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Foreign Direct Investment (FD1), , 1., , 35, , MEANING OF FDI, In a global economy FDI is becoming more important than trade as a mode of, , international economic transactions. There are two categories of investment, , direct, , investmernt and portfolio investment. Direct investment implies that investment is, followed by control - its implies an ownership share of at least 10 or 25 per cent; Portfolio, , investment (i.e., investment devoid of control) has its own importance in a firm's financial, management and strategy. Portfolio Investment is investing in foreign financial, , instruments. Portfolio equity flows provide finance to firms in developing countries., Foreign porttolio instruments refers to buying company's stocks without control over tis, , management., Foreign capital inflows can take the form of ADR or American Depository Receipts, (ADRs). It is a negotiable certificate issued by a US bank representing a specified number, of shares in a foreign stock traded in US stock market. Global Depository Receipts (GDRs), is a negotiable instrument issued by Depository Bank against the domestic shares of the, issuing company. It is traded in one or more international exchanges (except USA)., , External Commercial Borrowings (ECBs), Remittances and Foreign Capital Deposits, are other forms of foreign capital inflows., IMF defined FDI as "investment that is made to acquire a lasting interest in an, enterprise operating in an economy other than that of the investor. The investor's purpose, , being to have an effective voice in the management of the enterprise.", 1.1 Types of FDI, Business firms are motivated to indulge in FDI with the following objectives:, Sales expansion, Resource acquisition, , Diversification, Competitive risk minimization, FDI may be classified into the following types:, I., , Horizontal Foreign Investment and Vertical Foreign Investment, , II, , Inward and outward FDI, II Green Field Investments and Mergers/, , Acqui_ition's, , Iv. Equity, Reinvested earnings and other forms of capital (M & A), 1., , Horizontal Foreign Investment (HF) and Vertical Foreign Investment, , Horizontal Foreign Investment (HF) and Vertical Foreign Investment: It refers to, investment of a firm in a foreign country to produce the same product which is produced, in its home country., O Horizontal FDI implies that FDI undertaken in the same industry by the firm as it, operates, , in, , at, , home., , For, , example,, , Electrolux, , -, , a, , Swedish, , firm, , -, , the, , manufacturing of household appliances (such as washing machines, refrigerators,, dishwashers and so on) invested in Asia and Eastern Europe for producing, similar household appliances., , aHFI implies geographical / spatial diversification ofthe firm's product line., , aIt represents intra-enterprise product diversification ofthe firm's product line., Vertical Foreign Investment (VFI) : It is meant for integration of process in the, production. There may be backward vertical investment or forward vertical integration., OBackward Vertical Integration (BVI) implies that the firms directly invest in a, foreign country to produce intermediate goods that are meant to be used as inputs, in its domestic production process. In extractive investment in petroleum or, minerals.

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Businews Economies (T.Y.B.Com.) (Sem. v, Forward Vertical Investment (PV) implies that the firm invests in a forcign, country in producing the final stage goods or assembly of the produet to market it, directly to the foreign buyers. FVI, thus, involves establishment of an assembly, , 2, , plant, , sales branch for exports., Inward and Outward Investment, or, , nward Investment of foreign capital occurs in local resources (FDI). Outward, , investments reter to direct investments abroad., 3., Greenfield Investments and Mergers and Acquisitions (M & A), Tt involves flow of funds in the host nations for creating new production capacities or, , expanding the existing ones., Mergers and Acquisitions occurs when there is transfer of existing assets from local, hrm to foreign firms and acquiring control over its management operations., , Equity, Reinvested earnings and other capital (M & A): Equity capital is the value, ot MNCs investment in shares of an enterprise in a foreign country. It includes M, , and A, , and Greenfield investments Reinvested earnings are MNCs share of affiliated earnings not, , distributed as dividends (undistributed profits)., Other capital refers to borrowings (short long term) and lending of funds between, the foreign countries and the affiliates., 1.2, , Trends /Significance of FDI, Trends in FDI, The new economic policy, 1991, introduced various regulatory and innovative reform, , measures which has led to an environment to boost foreign investment and make India, investment friendly destination. FDI in India increased between the period JanuarySeptember. 2015 at $ 26.5 billion as compared to $ 22.4 during the previous years. (an 18%, increase). Foreign Investment Promotion Board too has been taking measures to improve, the Ease of Doing Business and relaxing the FDI norms to this effect. FDI in India doubled, , to US $ 48 bn in January 2015 which was the highest inflows from US $ 2.18 bn in January, 2014. As per the Department of Industrial Policy & Promotion estimates, FDI in India has, been showing a 13% increase on a year to year basis during the same period., Sector-wise FDI among the top 10 sectors computer software and hardware to have, received the maximum FDI (US $ 3.06 bn) followed by trade (US $ 2.73 bn) services, (US S 1.46 bn) automobile (US $ 1.46 bn) and telecommunication (US $ 0.66 bn), Country-wise, Mauritius showed maximum FDI inflows into India at US $ 13.35 bn., followed by Singapore (US $ 9.21 bn), Netherlands (US $ 2.38 bn) & USA (US $ 1.74 bn), , Japan (US` 1.26 bn)., , Recent trends in FDI, , India has become the fastest growing investment region for foreign investors in 2016., Some ofthe recent developments are:, 1., , In Feb. 2018, IKEA, a MNC dealing in ready to assemble furniture and kitchen, appliances announced its plan to invest upto 7 4000 crores in Maharashtra., , 2., , In Nov. 2017, 39 MOUs were signed for investment of T 4000-5000 crores in the, North-East regions of India., , 3., , In December 2017, the DIPP approved FDI proposals of Damro furniture and super, Infotech solutions in real sector and Department of Economic Affairs, Ministry of, Finance approved two FDI proposals worth F 532 crores, also it closed three FDI, proposals total FDI worth 7 24-56 crores during the same period., , 4., , Walmart India Pvt. Ltd. is planning to set up 30 new stores in India in coming three, years., , 5., , SAIC Motor corporations is planning to enter India's automobile market in 2019.

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Foreign Direct Investment (FDI), , 6., , 7, , ', , 37, , Kathmandu based MNC is planning to invest 1000 crores in India by 2020 in its, food/ beverages sector similarly US based footwear company Sketchers is planning, to add 400-500 more outlets in India., Cumulative equity FDI inflows in India increased 40% between FY 2015-16 and, FY 2016-17, , 1.3 Significance OF FDI, 1., , Through foreign direct investment, corporations extend their business activity into, foreign countries., , 2., , The main object of FDI is to acquire or retain control over markets and, productive resources., , or, , Major areas of FDI are oil, coal and ores, as well as service sector including, banking / finance, legal services, marketing and distribution., Thus, capital movement in the form of foreign investment is advantageous to the, economies of both the lending and borrowing nations., 3., , To the lending country, foreign investments may prove to be an additional source of, , supply of the required products when investment is made in the exporting industries, abroad. Lending of capital raises the purchasing power of borrowing nations in the, foreign market which may enable the lender country to increase its exports. And when it, , is a tied loan with a condition that the proceeds should be spent only in the lending, country, it will definitely be a means for enhancing its exports. Further, in the long run,, with the help of foreign capital when the borrower country's productivity and incomne, increases, their import propensity may increase which may help in pushing up the exports, , of the lending country further., Similarly, the borrowing country enjoys the following benefits from foreign capital:, i), , The country can exceed its imports over its exports with the help of borrowed, capital without experiencing much difficulties of foreign exchange resources., Foreign capital thus, helps to offset temporary balance of payments deficits, experienced by the borrowing country., , ii) Foreign capital can serve as an additional source of capital formation in a capitaldeficient country. Without curbing its current consumption level, the borrowing, nation can accelerate its pace of economic development with the help of foreign, assistance., , ii) Direct foreign investments bring entrepreneurial talents and technical know-how, to a poor country which lacks such pre-requisites of growth., , iv) A country for defence purpose can make use of foreign capital as a source of, financing war., v)The borrowing nation may use the proceeds of a foreign loan in buying gold from, , abroad so that, its monetary base is strengthened and it can increase its domestic, money supply. With the expansion of money supply, monetary demand for, domestic output may increase so that, the price of domestic goods may rise, relative to imported goods under the inflationary motion. Resources in exporting, , industries would then be diverted to domestic consumption goods industries., Further, imports of this country will also exceed. Thus, over a period of time an, international loan implies a transfer of real goods to the borrowing nation., In fine, the significance of capital movement lies in the fact that, such movement may, , tend to affect the incomes of countries involved, as capital flows induce changes in, investment expenditure, levels of income, and when the level of income is affected it, changes in the levels of imports and exports of the countries concerned. The change in the, import of related countries caused by capital movement depends on their marginal, propensities to save and to import.

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Business, , 38, , g'R'R, the increase, , in the, , imports, , Economics, , concerned will be, of countries, , (T. Y.B.Com.) (Sem.-v), , larger, , When, , their, , to, , save are, to, With, trade of the related countries., influence, foreign, flows, of, directly, receiving, n u s , capital, decreased while that, of capital, if a country's expenditure is, on, aepending, contract,, outflow, or, size of imports will either expand, the, then, increased,, Ountry's, ea, drginal propensities, , import are, , greater and their, , marginal propensities, , e, , the, , respective degrees of the propensities., role in respect of several, a significant adjusting, also, flow, play, may, of the trade cycles, Above all, capital, and amplitudes, the, in, timing, differences, of disturbances, such as, pes, between countries or their differing rates of growth., in India, FDI equity intlows, of, growth, the, Kecent Trends indicate that which, trend of FDI inflow in India., a increasing, signifies, w, a, s, 32%, 2010-11 to 35,612, during the F.Y. 2017-18, bn $ US for, in India increased from 11,834, percentage, , AS per RBI,, , net FDI inflows, , US bn $ in 2017., India in expected to grow, network from US $4 bn by 2025., As per, , (GIN) FDI in, , 25% annually Global impact investing, , 1.4 Policy Initiatives, I., , New Industrial Policy (1991)D, , 51% of foreign ownership in, Government introduced automatic approval of upto, 34 priority sectors., limit to 100% without prior approval, Government had the authority to raise FDI, insurance and defence), of Parliament, , (barring pension,, , There were 2, , a), , ways, , to, , whole, Some sectors like agriculture, manufacturing, for FDI., and infrastructure does not require prior approval, Investment Promotion Board), Earlier FIPB, , :, , Automatic Route, , trading, railways, b), , get FDI approval in India., , Government route, , :, , (Foreign, , sale, , was, , telecommunication, for granting approval to sectors like air transport,, Since 1995 DIPP (Department of Industrial, Banking food processing and retailing., and facilitates foreign technology, Policy and promotions Board). encourages, faced by foreign investors are, Problems, collaborations among Indian companies., solved by Foreign Investment Implementation Authority (FILA) which was set up, , responsible, , in 1999. Its major responsibility was to fast track the FDI proposals for approvals, and address to the, , c, , problems faced by foreign, , investors., , Board) w a s set up in 1991 to guide /, facilitate and implement FDI proposals. It introduced digitization in filing, FIPB, , (Foreign, , Investment Promotion, , proposals to ensure transparency., 2., , FDI policy 2017, , formalities and, On August 28, 2017, DIPP announced FDI policy to reduce the, initiatives were taken, the flow of foreign investments to the country. The following, Abolition of FIPB and establishment of DIPP., , ease, , in, , :, , Different departments were appointed to look into sector specific investments., , Standard operating proceedings (SOP) issued detailed procedures time lines and, list of competent authorities for processing FDI approvals., , Start ups could issue equity or equity linked debt instruments to foreign venture, capital investors., , The United Nations Conference on Trade and Development (UNCTAD) ranked India, as the 9th most favourable foreign investment destinations in 2016.

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Foreign, , Diret Investment (FD), , 39, , Some policies in private FDI in India were as follows, , Domestic companies are allowed to issue equity shares, compulsorily convertible, preterence shares (CCPS) and debentures that are fully and compulsorily convertible to, non-residents, subject to certain guidelines and norms., The approval of FIPB is mandatory for the lssue of warrants, partly period shares etc., while the issue of non-convertible, partly convertible or optionally convertible preference, shares and debentures need to comply with the RBls, [ECB] External Commercial, , borrowings guidelines., There is no need for government approval for FDI in virtually all sectors / activities, exoept for those in the negative list framed by GOI eg. defense and retail trade. The FIPB, considers and approves those proposals which do not qualify through automatic route., Free Repatriation of capital investment is allowed if the orginal investment was in, , convertible foreign exchange and is subject to payment of taxes and other conditions, All royalty payments, lump sum fees for the transfer of technology and use of, , trademarks or brand name are allowed under the automatic route without any monetary, or duration limit. Use of foreign brand norms, , trade marks is allowed to sell goods in, , India., FIPB has created a single window clearance facility and 'Investor escort services in, various states to simplify the approval process for new ventures., Recently GOI has liberalised FDI in single and multi-brand retailing sector., Recent Policy Initiatives, GOI has permitted 100% FDI in medical devices, single brand retailing and telecom, 1, sectors., , 2., , FDI ceiling is increased in insurance and sub activities from 26% to 46%., , 3., , FDI in commodity exchange, stock exchange and depositors, power exchanges,, petroleum refining by PSUs, courier services have been shifted from government, route to automatic route., , 4, , FDI limit is raised in the following sectors:, , a) Credit information (74%), b) Asset Reconstruction (100%), c)Defence Sector (49% from 26%) under government route, d) FDI (24% under automatic route on a case to case basis with approval of Cabinet, Committee on security), , e) Construction operator and maintenance of specified activities of railway (100%, FDI under automatic route.), , 5., , DIPP has set up a special management team to facilitate and speed up investments, 2014 Industrial, proposals from Japan, (known as Japan Plus team) w.e.f, October, , corridors (DMIC) elhi, , Mumbai, Chennai, Bangalore, Indl. Corridor, (CBIC) etc. four, township projects in various upconming cities of India., , Industrial, , Integrated, The Central Board of Direct taxes (CBDT) has exempted employee stock options and, , Corridor,, , FDI from long term capital gains tax. The GOI is in talk with stakeholders to ease FDI, in defence under automatic route to 51%. In Jan, 2018, 160% FDI was allowed in, automatic route. Likewise 100% FDI in cash / ATM, brand retail, , single, , through, , companies is likely to come up., , Thus FDI investment measures in India are viewed as key driver of economic growth, and a major source of non-debt financial resource for the economic development of, the country.

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Business Economics (T.Y.B.Com.) (Sem.-v, , 40, , 1.5 Merits/ Demerits of Foreign Direct Investment, CGovernnent is taking lot of measures to increase foreign investment in India & that's, , why the Union cabinet has opened the gates of multi brand retail segment of India to well, known foreign chains like Wal-Mart, Carrefour etc., FDI has lot of advantages / Merits to its favour which can be summarized as below:, 1., , More consumer savings : One of the biggest advantage of FDI is that it will, , increase the savings of Indian consumer as he will get good quality products at, much cheaper rates. Consumer savings are likely to increase 5 to 10% from FDI., 2., , 3., , the miserable, basis because, of lesser return from their agricultural produce. FDI will certain help a lot in, improving their conditions as the farmers are going to get 10 to 30% higher, , Higher remuneration for farmers: FDI will help a lot in improving, conditions of Indian farmers who are committing suicides on daily, , remuneration because of FDI., Increase in employment opportunities: FDI is certainly going to increase the, employment opportunities in India by providing around 3 to 4 million new jobs., , Not only this it will lead it 4 to 6 million jobs created in logistics, labour etc., because of FDI., 4Increase in government revenue : Government revenues are certainly going to, increase a lot because of FDI. Government revenues will increase by 25 to 30, billion dollars. This government revenue can help a lot in the development of, , Indian economy., 5., , Increase in Investments: FDI contributes to gross fixed capital formation without, increase in external debt., , 6., , Contribution to infrastructure development: Most of the greenfield investments, contribute to the development of technology and infrastructure in the host, , country., , They, , also, , have, , a, , positive impact, , on, , stimulating, , research, , and, , development from parent company., 7., , Stimulates exports / Competition : FDI helps to produce import substitutes and, promote exports which increases the flow of earnings (revenue) and improves, balance of payments situation., , 8., , of capital inputs, FDI, n e w technology : In the form of new varieties, can allow transfer of new technology. It also helps in promoting domestic, enterprises, producing better quality of goods / services., Transfer of, , Demerits, , of FDI: Although, , disadvantages as well. Following are, 1., , with it lot of, some of its demerits, , FDI, , brings, , advantages,, , it is not free from, , Destruction of small entrepreneurs : The biggest fear from FDI is that it is likely, , to, , the small entrepreneurs or small kirana shops as they will not be able, destroy, withstand the tough competition of big entrepreneurs, as these entrepreneurs, , to, are going to provide all the goods to the consumers at much lesser prices., 2., , of the view that entry of big foreign, chains like Wal-Mart, Carrefour etc. are not going to generate any jobs in reality, , Shrinking of jobs: Many, , critics of FDI, , are, , move from unorganized sector to, in India. At best, the jobs, while their number will remain the same or lesser but not more., , will, , 3., , organized, , sector, , also of the view that it is a fallacy, that the farmers are going to benefit in any way because of the entry of foreign, chains, chains in India rather it will make the Indian farmers a slave of these big, to, and the farmers will entirely be on their mercy. Thus, FDI is only going, No real benefit to, , farmers:, , Critics of FDI, , are, , deteriorate the already miserable conditions of Indian farmers.

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Foreign, , Direct Investment (FD), , 41, , 4. Adverse impacton BOP situation: The capital account of the host country can be, adversely impacted due to management fees, royalties, profit repatriation, capital, and interest repayments etc., 5. Unsuitable foreign technology : It can negatively impact the small businesss/, local traders as changes in suppliers and competing firms may not necessarily be, , adaptive to suit local environment., 6. Socio-cultural Impact: FDI benefits a small proportion of population i.e. those, who can acquire training and those who are healthy to adapt to new processes, technology. It can thus create wage differentials between rural/ urban firms., , Culturally too, it encourages consumption of non-traditional products and thus, promotes consumerism., , 7. Loss of Autonomy: FDI can create dependency on foreign technology sources,, divert domestic resources towards production of imported goods., , 2, , FOREIGN INVESTMENT PROMOTION BOARD, Introduction, , Since the beginning of the new Economic Era in the 31t century, the GOI has opened, up the economy and permitted foreign investment for the country's or development., , The FIPB was set up in early 1990s. It is government organization which offered, single window clearance for proposal on FDI in India, which were not permitted through, automatic route but required government approval. The FIPB is designated to provide, , the, , grants, and composite approvals involving foreign investment and foreign technology. It, is located in the Department of Economic affairs, Ministry of Finance. The Finance, Minister Mr. Arun Jaitley is in charge of FIPB., , The FIPB has been recently abolished on 24th May 2017. In a significant move aimed at, speeding the flow of investment in India union cabinet liberalised the policy further by, allowing FIPB to clear proposal from overseas worth 5,000 crores while recommendation, endatron for proposal of more than above 5,000 crores need to be referred to (CCA)., Functions of FIPB, 1., , 2, 3., , To, , quickly approve the foreign investment proposal, To look over the, implementation of approved proposals., To communicate with, government/ non government, , 4, , increase the flow of FDI in the country., To identify the various sectors that require FDI., , 5., , To, , 6., , To Review the FDI, , and, , Industry, , in order to, , keep such activities that encourage FDI in the country like, contacts, with international companies and inviting them to invest in India.establishing, , policies, , administrative ministries,, , and, , to, , to set up, , encourage FDI into the various sector., , communicate with other agencies such as the, guide lines that are transparent and which, , Currently FDI in 11 sectors including defense and retail trading, approval and in rest of the sectors FDI comes through automatic route.require, , government, , With the abolition of FIPB the, , department of Industrial policy and, proposals that require government approval, The DIPP, , Promotion (DIPP), to the concerned, ministry or Department., release a set up of Standard, Operating, Procedures (SOP) under the new system, investors will no, longer have to submit physical, FDI proposal. Digital verification is sufficient. The, department of electronic affairs will, process case in which FDI proposal do not, neatly fit into the mandate of a specific, department or ministry, , would, central, , now, , direct FDI, , Scraping FIPB is appreciated as, doing business in India is improved., , the process of red, , tapism, , is avoided and the, , ease, , of

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Business Economics (T. Y.B.Com.) (Sem.-V), 4, , R'P'R, , 3MULTINATIONALCORrORATIONS, Introduction, , a, wide, huge industrial organisations haVing, two, main, of countries. Ihe, spread over a number, , inational Corporations (MNCS), , Ork, , of, , branches and subsidiaries, , are, , centrally, size with their worldwide activities, into Jolnt venture with a, enter, Controlled by the parent companies. Such a company may, of, different, among companies, in another country. There may be agreement, be referred to, mpany, market, etc. They can, O u n t r i e s in, respect of division of production,, the home country) but, in one country (called, which have, been, incorporated, whose operations, extend, beyond, the home country and which carries (called the host, characteristics of MNCs are, , their, , large, , ompanies, , countries) in addition to, , the home country. Its head quarters, , are located in the, , home, , country., , It is known by various names such as transnational corporation (TNCS), global, , enterprise,, , world, , enterprise., , Some of the, , popular, , MNC, , are, , Cadbury India, Pepsi India,, , Sony India, Hindustan lever., , advanced countries, with the USA, companies a r e to be found in almost all the, their own countries,, perhaps the biggest amongst them. Their operations extend beyond, , These, , and cover not only the advanced countries but also the LDCs. Today, many Japnese,, Korean, European and Indian MNCs are operating world over., , 3.1 Role of MNC's, , Many MNCs have annual sales volume in excess of the entire GNPs of the developing, of, countries in which they operate. MNCs have great impact on the development process, the developing countries., 1, , Filling Savings Gap: Firstly, MNCs fill the resource gap between targeted or desired, , investment and domestically mobilized savings. For example, to achieve a 7% growth rate, of national output if the required rate of saving is 21% but if the savings that can be, , domestically mobilized is oniy 16% then there is a 'saving gap' of 59%. If the country can, ill this gap with foreign direct investments from the MNCs, it will be in a better position, to achieve its target rate of economic growth., , 2, , Filling Trade Gap: Secondly, they fill the foreign exchange or trade gap. An inflow, , of foreign capital can reduce or even remove the deficit in the balance of payments if the, , MNCs can generate a net positive flow of export earnings., , 3., , Filling Revenue Gap: Thirdly, MNCs bridgethegap between targeted governmes, , tax revenues and locally raised taxes. By taxing MNC profits, LDC governments are able, , to mobilize public financial resources for developing projects., 4. Filling Management Technological Gap : Fourthly, Multinationals not only, provide financial resources but they also supply a "package" of needed resources, , including management experience, entrepreneurial abilities and technological skills. These, can be transferred to their local counterparts by means of training programs and the, , process of learning by doing'., Moreover, MNCs bring with them the most sophisticated technological knowledge, about production processes while transterring modern machinery and equipment to, capital poor LDCs. Such transfers of knowledge, skills and technology are assumed to be, , both desirable and productive for the recipient country., 5. Other Beneficial Roles: The MNCs also bring several other benefits to the host, , country., a), , The domestic labour may benefit in the form of higher real wages and genera, , employment opportunities., b) The consumers benefit by way of lower prices and better quality products.

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Forign, , 43, , Dirat Investment (FD), , c)Investments by MNCs will also induce more domestic investment. Forexample,, ancillary units can be set up and feed' the main industries of the MNCs., , d) MNCs ependitures on research and development (R & D), although limited is, bound to benefit the host country., external, Apart from these there are indirect gains through the realization of, economies., , 3.2 Arguments Against MNCs (The negative role):, There are several arguments against MNCs as discussed below:, 1., , Although MNCs provide capital, they may lower domestic savings and investment, rates by stifling competition through exclusive production agreements with the host, governments. MNCs often fail to reinvest much of their profits and also they may, , inhibit the expansion of indigenous firms., 2., , Although the initial impact of MNC investment is to improve the foreign exchange, position of the recipient nation, its long-run impact may reduce foreign exchange, deteriorate, earnings on both current and capital accounts. The current account may, , as, , a result of substantial importation of intermediate and capital goods while the capital, account may worsen because of the overseas repatriation of profits, interest, royalties,, etc., , 3., , 4., , 5., , 6., , While MNCs do contribute to public revenue in the form of corporate taxes, their, contribution is considerably less than it should be as a result of liberal tax, concessions, excessive investment allowances, subsidies and tariff protection, , provided by the host government., The management entrepreneurial skills, technology and overseas contact provided by, the MNCs may have little impact on developing local skill and resources. In fact, the, MNCs by stifling the, development of these local skills may be inhibited by the, dominance of local, MNCs, the, of, result, growth of indigenous entrepreneurship as a, markets., MNC's impact on development is very uneven. In many situations MNC activities, reinforce dualistic economic structures and widens income inequalities. They tend to, workers only. They also divert resources, promote the interests of few modern-sector, of consumer goods by producing Luxury goods demanded, away from the production, by the local elites., MNCs typically produce inappropriate products and stimulate inappropriate, consumption patterns through advertising and their monopolistic market power., Production is done with capital-intensive technique which is not useful for labour, in the host, surplus economies. This would aggravate the unemployment problem, , country., , 7., 8., , in R & D activities in, The behaviour pattern of MNCs reveals that they do not engage, to bear the bulk of their costs., underdeveloped countries. However, these LDCs have, in directions, MNCs often use their economic power to influence government policies, unfavourable to development. The host government has to provide them special, economic and political concessions in the form of excessive protection, lower tax,, , subsidized inputs and cheap provision of factory sites. As a result, the private profits, 9., , of MNCs may exceed social benefits., Multinationals may damage the, , by suppressing domestic, worldwide contacts and, entrepreneurship through their superior knowledge,, and, inhibit the emergence of, advertising skills. They drive out local competitors, small-scale enterprises., , 4/T.Y.B.Com. - Business Economics (Sem.-V), , host, , countries

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Business, , Economics, , (7., , Y.B.Con.), , (Sem.-V), , 44, , Conclusion, , ds, , well, , blessing. It has POsive, a mixed, of, is, country, both prS ana cons, MNCs in a developing, consideration, ne role of, in India,, into, FDl, taking, about, o n the economy. After, as, apprehensions, v e impact, are certain, there, that although, , a n sately say, , all these fears are unfounded., , growth and development, promote economic, , detinitely, , Dwill, , in Inala., , MODEL QUESTIONS, , I., , Answer in brief:, , ., , What is, , 2., , 4., , Explain the meaning of, FDI in, taken to promote, Examine the policy m e a s u r e s, the classification of FDI., , 5., , Write, , a note o n functions, , 6., , What, , are, , 7., , Explain the, , 8., , Write, , 9., , Explain the, , 10., , FDI is, , II., , Write Short notes, , 3., , demerits., , its merits and, Direct Investment? Explain, their role., (MNC's) and, Corporations, Multinational, , Foreign, , India., , Explain, , of FDI, the trends and significance, , key policy initiatives, , note, , a, , on, , MNC, , b), , FIPB, , to, , in India., , promote FDI, , MNCs., , recent, , is its importance, in India. What, trends in FDI inflows, in India. Discuss., , c o n s i d e r e d as a n, , a), , of FIPB., , in India?, , engine of growth, , on, , c)Typesof FDI, OBJECTIVE QUESTIONS, , A., , 1., , Fill in the blanks:, , foreign, produce the, foreign, , investment, , same, , i n v e s t m e n t is mearnt, , 5., 6., , implies production, , 8., , B., 1., , foreign country, , of intermediate goods, , refers to, , an, , investment, , that, , are, , meant to, , be used, , made to, , the, , a, , acquire, , company, , foreign, , in, , multinational enterprises?, is a definition of, Which of the following, nationals., half its directors a r e foreign, least, At, a), domestic market., market is larger than the, overseas, The, b), in foreign markets., cent of its business, 30, least, at, per, owns, , c)The, , a, , o r domestic, , highest FDI in India 2017., India., frame FDI policy in, is responsible to, vertical investment, (4), vertical, (3) backward, (2), horizontal,, (8) DIPP], [Ans. (1), FDI, (7) Telecommunication,, vertical, (5) Portfolio, (6), and rewrite the s e n t e n c e :, Choose the correct alternatives, sector received, , to, , of, in the production, for integration of process, , branch for exports., imports., o r sales, of a n assembly plant, establishment, is, Which can exceed 20 to 25%., devoid of control., is, Investment, a, leasting interest in, enterprise., , 7., , of a firm in a, in its home country., , investment, , produced, product which is, , commodity., , 3, , refers to, , forward