FDI AND FII

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CA Kripa Sah (Querist)

25 May 2009 sir,
what is the difference between FDI and FII??
(foreign direct investors and foreign institutional investors)
pls clarify it!is it synonyms??

Divya

Divya (Expert)

27 May 2009 Foreign Direct Investors can be defined as Investors who invest in any productive assets of India i.e. securities which shall include companies incorporated in foreign countries, individuals such as foreign citizens and non resident Indians and other legal entities of foreign origin.

Foreign institutional investors are defined under SEBI Regulations as an institution that is a legal entity established or incorporated outside India proposing to make investments in India only in securities.Such FII have to get registered with SEBi to commence operations.

Foreign institutional investors shall also include domestic asset management company or domestic portfolio manager who manage funds raised or collected or bought from outside India for the purpose of making investment in India on behalf of foreign corporates or foreign individuals.

The term foreign direct investors and foreign institutional investors are not synonyms. There is a slight mark of demarcation between the two being that foreign direct investors tends to include also individuals such as foreign citizens and non resident Indians in addition to entities incorporated in foreign countries whereas foreign institutional investors are defined to be incorporated foreign entities.

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