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Business Environment and Law-Foreign Capital And Collaboration

Foreign Capital And Collaboration – A Critical Assessment-Foreign Capital And Collaboration

   Posted On :  06.05.2018 10:45 pm

Foreign Capital And Collaboration – A Critical Assessment-Foreign Capital And Collaboration

Foreign Capital And Collaboration – A Critical Assessment


  • Transfer of technology can be affected with more investment being made by technologically advanced MNCs. But, there are aspects of foreign direct investment which seriously impinge on people’s welfare and national sovereignty.

  • Nearly half of the Foreign Investment is in the nature of portfolio investment, which only strengthens speculative trading in shares. This only underlines the fact that MNCs are able to manipulate the stock market to suit their goals.

  • Foreign direct investment is catering to the needs of the upper middle and affluent classes. Consequently, there is an utter neglect of the wage goods sector.

  • Portfolio investment made in India is in the nature of hot money, which may take to flight, if the market signals indicate any adverse trends. Thus, it would be a mistake to treat portfolio investment as a stable factor in our growth.

  • A larger inflow of foreign direct investment, more so in the financial sector, will lead to building of reserves, which in turn will expand domestic money supply. Consequently, inflationary trend of prices gets strengthened in the process.

  • MNCs after their entry are rapidly increasing their shareholding in Indian companies. This has resulted in a number of takeovers by the MNCs and thus, the process of Indianisation of the corporate sector has been totally reversed.

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