CA in Practice
1447 Points
Posted on 22 December 2015
FDI is foreign investment in a specific entity. It generally creates new entities and used to increase the capacity of existing entities.
On the other hands FII investment is foreign investment in share market. it is not specific to any particular entity and FII is free to liquidate his investment in any share, any time, and to invest the money in other share or to take back his investment out of country.
From above you can see that FDI is more useful as it creates new business. it is a long term investment in comparison of FII Ivestment.FII, on the other hand, is more of speculative nature. Only aim of FII is to make profits out of share market.
In simple terms it can be said that FII is investment in Indian share market by the foreign institutions and FDI is doing business in India by any foreign company or entity.