Downstream Investment / Indirect Foreign Investment
Investment in Indian companies by a non-resident is called as ‘foreign investment’.
This foreign investment can be :
Direct Foreign Investment;
Indirect Foreign Investment.
Investment by non-resident entity/person resident outside India in the capital of an Indian company is generally called as FDI i.e. Foreign
Whereas in case an Indian company who has FDI, further invest in any other Indian company, it would be called as “Indirect Foreign Investment”.
The indirect investment can also be a cascading investment i.e. through multi-layered structure.
The Indirect Foreign Investment is otherwise also known as “Downstream Investment”.
Definition of “Downstream Investment”
is given under the c
lause 3.8.2 of the consolidated FDI policy 2016, which is as follows.
‘Downstream investment’ means indirect foreign investment, by an eligible Indian entity, into another Indian company/LLP, by way of subscription or acquisition.
provides the guidelines for calculation of indirect foreign investment, with conditions specified in paragraph 1.2 (v).
Foreign Direct Investment (FDI)
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