India's Greenfield Investment Share Outpaces China's, UNCTAD Report Shows

Foreign investment reaches a country through two broad channels. A greenfield investment is money a foreign company spends to build a new plant, unit or venture from scratch in another country. A brownfield investment, by contrast, means buying into or merging with a firm that already exists. This distinction matters because a greenfield project usually adds new production capacity and new jobs, while a brownfield deal often just changes ownership of existing assets.

Since the 1991 reforms, India has steadily opened its economy to such flows. The Department for Promotion of Industry and Internal Trade (DPIIT), under the Ministry of Commerce, is the nodal body for foreign investment policy, and the Foreign Exchange Management Act (FEMA), 1999 provides the legal framework. India's total, or gross, FDI inflow has stayed large in recent years. But separate analysis has shown that India's net FDI, gross inflows minus profit repatriation and outward investment by Indian firms, has fallen sharply even while gross numbers look healthy. This means the headline inflow figure alone does not tell the full story. Looking specifically at new-venture creation, which is what greenfield investment measures, gives a cleaner picture of how much fresh productive capacity is actually being built in India by foreign firms.