FDI and FII and how it functions

1. FDI & FII
(Foreign direct investment &
Foreign Institutional Investor)
Made By-
Prince Anurag Dharwa
2014BBLH016

2. FDI(FOREIGN DIRECT INVESTMENT)
 A foreign direct investment (FDI) is a controlling
ownership in a business enterprise in one country
by an entity based in another country.
 foreign direct investment includes "mergers and
acquisitions, building new facilities, reinvesting
profits earned from overseas operations and intra
company loans“

3. METHODS
 The foreign direct investor may acquire voting
power of an enterprise in an economy through any
of the following methods:
 by incorporating a wholly owned subsidiary or
company anywhere
 by acquiring shares in an associated enterprise
 through a merger or an acquisition of an unrelated
enterprise
 participating in an equity joint venture with another
investor or enterprise.

4. FDI STATUS IN INDIA
 Foreign investment was introduced in 1991
under Foreign Exchange Management Act (FEMA),
driven by then finance minister Manmohan Singh.
As Singh subsequently became the prime minister,
this has been one of his top political problems, even
in the current times. India disallowed overseas
corporate bodies (OCB) to invest in India. India
imposes cap on equity holding by foreign investors
in various sectors, current FDI
in aviation and insurance sectors is limited to a
maximum of 49%.

5. FII(FOREIGN INSTITUTIONAL INVESTOR)
 Foreign institutional investors (FIIs) are those
institutional investors which invest in the assets
belonging to a different country other than that
where these organizations are based.
 Foreign institutional investors play a very important
role in any economy. These are the big companies
such as investment banks, mutual funds etc, who
invest considerable amount of money in the Indian
markets. With the buying of securities by these big
players, markets trend to move upward and vice-
versa. They exert strong influence on the total
inflows coming into the economy.

6. FII’S IN INDIA
Market regulator in India i.e SEBI has over 1450
foreign institutional investors registered with it. The
FIIs are considered as both a trigger and a catalyst
for the market performance by encouraging
investment from all classes of investors which
further leads to growth in financial market trends
under a self-organized system.