based companies. The objective is to make financial returns
without any commitment of duration, management, resources,
technology, etc. to the investee company.
