DIFFERENCE FDI & FII:
# Both FDI and FII are related to Foreign Investment.
# In FDI, Company (Parent) makes an investment in a foreign country.
# In FII, An Investor make an investment in the market of Foreign Country.
# In FII companies only need to get registered on the Stock Exchange to make investments.
# The Foreign Institutional Investor is also known as HOT MONEY.
Reason to be called Hot Money: As the investors have the liberty to sell it and take it back. In Layman Language, After selling your product collect your money and go to your country.
# But in FDI, It is not possible.
# In simple words, FII can enter the stock market easily and also withdraw from it easily. But FDI can’t let enter or exit easily. That’s why the majority of nations choose FDI over FII.
# FDI only targets a specific Enterprise. It’s AIM is to increase:
2. Productivity and
3. Change in the Management Control.
# FDI is more stable than FII; FDI brings capital, good governance practices and better management skill and even technology transfer.
# FII helps only in promoting Good Governance and improving Accounting.
# FDI flows in Primary Market. -> Long Term.
# FII flows in Secondary Market. -> Short Term.