Meaning
Gross FDI means the total foreign direct investment coming into a country before deducting any outflows.
It shows the total amount invested by foreign companies, foreign institutions, foreign investors, or foreign promoters into the domestic economy.
In India’s case, Gross FDI means the total foreign direct investment coming into India during a particular period.
Simple Definition
Gross FDI is the total FDI inflow received by a country.
It does not subtract:
- Repatriation by foreign investors
- Disinvestment
- Sale of stake by foreign companies
- Outward FDI by Indian companies
That is why Gross FDI shows the entry of foreign investment, but not necessarily the final amount retained in the economy.
Components of Gross FDI
Gross FDI generally includes:
- Equity capital
- Reinvested earnings
- Other capital
Equity Capital
This is the direct investment made by foreign investors into Indian companies.
It may include:
- Setting up a new company
- Buying stake in an Indian company
- Expanding an existing business
- Mergers and acquisitions
- Greenfield projects
- Brownfield investments
Reinvested Earnings
These are profits earned by foreign companies in India but not taken back to their home country.
Instead, the company reinvests those profits in India.
This shows long-term confidence because the company is choosing to expand or continue operations in India.
Other Capital
This includes inter-company loans or debt transactions between parent companies and their Indian subsidiaries.
For example, if a foreign parent company gives funds to its Indian subsidiary, it may be counted under other capital.
