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Difference Between FDI and FII
Meaning of FDI
- FDI stands for Foreign Direct Investment, a component of a country’s national financial accounts.
- Foreign direct investment is investment of foreign assets into domestic structures, equipment, and organizations.
- It does not include foreign investment into the stock markets.
- FDI is thought to be more useful to a country than investments in the equity of its companies because equity investments are potentially “hot money” which can leave at the first sign of trouble, whereas FDI is durable and generally useful whether things go well or badly.
- FDI‘ Means Investment By Non-resident Entity/Person Resident Outside India In The Capital Of An Indian Company Under Schedule 1 Of Foreign Exchange Management (Transfer Or Issue Of Security By A Person Resident Outside India)
Meaning Of FII
Foreign Institutional Investment (FII)
- FII denotes all those investors or investment companies that are not located within the territory of the country in which they are investing.
- “SEBI’s definition of FIIs presently includes foreign pension funds, mutual funds, charitable/endowment/university funds etc. as well as asset management companies and other money managers operating on their behalf.”
- Foreign Institutional Investor‘(FII) means an entity established or incorporated outside India which proposes to make investment in India and which is registered as a FII in accordance with the SEBI (FII) Regulations 1995.
Difference Between FDI and FII
| FDI | Fll | |
| 1 | FDI is when foreign company brings capital into a country or an economy to set up a production or some other facility. FDI gives the foreign company some control in the operations of the company | FII is when a foreign company buys equity in a company through the stock markets. Therefore, in this case, FII would not give the foreign company any control in the company |
| 2 | FDI involves in the direct production activity & also of medium to long term nature | FII is a short term investment mostly in the financial markets & it consist of FII |
| 3 | It enables a degree of control in the company | It does not involve obtaining a degree of control in a company |
| 4 | FDI brings-long term capital | FII brings short-term capital |
Difference Between FDI and FII
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