Foreign Direct Investment--

Foreign direct investment refers to the investment made by an entity in an enterprise located in a different country. By virtue of making this investment, the investor gains a certain degree of influence or control over the management of the enterprise.FDI can be both outward and inward. In the case of inward FDI, the investor can enter the country by incorporating a company, either by getting into a joint venture with an Indian company or setting up a wholly owned subsidiary. Alternatively, he could retain the status of a foreign company and simply set up a liaison, project or branch office in India.

Benefits:FDI comes with benefits for both the investor and the economy where the investment in made. For the investor, this could be a chance to tap markets where he could make profits. For the economy, FDI has provided a muchneeded push in terms of injecting liquidity apart from bringing in better technology, creating more job opportunities and so on.

Difference between FDI & FII :The most visible difference would be that while FDI includes investment directly into a particular company. Foreign Institutional Investors (FIIs) are known to invest either in the primary or secondary markets, in stocks, mutual funds or via instruments such as participatory notes, dated government securities , commercial papers etcetera. There is also a greater perception of stability that is associated with FDI. In periods of market instability , FIIs are known to beat a hasty retreat leaving the market in a lurch.

Source:ET

Indian market : Most attractive destination for FIIs

At a time when equity markets are coming under selling pressure, particularly from Foreign Institutional Investors, SEBI said India has become the most attractive destination for FIIs.       "FIIs the world-over are interested in India. During October 07, the number of FIIs in India was 1,000 which has increased to 1,500 during October 08," Securities and Exchange Board of India Whole-Time Member T C Nair said at a conference here.  "India has come to the rescue of FIIs and also help them to compensate their losses," he said, adding that SEBI was doing everything possible to facilitate FIIs in hassle-free investment in the country.  FIIs play a key role in the internationalisation of the securities market. There were more opportunities for FIIs to invest in India. They can even invest in unlisted companies. SEBI planned to introduce interest rate derivatives by January.  SEBI has already introduced currency futures in dollar-rupee. Besides, he said the present global financial crisis would not affect India much. "There is no crisis in the country. It is all due to apprehensions. There is just a spill-over effect" . This apparently shows a good sign towards the future recovery and adding to some extent for compensating the effect of economic meltdown in India.