TRENDS IN FDI & FII

1. Entities covered by the term ‘FII’ include “Overseas pension funds,

mutual funds, investment trust, asset management company, nominee
company, bank, institutional portfolio manager, university funds,
endowments, foundations, charitable trusts, charitable societies, a
trustee or power of attorney holder incorporated or established outside
India proposing to make proprietary investments or investments on
behalf of a broad-based fund.

2. Foreign direct investment (FDI) refers to long term participation by

country A into country B. It usually involves participation in
management, joint-venture, transfer of technology and expertise.

Done by,
Rounak gupta
RECENT TRENDS IN FDI
1. The flows of foreign direct investment (FDI) to developing countries have
declined by 26 percent since 1999, while China’s share has increased from
21 percent to 39 percent.

2. India is the third most attractive foreign direct investment

destination in the world, behind China as number one and the
United States as number two. In 2008, India was ranked number
two but slipped to the number three spot given the economic
downturn and the surge of investments by Chinese and Indian
firms acquiring American companies.

3. According to India’s Department of Industrial Policy and

Promotion, despite the global recession and liquidity crunch, the
Indian economy recorded an 11 percent increase in FDI in
2008-09.

4. With sectors like chemicals and telecommunication experiencing

robust growth of 227 percent and 103 percent respectively.
RECENT TRENDS I8N FII
1.Nearly half of the Rs 70,000 crore offshore investments
that have come into Indian bourses this fiscal, till October
2009, are from alleged tax havens such as Mauritius, Hong
Kong and Luxembourg—the three together contributing
almost Rs 25,000 crore of the net inflow from foreign
institutional investors (FIIs).
2.   Significant omissions from this list are FIIs of
Singapore and Switzerland, the two countries that had figured
among the top five with the highest investments in Indian
equities during the economic slowdown of 2008.
3.What can be of concern for the government is the rising share of
participatory notes (PNs) in the total FII flow into stock markets.
4.Till October 2009, FII held equities totalled more than $160 billion.
 5. Poor market conditions towards the end of 2008 had forced the government
to remove restrictions on participatory notes (PNs), but it had asked FIIs to register
in India rather than investing through PNs. It is estimated that of net FII inflows of
Rs 44,000 crore during September-October 2009, nearly a third, or Rs 14,000, crore
investment was on account of PNs.

Daily Trends in FII Investments on

30-NOV-2009
Net
Gross Net
Gross Investm Conversion
Reportin Debt/Eq Purchas Investm
Sales(Rs ent (1 USD TO
g Date uity es(Rs ent (Rs
Crores) US($) INR)*
Crores) Crores)
million
30-NOV- Equity 1420.80 2151.10 (730.30) (156.00)
Rs.46.81
2009 Debt 206.10 458.00 (252.00) (53.80)