{"id":1814,"date":"2020-09-01T17:53:10","date_gmt":"2020-09-01T12:23:10","guid":{"rendered":"https:\/\/blog.tickertape.in\/?p=1814"},"modified":"2023-01-09T12:06:28","modified_gmt":"2023-01-09T06:36:28","slug":"how-do-fdi-fpi-and-fii-differ-from-each-other","status":"publish","type":"post","link":"https:\/\/www.tickertape.in\/blog\/how-do-fdi-fpi-and-fii-differ-from-each-other\/","title":{"rendered":"Foreign Investments 2022 Guide: Difference Between FDI, FPI and FII"},"content":{"rendered":"\n<p>FDI, <a href=\"https:\/\/www.tickertape.in\/blog\/foreign-portfolio-investment\/\">FPI<\/a>, and FII are 3 terms that are much talked about with respect to the foreign investment arena. They may seem to be similar on the face of it but are fundamentally different. While the internet is filled with articles explaining the difference between FDI and FPI, decoding the \u2018what\u2019 and \u2018whereabouts\u2019 of FII is tricky. Because the information available lacks clarity.<\/p>\n\n\n\n<p>So, we took up this endeavour of investigating into the matter and finding out what is what. Here\u2019s our humble attempt in doing so. We have tried to put our words in as simple a manner as we could.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_66_1 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.tickertape.in\/blog\/how-do-fdi-fpi-and-fii-differ-from-each-other\/#Overview-of-a-foreign-investment\" title=\"Overview of a foreign investment\">Overview of a foreign investment<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.tickertape.in\/blog\/how-do-fdi-fpi-and-fii-differ-from-each-other\/#Need-for-a-foreign-investment\" title=\"Need for a foreign investment\">Need for a foreign investment<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.tickertape.in\/blog\/how-do-fdi-fpi-and-fii-differ-from-each-other\/#FII-was-subsumed-by-FPI\" title=\"FII was subsumed by FPI\">FII was subsumed by FPI<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.tickertape.in\/blog\/how-do-fdi-fpi-and-fii-differ-from-each-other\/#Categories-of-FPI\" title=\"Categories of FPI\">Categories of FPI<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.tickertape.in\/blog\/how-do-fdi-fpi-and-fii-differ-from-each-other\/#What-is-FDI\" title=\"What is FDI?\">What is FDI?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.tickertape.in\/blog\/how-do-fdi-fpi-and-fii-differ-from-each-other\/#Foreign-portfolio-investment-FPI\" title=\"Foreign portfolio investment (FPI)\">Foreign portfolio investment (FPI)<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/www.tickertape.in\/blog\/how-do-fdi-fpi-and-fii-differ-from-each-other\/#Understanding-FDI-and-FPI-with-an-example\" title=\"Understanding FDI and FPI with an example\">Understanding FDI and FPI with an example<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/www.tickertape.in\/blog\/how-do-fdi-fpi-and-fii-differ-from-each-other\/#Difference-between-FDI-and-FPI\" title=\"Difference between FDI and FPI\">Difference between FDI and FPI<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/www.tickertape.in\/blog\/how-do-fdi-fpi-and-fii-differ-from-each-other\/#FDI-or-FPI-which-is-better-for-the-economy\" title=\"FDI or FPI, which is better for the economy?\">FDI or FPI, which is better for the economy?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/www.tickertape.in\/blog\/how-do-fdi-fpi-and-fii-differ-from-each-other\/#What-do-foreign-investors-consider-before-making-an-FDI-or-FPI\" title=\"What do foreign investors consider before making an FDI or FPI?\">What do foreign investors consider before making an FDI or FPI?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/www.tickertape.in\/blog\/how-do-fdi-fpi-and-fii-differ-from-each-other\/#More-on-foreign-direct-investment\" title=\"More on foreign direct investment\">More on foreign direct investment<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/www.tickertape.in\/blog\/how-do-fdi-fpi-and-fii-differ-from-each-other\/#Types-of-FDI\" title=\"Types of FDI\">Types of FDI<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/www.tickertape.in\/blog\/how-do-fdi-fpi-and-fii-differ-from-each-other\/#Sector-wise-details-of-FDI-investments\" title=\"Sector-wise details of FDI investments\">Sector-wise details of FDI investments<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/www.tickertape.in\/blog\/how-do-fdi-fpi-and-fii-differ-from-each-other\/#Sectors-that-allow-100-FDI-via-automatic-route\" title=\"Sectors that allow 100% FDI via automatic route:\">Sectors that allow 100% FDI via automatic route:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"https:\/\/www.tickertape.in\/blog\/how-do-fdi-fpi-and-fii-differ-from-each-other\/#Sectors-that-allow-up-to-100-automatic-route\" title=\"Sectors that allow up to 100% automatic route\">Sectors that allow up to 100% automatic route<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-16\" href=\"https:\/\/www.tickertape.in\/blog\/how-do-fdi-fpi-and-fii-differ-from-each-other\/#Sectors-that-allow-up-to-100-Foreign-Direct-Investment-under-the-government-route\" title=\"Sectors that allow up to 100% Foreign Direct Investment under the government route\">Sectors that allow up to 100% Foreign Direct Investment under the government route<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-17\" href=\"https:\/\/www.tickertape.in\/blog\/how-do-fdi-fpi-and-fii-differ-from-each-other\/#Sectors-that-allow-up-to-100-FDI-under-the-automatic-and-government-routes\" title=\"Sectors that allow up to 100% FDI under the automatic and government routes\">Sectors that allow up to 100% FDI under the automatic and government routes<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-18\" href=\"https:\/\/www.tickertape.in\/blog\/how-do-fdi-fpi-and-fii-differ-from-each-other\/#List-of-prohibited-sectors-for-FDI\" title=\"List of prohibited sectors for FDI\">List of prohibited sectors for FDI<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-19\" href=\"https:\/\/www.tickertape.in\/blog\/how-do-fdi-fpi-and-fii-differ-from-each-other\/#Recent-amendments-in-the-FDI-policy\" title=\"Recent amendments in the FDI policy\">Recent amendments in the FDI policy<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-20\" href=\"https:\/\/www.tickertape.in\/blog\/how-do-fdi-fpi-and-fii-differ-from-each-other\/#Impact-of-FDI-on-the-environment\" title=\"Impact of FDI on the environment\">Impact of FDI on the environment<\/a><\/li><\/ul><\/nav><\/div>\n<h3 class=\"wp-block-heading\" id=\"Overview\"><span class=\"ez-toc-section\" id=\"Overview-of-a-foreign-investment\"><\/span><strong>Overview of a <\/strong><strong>foreign investment<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Foreign money helps to bridge the gap in the funding requirements of an economy or a company. There are various forms of foreign investments of which FDI, FPI, and FII are popular. Though these terms are similar in many ways, they are fundamentally different. You cannot use the terms interchangeably, and certainly not swap FII for FPI and vice versa. Because FII has been subsumed with FPI. More on this later in the article.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"Need\"><span class=\"ez-toc-section\" id=\"Need-for-a-foreign-investment\"><\/span><strong>Need for a <\/strong><strong>foreign investment<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>You may have probably heard a thousand times that finance is the lifeblood of a business. Without money, businesses come to a standstill and the owners have to pack their bags and leave. And so small business owners bring in the capital either from their savings, loan, or revenue earned over time.<\/p>\n\n\n\n<p>However, arranging capital for big corporations is not as simple. Many can\u2019t meet their capital requirements via internal sources alone. Willingness and motivation don\u2019t equal finance. And if the plan is to make it big, the economy and businesses operating within its borders need access to a big bundle of money. Enters foreign investment. Before looking at the types of foreign investments, let us see whatever happened to FII.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"FII\"><span class=\"ez-toc-section\" id=\"FII-was-subsumed-by-FPI\"><\/span><strong>FII was subsumed by FPI<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>FII stands for foreign institutional investment. These are institutions such as <a href=\"https:\/\/www.tickertape.in\/blog\/mutual-funds\/\">mutual funds<\/a>, pension funds, and investment banks that <a href=\"https:\/\/www.tickertape.in\/blog\/why-should-you-prioritise-investing\/\">invest<\/a> in the assets of Indian companies. Before 2002, foreign institutions enjoyed a relatively simpler process to invest in domestic companies. Foreign individual investors were restricted. They were mandated to have a <a href=\"http:\/\/www.businessdictionary.com\/definition\/sub-account.html\" target=\"_blank\" rel=\"noreferrer noopener nofollow\" aria-label=\" (opens in a new tab)\">sub-account (SA)<\/a> with an FII to invest in India. This limited the flow of foreign investment in the economy.<\/p>\n\n\n\n<p>To address this issue, QFI was introduced in 2002. Qualified Foreign Investors or QFI refers to a foreign individual, resident, group or association belonging to the approved countries that can make foreign investment in India. Unlike before, Qualified Foreign Investors would invest in India without having a SA with the FII. However, they were still required to have a demat and a trade account with a depositor. Besides, they were also required to take prior approval from a depository if their total investment breached 8% of the company\u2019s <a href=\"https:\/\/www.tickertape.in\/blog\/what-is-equity\/\">equity<\/a> paid-up capital. But the change did widen the scope of foreign investment in India.<\/p>\n\n\n\n<p>However, it all changed in 2014. QFIs were merged with Foreign Portfolio Investors (FPI) in 2014. And so were FII. This was done to simplify and attract foreign portfolio investments in India. So, by virtue of the FPI Regulations 2014, sub-accounts, FII, and QFI are now merged with Foreign Portfolio Investors.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"Categories\"><span class=\"ez-toc-section\" id=\"Categories-of-FPI\"><\/span><strong>Categories of FPI<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>FPI is divided into 3 categories based on the investor\u2019s risk profile:<\/p>\n\n\n\n<ul><li>Category I: government and related foreign investors<\/li><li>Category II: persons, pension funds, regulated broad-based funds (BBF), university funds, and unregulated BBFs with regulated investment managers registered as an FPI<\/li><li>Category III: those who don\u2019t fall under the above categories<\/li><\/ul>\n\n\n\n<p>By default, the QFIs that existed back in 2014 were included under Category III of FPI. But, they could also be included under the other 2 categories if they met the respective eligibility. Note that FPI can only invest in up to 10% of the total issued capital of an Indian company.<\/p>\n\n\n\n<p>Now that the FII part is clear, let us look at FDI vs FPI.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"FDI\"><span class=\"ez-toc-section\" id=\"What-is-FDI\"><\/span>What is FDI?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>FDI is an abbreviation for Foreign Direct Investment. It is a direct method of investing in a foreign country. Here, a foreign investor, whether an institution or an individual, invest directly in the economy and gain a controlling interest in the recipient business.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"FPI\"><span class=\"ez-toc-section\" id=\"Foreign-portfolio-investment-FPI\"><\/span><strong>Foreign portfolio investment<\/strong> (FPI)<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>FPI or Foreign Portfolio Investment, on the other hand, means investment made by a foreign investor in the financial instruments or assets of a domestic company. These may be stocks and bonds.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"Example\"><span class=\"ez-toc-section\" id=\"Understanding-FDI-and-FPI-with-an-example\"><\/span><strong>Understanding FDI and FPI with an example<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>George, a US national, runs a multi-million dollar business in America and is interested in investing in India. He has two ways\u2014FDI and FPI\u2014to do it.<\/p>\n\n\n\n<p>If he wants to take the <strong>FDI<\/strong> route, he must:<\/p>\n\n\n\n<ul><li>Establish a wholly-owned subsidiary of his US business in India OR<\/li><li>Acquire an ownership interest in an Indian company (where he buys a huge stake in a domestic company that interests him) OR<\/li><li>Participate in a joint venture<\/li><li>Enter into a merger or acquisition deal<\/li><\/ul>\n\n\n\n<p>In any way George chooses, he will gain a controlling interest in the business. Meaning, he has a say in the operations of the business in India. But, if George is not interested in having a controlling interest in an Indian company and he merely wants to make a profit, he can take the <strong>FPI<\/strong> route. Here, he simply purchases <a href=\"https:\/\/www.tickertape.in\/blog\/what-are-equity-shares-meaning-types-features-limitations-and-more\/\">equity shares<\/a> of an Indian company.<\/p>\n\n\n\n<p>Note that FDI is usually done by individuals or businesses that can afford to invest directly in the host country. Whereas, retail investors like you and me, are most likely to take the FPI route. But FDI and FPI are different in a few other ways too, which are worth noting.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"FDI-vs-FPI\"><span class=\"ez-toc-section\" id=\"Difference-between-FDI-and-FPI\"><\/span>Difference between FDI and FPI<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td><strong>Points of differences<\/strong><\/td><td><strong>FDI<\/strong><\/td><td><strong>FPI<\/strong><\/td><\/tr><tr><td>Degree of control in the management of the business<\/td><td>High<\/td><td>None<\/td><\/tr><tr><td>Investment horizon<\/td><td>Long-term<\/td><td>Usually short-term<\/td><\/tr><tr><td>Ease of entry<\/td><td>Difficult<\/td><td>Relatively easier<\/td><\/tr><tr><td>Ease of exit<\/td><td>Investment avenue is quite illiquid, so exiting is not easy<\/td><td>Investment avenue is liquid, so exiting is easy<\/td><\/tr><tr><td>Form of investment<\/td><td>Funds, R&amp;D, technology, strategies, know-how, and technical knowledge<\/td><td>Only funds<\/td><\/tr><tr><td>Impact<\/td><td>Can increase GDP<\/td><td>Only increases the country\u2019s capital<\/td><\/tr><tr><td>Target<\/td><td>Specific company<\/td><td>Financial markets<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"Better\"><span class=\"ez-toc-section\" id=\"FDI-or-FPI-which-is-better-for-the-economy\"><\/span><strong>FDI or FPI, which is better for the economy?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Both FDI and FPI have pros and cons. As mentioned, foreign capital can bridge the gap in funding requirements of an economy. In turn, this contributes to the growth of the target business and creates employment opportunities, which ultimately propels economic growth.<\/p>\n\n\n\n<p>But most countries prefer FDI over foreign portfolio investment for the following reasons:<\/p>\n\n\n\n<ul><li>Investors making an FDI intend to gain a controlling power in the business\u2019 day-to-day management and strategic plans. They look for long-term gain and so have a long-term investment horizon. This makes FDI a stable and reliable source of foreign investment.<\/li><li>FPI, on the other hand, is relatively volatile. This is because investors taking the FPI route only intend to make profits on investing in stocks of domestic companies or bonds floated by the government. They don\u2019t intend to stay long. Also, these instruments are liquid, which makes it easier for them to exit. So, if the FPI investors sense some kind of danger or turmoil in the target business or the broader economy it operates in, they most likely liquidate their investments. Following this, a huge chunk of funds goes out of the economy leading it to sink.<\/li><\/ul>\n\n\n\n<p>Naturally, economies prefer FDIs over Foreign portfolio investments. However, if the economy and the business is stable, FPIs may stay for long and contribute to economic growth.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"Criteria\"><span class=\"ez-toc-section\" id=\"What-do-foreign-investors-consider-before-making-an-FDI-or-FPI\"><\/span><strong>What do foreign investors consider before making an FDI or FPI?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Investing in a foreign company is not like taking a walk in the park. It is risky. Therefore, foreign investors consider many factors before parking their funds overseas. These include:<\/p>\n\n\n\n<ul><li>Economic factors such as GDP growth, inflation, infrastructure and foreign exchange controls<\/li><li>Governmental factors such as policymaker\u2019s business philosophy and political stability<\/li><li>Incentives for them relating to tax and property rights<\/li><li>Business factors including opportunities and local competition<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"More\"><span class=\"ez-toc-section\" id=\"More-on-foreign-direct-investment\"><\/span><strong>More on foreign direct investment<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>According to <a href=\"https:\/\/www.oecd.org\/india\/\" target=\"_blank\" rel=\"noreferrer noopener nofollow\" aria-label=\"OECD (opens in a new tab)\">OECD<\/a>, a foreign investment qualifies to be an FDI, when an overseas investor invests 10% or more in an India company. FDIs are governed by the <a href=\"https:\/\/www.tickertape.in\/blog\/impact-of-the-revised-fdi-policy-on-indian-economy\/\">FDI policy<\/a>, which is regulated by the Foreign Exchange Management Act, 2000.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"Types-of-FDI\"><span class=\"ez-toc-section\" id=\"Types-of-FDI\"><\/span><strong>Types of FDI<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>FDI is of 2 types: automatic route and government route.<\/p>\n\n\n\n<p><strong>1.<\/strong>\t<strong>Automatic route of FDI:<\/strong> here, the investor need not seek RBI\u2019s prior approval to invest in a domestic company. They can inform RBI after making an FDI. Further, this route of foreign investment allows 100% investment in many sectors expect some, which are discussed later<\/p>\n\n\n\n<p><strong>2.<\/strong>\t<strong>Government route:<\/strong> here, the investor is mandated to get prior approval from the concerned Departments or Ministries via a Foreign Investment Facilitation Portal (FIFB). This portal is administered by the Ministry of Commerce and Industry, Department of Industrial Policy &amp; Promotion (DIPP), and Government of India<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"Sector\"><span class=\"ez-toc-section\" id=\"Sector-wise-details-of-FDI-investments\"><\/span>Sector-wise details of FDI investments<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>As per the FDI policy, FDIs are not allowed in all the sectors of the economy. And not all of the non-prohibited sectors permit 100% investment via the automatic route. Here are the details:<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Sectors-that-allow-100-FDI-via-automatic-route\"><\/span><strong>Sectors that allow 100% FDI via automatic route:<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<ul><li>Agriculture &amp; animal husbandry<\/li><li>Air-transport services<\/li><li>Airports<\/li><li>Automobiles<\/li><li>Broadcast Content Services<\/li><li>Cash and carry wholesale trading<\/li><li>Chemicals<\/li><li>Coal and Lignite<\/li><\/ul>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Sectors-that-allow-up-to-100-automatic-route\"><\/span><strong>Sectors that allow up to 100% automatic route<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<ul><li>Insurance: up to 49%<\/li><li>Pension: 49%<\/li><li>Power exchanges: 49%<\/li><li>Petroleum Refining (by PSUs): 49%<\/li><li>Medical Devices: up to 100%<\/li><li>Infrastructure company in the securities market: 49%<\/li><\/ul>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Sectors-that-allow-up-to-100-Foreign-Direct-Investment-under-the-government-route\"><\/span><strong>Sectors that allow up to 100% Foreign Direct Investment under the government route<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<ul><li>Banking and public sector: 20%<\/li><li>Broadcasting content services: 49%<\/li><li>Core <a href=\"https:\/\/www.tickertape.in\/blog\/investment-company\/\">investment company<\/a>: 100%<\/li><li>Food products retail trading: 100%<\/li><li>Print Media: 26%<\/li><li>Satellite: 100%<\/li><\/ul>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Sectors-that-allow-up-to-100-FDI-under-the-automatic-and-government-routes\"><\/span><strong>Sectors that allow up to 100% FDI under the automatic and government routes<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<ul><li>Private sector banking: up to 49% via automatic route + above 49% via government route<\/li><li>Biotechnology (Brownfield): up to 74% via automatic route + above 74% government route<\/li><li>Defence: up to 49% via automatic route + above 49% via government<\/li><\/ul>\n\n\n\n<p>Read the<a href=\"https:\/\/www.makeinindia.com\/policy\/foreign-direct-investment\" rel=\"nofollow noopener\" target=\"_blank\"> entire list of each category on the Make In India<\/a> website.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"Prohibited\"><span class=\"ez-toc-section\" id=\"List-of-prohibited-sectors-for-FDI\"><\/span><strong>List of prohibited sectors for FDI<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ol><li>Atomic energy generation and railway operations sectors except the permitted activities listed in the consolidated FDI policy<\/li><li>Manufacturing of tobacco or tobacco substitutes including cigars, cigarettes, and cheroots<\/li><li>Lotteries in any form such as online, government, and private<\/li><li>Chit funds<\/li><li>Agricultural and plantation activities except for fisheries, horticulture, tea plantations, animal husbandry, and so on<\/li><li>Housing and real estate except for projects, townships, commercial projects, roads, and bridges<\/li><li>Gambling or betting businesses including casinos<\/li><li>Trading in Transferable Development Rights (TDR)<\/li><li>Nidhi Company<\/li><\/ol>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"Amendments\"><span class=\"ez-toc-section\" id=\"Recent-amendments-in-the-FDI-policy\"><\/span><strong>Recent amendments in the FDI policy<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>In April 2020, the government made certain amendments to the FDI policy. Before the change was announced, only companies or individuals belonging to Pakistan and Bangladesh were only allowed to invest in India via the government route. Other foreign investors could invest in the country via the automatic route subject to some conditions.<\/p>\n\n\n\n<p>But the government revised the FDI policy for all neighbouring countries this year. This was to protect domestic companies from opportunistic takeovers and acquisitions due to the coronavirus (COVID-19) pandemic. Unable to operate seamlessly, cash-strapped businesses would naturally look for financial resources including foreign investments. But how exactly does this revision in the FDP policy protect Indian businesses? To understand this, read<a href=\"https:\/\/www.tickertape.in\/blog\/impact-of-the-revised-fdi-policy-on-indian-economy\/?ref=blog\"> the impact of the revised FDI policy on Indian economy<\/a> here.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"Environment\"><span class=\"ez-toc-section\" id=\"Impact-of-FDI-on-the-environment\"><\/span><strong>Impact of FDI on the environment<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>It is true that foreign direct investment fuels economic growth. That is why governments across the globe try to attract investors by revising their foreign investment policies. And this is especially true for developing economies.<\/p>\n\n\n\n<p>But FDI has certain downsides too. Cutting to the core, its impact is mostly felt on the host country\u2019s extracting industry and environment. In fact, both FDI and environment impact each other. Read the<a href=\"https:\/\/www.tickertape.in\/blog\/impact-of-fdi-on-the-environment-and-vice-versa\/?ref=blog\"> impact of FDI on the environment and vice versa<\/a> to learn more.<\/p>\n\n\n\n<p>We hope to have elaborated FDI vs FPI vs FII in a simple manner through this article. Also, we hope that you have a better understanding of how FDI and FPI impact the host country and its environment. Let us know your thoughts in the comments section below. Also, we are more than happy to cover a topic suggested by you.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>FDI, FPI, and FII are all types of foreign investment. But, FII is now subsumed by FPI. Read FDI vs FPI and their impact on the economy and environment<\/p>\n","protected":false},"author":27,"featured_media":1835,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"_lmt_disableupdate":"no","_lmt_disable":"no","footnotes":""},"categories":[9,1738],"tags":[],"acf":[],"modified_by":"Aradhana Gotur","jetpack_featured_media_url":"https:\/\/www.tickertape.in\/blog\/wp-content\/uploads\/2020\/09\/Fdi-pfi-fii-1.png?wsr","_links":{"self":[{"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/posts\/1814"}],"collection":[{"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/users\/27"}],"replies":[{"embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/comments?post=1814"}],"version-history":[{"count":21,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/posts\/1814\/revisions"}],"predecessor-version":[{"id":11604,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/posts\/1814\/revisions\/11604"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/media\/1835"}],"wp:attachment":[{"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/media?parent=1814"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/categories?post=1814"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/tags?post=1814"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}