{"id":7672,"date":"2025-07-11T11:01:11","date_gmt":"2025-07-11T11:01:11","guid":{"rendered":"https:\/\/lemonn.co.in\/blog\/?post_type=glossary&p=7672"},"modified":"2025-07-11T11:01:12","modified_gmt":"2025-07-11T11:01:12","slug":"what-is-foreign-direct-investment-fdi","status":"publish","type":"glossary","link":"https:\/\/lemonn.co.in\/blog\/glossary\/what-is-foreign-direct-investment-fdi\/","title":{"rendered":"What is Foreign Direct Investment (FDI)?"},"content":{"rendered":"

Foreign Direct Investment, or FDI, is when a company or individual from one country invests money into a business in another country. This investment often means the investor has a significant say in how the business is run. It’s not just about buying shares<\/a>; it’s about being involved in the company’s operations.<\/p>\n\n\n\n

Types of FDI<\/h2>\n\n\n\n

FDI can be categorized into different types based on how and where the investment is made:<\/p>\n\n\n\n

1. Horizontal FDI<\/strong><\/h3>\n\n\n\n

This occurs when a company invests in the same type of business in another country.<\/p>\n\n\n\n

Example:<\/em> A clothing brand from the UK opens stores in India.<\/p>\n\n\n\n

2. Vertical FDI<\/strong><\/h3>\n\n\n\n

Here, a company invests in a business that plays a role in its supply chain, either as a supplier or distributor.<\/p>\n\n\n\n

Example:<\/em> A car manufacturer from Germany invests in a tire company in India to supply its factories.<\/p>\n\n\n\n

3. Conglomerate FDI<\/strong><\/h3>\n\n\n\n

This type involves investment in a completely different industry.<\/p>\n\n\n\n

Example:<\/em> A tech company from the USA invests in a food processing company in India.<\/p>\n\n\n\n

4. Platform FDI<\/strong><\/h3>\n\n\n\n

In this case, a company invests in a country to produce goods that are then exported to other countries.<\/p>\n\n\n\n

Example:<\/em> A smartphone company sets up a factory in India to manufacture phones that are then sold in Africa and Europe.<\/p>\n\n\n\n

Real-Life Examples of FDI in India<\/h2>\n\n\n\n