UPSC | Prelims GS | 2026

With reference to foreign direct investment (FDI), which one of the following best distinguishes a greenfield investment from a brownfield investment?

  1. Greenfield investment creates a new facility, whereas brownfield investment uses or acquires an existing facility
  2. Greenfield investment is always made by the government, whereas brownfield investment is always private
  3. Greenfield investment concerns only agriculture, whereas brownfield investment concerns only services
  4. Greenfield investment is portfolio investment, whereas brownfield investment is a remittance

Answer

Correct Answer

Greenfield investment creates a new facility, whereas brownfield investment uses or acquires an existing facility

Explanation

Greenfield FDI establishes a new operation, such as a new plant or data centre, while brownfield FDI involves acquiring or expanding an existing business or facility. Neither mode is defined by government ownership or by a particular sector. Portfolio investment and remittances are different categories of cross-border flows.

Topics: economy, foreign investment, greenfield and brownfield fdi, investment modes