Foreign direct investment (FDI) is an opportunity for an individual or a business that is based out of a different nation, while it makes investment in another country. This could majorly be the reason to start a new business or even opt for investment in an existing foreign owned business. After the basic foreign funding investment, it is now time to understand the types of FDI that exist.
Types of FDI
There are majorly three types-
Horizontal FDI – When a business invests the funds in a foreign firm in the same industry it is known as horizontal FDI. For instance Nike, a US based firm, may purchase Puma, a Germany based firm. This falls under horizontal FDI category since the target industry is the same.
Vertical FDI – Vertical FDI is when the business invests in a foreign firm that it might even supply or sell to, this means the investment in made within the supply chain. For instance, Hersheys, a US chocolate manufacturer, might look to invest in cocoa producers in Brazil. This means a firm is purchasing a supplier, or potential supplier, in the supply chain.
Conglomerate FDI – Conglomerate FDI is when the funds are invested in a completely different industry. For instance, Walmart, a US retailer, may invest in BMW, a German automobile manufacturer. This looks like a no link at all venture but the end goal and vision is broader than you can see.
Here, are some recent FDI announcements that made it to the news.
- Aug 2019, Reliance Industries (RIL) announces that one of India’s biggest FDI deals have been cracked with Saudi Aramco to purchase a 20 percent stake in the Reliance’s Oil-to-chemicals business at a value of US$ 75 billion.
- Oct 2019, French oil and Gas giant, Total S.A., acquired 37.4 percent stake in Adani Gas Lts for a sum of Rs. 5662 crore, making it the largest FDI in India’s CGD sector.
- Jan 2020, Mastercard announced that it has plans to invest majorly in India, a huge sum of US $1 billion in the next five years to double and invest better in the R&D effort.
- Jan 2020, Amazon India confirms a huge investment of US$ 1 billion for the digitization of small and medium businesses and creating one million jobs by 2025.
- June 2020, Jio Platforms Ltd. Sold 22.38 percent stake to ten global investors in span of eight weeks under various separate deals, Facebook, Silver Lake, Vista General Atlantic, Mubadala, ADIA, TPG Capital, and L Catterton, are the ten investors.
Funding Agency Step Forward to Fund a Project Idea
A funding Agency is an external organization in either private or public sector that undertakes the overall task of contractual agreement. A funding agency often dictates how the funds might be used, and what is the expected deliverables as well as what are the reports essential. All of these are mentioned by funding agency.
Looking for foreign funding? We can help you, we are FDI India, your foreign fund facilitators. We can help you connect with the right business partner, who would not only invest funds in your business but also bring in technology, innovation and much more.