Can anybody reply to me in regard to what is the difference between FDI & FII?
CA Paresh Kothari (Service) (233 Points)
06 December 2007
Can anybody reply to me in regard to what is the difference between FDI & FII?
Dinesh
(Article)
(109 Points)
Replied 06 December 2007
CA Paresh Kothari
(Service)
(233 Points)
Replied 06 December 2007
Bhavesh
(Chartered Accountant)
(39 Points)
Replied 11 December 2007
Yes, FIIs may invest directly in a listed / unlisted Indian Company under the FDI Route i.e. invest directly in a company instead of purchasing shares from the stock echange. However, this shall not exceed 10% by one FII and 24% by all FIIs taken together. Futher, this limit may be increased upto the sectoral cap applicable ot the company provided the company passes a special resolution in this regard. Certain pricing guidelines also apply.
Ashis Mahapatra
(Consultant-Tax & FEMA/FDI)
(183 Points)
Replied 25 November 2009
Hi All
Investment comes to India basically in 4 ways
FDI FII FVCI NRI/OCB /OTHER
(1) FDI comes through 5 routes
1Wholly owened subsidiary(WOS)-- Forming a new company/ 100pc Taking Over an existing co
2 Join Venture(JV)-- Forming a company by Joint participation by Indian(s)/acquaring less than 100 pc share of existing one where other participant is Indian Resident (s) only
3 Branch Office
4 Project Ofice
5 Liasion office
FOR FIRST 2 FDI (WOS & JV) ,INVESTMENT INVOLVING UP TO RS 600 CR. FIPB APROVAL & BEYOND RS 600 CR CCEA APROVAL IS REQUIRED.HOWEVERWHER INVESTMENTS DONE BY AN NRI/OCB (OVERSEASE CORPO. BODY OF WHICH 60% ARE NRI /INDIAN ORIGIN) APROVAL OF SIA IS REQUIRE WHO IN TURN TAKE 2ND CLEARANCE FROM FIPB/CCEA. PRE & POST INCORPORATION REPORTING (NOT APROVAL) + YRLY REPORTING REQUIRED TO RBI.
HOWEVER IF THE INVESTMENT FALL UNDER AUTOMATIC ROUTE OR DO NOT EXCEED THE SECTORIAL CAPITAL NO SUCH APROVAL REQUIRED FROM SUCH AUTHORITIES UNLESS THE SPECIFIC SECTORWISE GUIDELINE PRESCRIBES NECESSARY APROVAL . HOWEVER REPORTING TO RBI IS MADE WHEATHER OR NOT IT FALL UNDER APROVAL / AUTOMATIC ROUTE.
SOME SECTORS REQUIRED NECESSARY INDUSTRIAL LICENSING
FOR LAST 3 FDI (LIASION / BRANCH /PROJECT) RBI IS THE SOLE BODY TO APROVE THESE. THERE IS NO APROVAL REQUIRED FROM FIPB/CCEA/SIA.THERE IS NO AUTO MATIC AS SUCH.THESE APROVALS FOR SHORT PERIOD OF TIME (EX. LIASION OFF CAN BE ALLOWED FOR 3 YR ONLY & WITH A SPECIFIC APROVAL 3 YR MORE.)
HOWEVER IN PRACTICE FOR INVESTMENTS FROM SPECIFIED COUNTRIES (RBI CAUTION LIST COUNTRIES ) THE APPLICATION GOES TO MINISTRY OF FINANCE / EXTERNAL AFFAIRS/ CORPORATE AFFIRS / SECTOR SPECIFC MINISTIRES LIKE STEEL , COAL ETC
(2)IN CONTRARY FII INVESTMENT COMES FOR PORTFOLIO INVESTMENTS ONLY (LIKE LISTED SHARES ,MF , MONEY MRKT INSTRUMENTS ETC. NO PVT PLACEMENT ALLWED.SEBI APROVAL IS COMPULSORY)
(3)FVCI (FOREIGN VENTUIRE CAPITAL COMPANY)- FOR INVESTMENTS IN PVT PLACEMENTS /PVT EQUITY OR RELATED INSTRUMENTS. SEBI APROVAL IS MUST & DUAL APROVAL FROM RBI IN SOME CASES.THERE IS SOME ADITONAL GUIDELINES TO ADHERE IN SECTOR SPECIFIC.
(4)NRI/OCB/OTHER INVESTMENTS REQUIRE APROVAL FROM AUTHORITIES ON SPECIFIC CASES & ALSO THERE IS LOCK IN PERIOD FOR REPATRIATION IN SOME CASES
PERIODICAL REPORTING REQUIRED TO RBI/SEBI OR OTHER AUTHORITIES
ADDITION TO THESE GUIDELINES SECTORIAL SPECIFIC GUIDELINES TO BE COMPLIED/SATISHFIED (FOR INVESTMENT/FORMATION OF INSURANCE/TELECOM COMPANY IRDA/MINISTRI OF COMUNICATION GUIDELINES TO ADHERE)
RGRDS
Landmark Judgments: Important Provisions of the EPF & ESI Act interpreted by the Honorable Supreme Court of India