Brownfield FDI

Brownfield FDI is investment made by a foreign company in existing production arrangements. An important form of Brownfield investment is merger and acquisition by foreign MNCs in India. Here, a domestic company is taken over by the MNC.

Brown field FDI is different from Greenfield FDI. Greenfield FDI makes additional production capacity, whereas Brownfield FDI is purchase of existing production capacities. The latter is just a transfer of ownership of existing firm from a domestic entrepreneur to a foreign one.

Disadvantage of Brownfield FDI as a source of investment is that it doesn’t create expansion of production capacities or employment generation etc.

December 3, 2017
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