FDI and FII

This video would describe about two important types of foreign investments- the foreign direct investment and foreign institutional investor.
FDI is when a company makes investment in foreign country by setting up the business over there.
FII is an entity or institution which makes investment in a foreign country by getting registered in the stock exchange of foreign market to trade in securities.
 Foreign companies invest in India to take several advantages like relatively lower wages, cheaper production, new potential customers, tax exemptions, tapping growth potential of market, interest rate arbitrage.
It also benefits the host country by providing employment, increasing capital flow, greater investment opportunities, foreign exchange, transfer of new technology, skills & knowledge.
When FIIs invests in large in Indian stock market, rupee appreciates and the balance of payment improves
When FIIs withdraws, rupee depreciates and the balance of payment weakens
A comparison has been made between FDI and FII based on various factors like employment, tax rate, time period etc.
FDIs invests in the real economy while the FIIs invests in stock market only.
FDIs pay higher taxes as compares to the FIIs
FDIs generates mass employment as compared to FIIs that generates no or few employment opportunities
Both these foreign investments highly influence the country's economy and financial system.
It has its own positive and negative impacts. Do watch the video to know all about FDIs and FIIs.
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1. FDI and FII Foreign Direct Investment Foreign Institutional Investor

2. Introduction Foreign Direct Investment Foreign Instituitional Investor When a company makes a long term investment in a foreign country by either setting up the subsidiary company or working in association over there and getting involved in business process of buying, producing and selling in that foreign country It is an entity or institution which makes investment in a foreign country by getting registered in the stock exchange of foreign market to trade in securities

3. Foreign Direct Investment Parent Company Subsidiary Foreign Direct Investment Domestic Country Foreign Country Expansion

4. Foreign Institutional Investor Foreign Institutions Banks Mutual Funds Corporations Insurance Companies Stock Market Asset Management Company BSE MSEI NSE Invests US India

5. Foreign Investments A Foreign business entity can enter India via a number of alternatives, subject to general conditions mentioned in FDI Policy: 1. As an Indian Company- a. By setting up a wholly owned subsidiary b. Joint Venture with an Indian entity/person 2. Operate as a foreign company and be registered with the Registrar of Companies, MCA    Foreign companies invest in India to take advantage of relatively lower wages , cheaper production, new potential customers, special investment privileges such as tax exemptions , tapping growth potential of market, interest rate arbitrage Benefits to host country- Generates employment, capital flow, greater investment because others also view as stable economy, foreign exchange, new technology, skills & knowledge

6. From 1990 to 2018 , FIIs net investment has been 8.5 lakh crore in Indian equity market Since 1992 till date each year around 20 billion dollars of FDI is received India is highest recipient of remittance from abroad mostly from the gulf countries When FIIs invests in large in Indian stock market, rupee appreciates and the balance of payment improves When FIIs withdraws, rupee depreciates and the balance of payment weakens

7. Comparison Foreign Direct Investment Foreign Institutional Investor Invests in the real economy Pays corporate tax of 40% and dividend distribution tax of 30% Entry and exit controlled by Parliament & RBI They create mass employment Long-term It flows into the primary market Stable Invests only in the stock market Pays only long-term capital gain tax of 10% No entry and exit barrier They create few job opportunities Short-term It flows into the secondary market Hot money

8. Examples Foreign Direct Investments Foreign Institutional Investor Examples- Amazon Walmart Bajaj Allianz Citibank Glaxosmith kline Ikea Starbucks Examples - Europacific growth fund- Invested in 16 companies with a total valuation 51,564 cr. Abudhabi Investment Authority- Invested in 21 companies with a total valuation 18,943 cr. Govt.Pension Fund Global- Invested in 77 companies with a valuation of 14,600 cr.

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