9.10.1. Foreign Direct Investment

♤ Investment made by a company or individual in one country in business interests in another country, in the form of either establishing business operations or acquiring business assets in the other country, such as ownership or controlling interest in a foreign company.

♤ Foreign direct investments are distinguished from portfolio investments in which an investor merely purchases equities of foreign-based companies. The key feature of foreign direct investment is that it is an investment made that establishes either effective control of, or at least substantial influence over, the decision making of a foreign business.

♤ As per new definition, accepted as per recommendation of Arvind Mayaram Committee, foreign investment of 10% or more in an Indian listed company is treated as FDI.

♤ In addition, foreign investment in an unlisted company, irrespective of the threshold limit, is treated as FDI.