Greenfield investment is a type of Foreign direct investment where the foreign investor makes equity investment in new projects of other countries. Foreign investments are of two types- greenfield and brownfield investment. The term “green-field investment” gets its name from the fact that the company—usually a multinational corporation (MNC)—is launching a venture from the ground up—ploughing and prepping a green field. The greenfield makes investment in a new project of a foreign company whereas brownfield investment makes investment in existing projects of a foreign company.
Examples of greenfield investment in India
- Chennai- Salem Expressway
- ‘Noida International Airport. etc.
Advantages of a Greenfield Investment
- Firstly, High level of control over business operations
- Secondly, High level of quality control over the manufacturing and sale of products and/or services
- Further, High control over brand image and staffing
- Moreover, Economies of scale and economies of scope achieves in terms of marketing, research and development, and production
- Furthermore, Bypassing trade restrictions
- Finally, Creating jobs for the economy where the greenfield investment is taking place
Disadvantages
- Firstly, An extremely high-risk investment – a greenfield investment is the riskiest form of foreign direct investment
- Secondly, Potentially high market entry cost (barriers to entry)
- Thirdly, Government regulations that may hamper foreign direct investments
- Finally, High fixed costs involved in establishing a greenfield location
Greenfeild investment status in India
Accordingly, under Pariyojana’s Phase – I, the government plans to develop as many as 22 Greenfield Expressways as well as Access Controlled Corridors. Following are the upcoming 22 Greenfield projects:
1) a- Delhi-Vadodara Expressway: This corridor is 845 kilometres long.
b- Vadodara-Mumbai Expressway: This is 446 kilometres long corridor.
c- Delhi-Faridabad-Sohna: This is a 60 kilometres spur to the Delhi-Mumbai highway Stretch.
2) Ahmedabad-Dholera Expressway: This is 109 kilometres long.
3) Delhi-Amritsar-Katra Expressway: The 672 kilometres long highway.
4) Bengaluru-Chennai Expressway: This 262 kilometres long Expressway.
5) Kanpur-Lucknow Expressway: The 63 kilometres long Expressway.
6) Ambala-Kotputli Corridor: The 313 kilometres long Ambala – Kotputli corridor.
7) Chennai-Salem Corridor: This 277 kilometre long flagship corridor from Chennai to Salem.
8) Amritsar-Bhatinda-Jamnagar Corridor: The 917 kilometre long section of the 1,224 kilometre long Amritsar-Bhatinda Jamnagar corridor will be developed at a cost of Rs 22,543 crore.
9) Durg-Raipur-Arang Corridor: This 92 kilometre long corridor will be developed at a cost of Rs 2,689 crore.
10) Raipur-Vishakhapatnam Corridor: The 465 kilometres long corridor will be developed at a cost of Rs 14,695 crore.