Foreign Institutional Capital & Foreign Direct Investment - Sector-wise Trends and Issues, Indian Ec Video Lecture | Indian Economy - B Com

hello everyone let us learn to the the
concept of FDI and FII whoa I think my
technical team is working too hard on
this let us assume that there is a
company in America now this company
wants to invest in India let us see how
they can do it the firm has two options
the first option is called FDI it stands
for foreign direct investment the second
option is FIA which stands for foreign
institutional investors now let us see
what FDI means consider a company ABC
Limited it manufactures its products in
you US it sells its product in u.s. so
basically it operates in US now ABC
Limited wants to expand their business
in India so they make a foreign direct
investment into the infrastructure of a
country let us see how didhow they do
this now ABC Limited will open up a
subsidiary that is a company called ABC
India Limited now ABC India Limited is
owned partly by ABC Limited and partly
by an Indian company
so in short ABC Limited is working in
India so they start manufacturing in
India they start producing their goods
in India
and they start selling their products to
Indians FDI is always a long-term
investment which is made in the
infrastructure of a country it is very
helpful for the growth of a country let
us now see what foreign institutional
investors are
these are individual investors living
abroad who want to invest in the debt or
equity market of a country let us
suppose a foreign institutional investor
who's living in u.s. he wants to invest
his money in the Indian equity market by
purchasing or selling this shares of the
companies so he is basically investing
in FII through FII in the Indian market
he also can give a loan to Indian
companies who wants to take it so FII is
generally a long-term or a short-term
investment which is made in the money
markets of the country that is either
the share market or the debt market now
let us highlight the difference in FDI
and FII FDI leads to increase in the
productivity of the country and FII
leads to increase in the money of the
country but not the GDP FDI is a
long-term investment while FII
can be along or a short-term investment
now since FDI in FDI investment is made
in infrastructure of a country it
creates a lot of jobs but FTA FII does
not do that
I hope this session was helpful to you
thank you very much