Presentation on

Types of
Foreign Direct Investment
By : Tanya Gera
 Foreign Direct Investment (FDI)

Foreign direct investment (FDI) is an investment made by a firm or

individual in one country into business interests located in another
country.
Generally, FDI takes place when an investor establishes foreign
business operations or acquires foreign business assets, including
establishing ownership or controlling interest in a foreign
company.
Types of FDI

• On the basis of Direction of Investment

Inward FDI – Example - Suzuki, Honda, Amazon, KFC etc.

Outward FDI –Example- Wipro, Tata Reliance etc.

• On the basis of Type of Activity

a) Horizontal FDI
b) Vertical FDI
i) Forward
ii) Backward
iii) Conglormerate
• On the basis of Investment Objective

a) Resource seeking FDI

b) Market seeking FDI

• On the basis of Entry Modes

a) Green field Investment

b) Brown field Investment
• On the basis of Sector
a) Industrial sector- the foreign firms invest in manufacturing sector.
Its objective are:-
i) To achive cost efficiency by taking advantage of raw material availability.
ii) To by pass trade barrier such as high import tariff.
iii) To be closer to the market & serve them more efficiently.
iv) To have physical presence due to strategic reasons.
b) Non- Industrial FDI- Invested by foreign firms in service sector
Its objective are:-
i) To overcome regulatory obstacles
ii) To create regular contact with customer
iii) It serves as a strategic option to enter International Market.
• On the basis of Strategic Mode

a) Export Replacement
b) Export Platforms
c) Domestic Substitution
THANK YOU !