FDI

India is a country that has been able to restore investor confidence in its markets, even during the toughest of times. Increase in capital inflows, foreign direct investments (FDI) and overseas entities participation reflect the fact that Indian markets have fared well in recent times. Moreover, foreign companies are viewing the South-Asian nation as a strategic hub for their operations and investments owing to investor-friendly policy environment, positive eco-system and huge potential for growth. India Incs increasing presence over the global canvas and Indian governments consistent support to the FDI space have facilitated remarkable developments and investments from overseas partners. Some of them are discussed hereafter:

Objectives of World Bank

The World Bank was established to promote long-term foreign investment loans on reasonable terms. The, purposes of the Bank, as set forth in the 'Articles of Agreement are as follows: (i) To assist in the reconstruction and development of territories of members by facilitating the investment of capital for productive purpose including; (a) the restoration of economies destroyed or disrupted by war; (b) the reconversion of productive facilities to peaceful needs; and (c) the encouragement of the development of productive facilities and resources in less developing countries; (ii) To promote private investment by means of guarantee or participation in loans and other investments made by private investors. (iii) When private capital is not available on reasonable terms, to supplement private investment by providing on suitable conditions finance for productive purpose out of its own capital funds raised by it and its other resources. (iv) To promote the long-range balanced growth of international trade and the maintenance of equilibrium in balances of payments by encouraging international investment for the development of the productive resources of members, thereby assisting in raising productivity, the standard of living, and conditions of labour in their territories. (v) To arrange the loans made or guaranteed by it in relation to international loans through other channels so that the more useful and urgent projects, large and small alike, will be dealt with first.

(vi) To conduct its operations with due regard to the effect of international investment on business conditions in the territories of members and in the immediate postwar years, to assist in bringing about a smooth transition from a wartime to peacetime economy.

Functions of world bank     Provide funds for development projects Provide policy advice and technical assistance Promote investment in developing countries Extend grants for project preparation and institutional building

8) Factors to Consider in Multinational Capital Budgeting-Exchange Rate Fluctuations, Inflation, Financing i) Arrangement- Financing costs are usually captured by the discount rate. , ii) Blocked Funds-Some countries may require that the earnings be reinvested locally for a certain period of time before they can be remitted to the parent. , iii) Uncertain Salvage Value-The salvage value typically has a significant impact on the projects NPV, and the MNC may want to compute the break-even salvage value. ,Impact of Project on Prevailing Cash Flows ,iv)Host Government Incentives-These should also be considered in the analysis . Cash flows to a project and to the parent must be differentiated). (National differences in tax systems, financial institutions, and financial norms and in constraints on financial flows must be recognized.) (Different inflation rates can affect profitability and the competitive position of an affiliate.) (Foreign exchange-

rate changes can alter the competitive position of a foreign affiliate and the value of cash flows between the affiliate and the parent.) (Segmented capital markets create opportunities for financial gains or they may cause additional costs.)(Political risk can significantly change the value of a foreign investment)