FDI INFLOWS TO INDIA

Foreign direct investment (FDI)

• Foreign direct investments (FDI) are
investments made by one company into
another located in another country.
• Foreign direct investment refers just
to building new facility, and a lasting
management interest (10 percent or
more of voting stock) in an
enterprise operating in an economy
other than that of the investor. FDI is
the sum of equity capital, long-term
capital, and short-term capital as
shown in the balance of payments.  
Foreign direct investment (FDI)
• FDI usually involves participation in
management, joint-venture, transfer
of technology and expertise.
• Stock of FDI is the net (i.e., outward
FDI minus inward FDI) cumulative
FDI for any given period. Direct
investment excludes investment
through purchase of shares (if that
purchase results in an investor
controlling less than 10% of the
shares of the company).
Foreign direct investment (FDI)
Internationalization challenge
through three main principles:

1. absolute cost advantages,

2. product differentiation advantages

3. economies of scale.
TYPES OF FDI
• Horizontal FDI arises when a firm duplicates its home country-based
activities at the same value chain stage in a host country through FDI.
• Platform FDI Foreign direct investment from a source country into a
destination country for the purpose of exporting to a third country.
• Vertical FDI takes place when a firm through FDI moves upstream or
downstream in different value chains i.e., when firms perform value-
adding activities stage by stage in a vertical fashion in a host country.
METHODS OF FDI
• The foreign direct investor may acquire voting power of an enterprise
in an economy through any of the following methods:
• by incorporating a wholly owned subsidiary or company anywhere
• by acquiring shares in an associated enterprise
• through a merger or an acquisition of an unrelated enterprise
• participating in an equity joint venture with another investor or
enterprise[
Foreign direct investment incentives may take the following forms:
1. low corporate tax and individual income tax rates
2. tax holidays
3. other types of tax concessions
4. preferential tariffs
5. special economic zones
6. EPZ – export processing zones
7. bonded warehouses
8. maquiladoras
9. investment financial subsidies
10. free land or land subsidies
11. relocation & expatriation
12. infrastructure subsidies
13. R&D support
14. energy
15. derogation from regulations (usually for very large projects)
16. Governmental investment promotion agencies (IPAs) use various marketing strategies inspired by the
private sector to try and attract inward FDI, including diaspora marketing.
BENEFITS
• Apart from being a critical driver of economic growth, Foreign Direct
Investment (FDI) has been a major non-debt financial resource for the
economic development of India. Foreign companies invest in India to take
advantage of relatively lower wages, special investment privileges like tax
exemptions, etc. For a country where foreign investment is being made, it
also means achieving technical know-how and generating employment.
• The Indian Government’s favourable policy regime and robust business
environment has ensured that foreign capital keeps flowing into the
country. The Government has taken many initiatives in recent years such
as relaxing FDI norms across sectors such as defence, PSU oil refineries,
telecom, power exchanges, and stock exchanges, among others
Market size

• According to the Department for Promotion of Industry and Internal

Trade (DPIIT), FDI equity inflow in India stood at US$ 521.47 billion
between April 2000 and December 2020, indicating that the
government's efforts to improve ease of doing business and relaxing
FDI norms have yield results.
• FDI equity inflows in India stood at US$ 51.47 billion in 2020-21
(between April 2020 and December 2020). Data for 2020-21 indicates
that the computer software and hardware sector attracted the
highest FDI equity inflows of US$ 24.39 billion, followed by the
construction (infrastructure) activities (US$ 7.15 billion), service
sector (US$ 3.86 billion) and trading (US$ 2.14 billion).
Investments/ Developments
• Some of the significant FDI announcements made recently are as follows:
• In the first nine months of FY21, total FDI inflows amounted to US$ 67.54 billion, a
 22% YoY increase.
• In February 2021, Amazon announced to start manufacturing electronic devices in
India from 2021
• In January 2021, Amazon partnered with Startup India, Sequoia Capital India and
Fireside Ventures to launch an accelerator programme to support early-stage start-ups
take their brands to international markets and boost domestic exports.
• In November 2020, Rs. 2,480 crore (US$ 337.53 million) foreign direct investment (FDI)
in ATC Telecom Infra Pvt Ltd. was approved by the Union Cabinet.
• In November 2020, Amazon Web Services (AWS) announced to invest US$ 2.77 billion
(Rs. 20,761 crore) in Telangana to set up multiple data centres; this is the largest FDI in
the history of the state.
• Since April 2020, the government has received over 120 foreign direct
investment (FDI) proposals worth ~Rs. 12,000 crore (US$ 1.63 billion)
from China. Between April 2000 and September 2020, India received
US$ 2.43 billion FDI from China.
• According to the Reserve Bank of India (RBI), India’s Outward Foreign
Direct Investments (OFDIs) in equity, loan and guaranteed issue stood
at ~US$ 1.85 billion in February 2021 vs. US$ 1.19 billion in January
2021.
Government Initiatives
• In March 2021, the parliament approved a bill to increase foreign direct investment (FDI) in
the insurance sector from 49% to 74%.
• In March 2021, Mr. Shripad Naik, the Minister of State for Defence, stated that a total of 44
Indian companies, including public sector units, have received approvals related to FDI for
joint production of defence items with foreign organisations.
• In December 2020, the government of Uttar Pradesh agreed to provide Samsung Display
Noida Private Limited with special incentives to set up a mobile and IT display product
manufacturing unit. Under the Central Government's scheme for promotion of
manufacturing electronic components and semiconductors (SPECS), Samsung will also
receive a financial incentive of Rs. 460 crore (US$ 62.61 million). This project will develop a
global export hub in Uttar Pradesh and will help the state attract more foreign direct
investments (FDI).
• In December 2020, changes in the guidelines for the provision of Direct-to-Home (DTH)
services have been approved by the Union Cabinet, enabling 100% FDI in the DTH
broadcasting services market.
• Road ahead
• India is expected to attract foreign direct investments (FDI) of US$
120-160 billion per year by 2025, according to CII and EY report. Over
the past 10 years, the country witnessed a 6.8% rise in GDP with FDI
increasing to GDP at 1.8%.
• In terms of attractiveness, investors ranked India #3; ~80% investors
have plans to invest in India in the next 2-3 years, while ~25%
reported investments worth >US$ 500 million, the Economic Times
reported.
Entry of FDI
• Foreign investment into a domestic entity on a strategic basis is subject to FDI policy
in India. The GoI through Department of Industrial Policy & Promotion (DIPP)
formulates a consolidated the  on a yearly basis which is a defined framework for
FDI. Most recently, reforms were made for FDI policy in India 2019. 
• Foreign investors can invest directly in India, either on their own or through joint
ventures in virtually all the sectors except in a very small list of activities
where foreign investment is prohibited.
• FDI in the majority of the sectors is under the automatic route, i.e., allowed without
any requirement of seeking regulatory approval prior to such investment. Thus, the
process to get FDI in most sectors don't require prior approval from the GOI. Eligible
investors can invest in most of the sectors of Indian Economy on an automatic basis.
• Any Non-resident individual (NRI)/Entity can invest subject to FDI policy
(except in prohibited sectors). NRI resident in and Citizens of Nepal &
Bhutan are permitted to invest on repatriation basis (amount of
consideration for such investment shall be paid only by way of inward
remittances through normal banking channels).
• Company, trust or partnership firm incorporated outside India and
owned and controlled by NRIs
• Foreign Institutional Investors (FII) and Foreign Portfolio Investors (FPI)
• Registered FIIs/ FPIs/ NRIs as per Schedules 2, 2A and 3 respectively of
Foreign Exchange Management (Transfer or Issue of Security by a Person
Resident Outside India) Regulations, 2000 can invest or trade through a
registered broker of Indian Companies on recognized stock exchanges.
• SEBI registered Foreign Venture Capital Investor (FVCI) in any activity
mentioned in Schedule 6 of Notification No. FEMA 20/2000.
FDI Investment Routes
• Foreign Direct Investment (FDI) can be made through two routes that are:
• Automatic Route: Indian companies engaged in various industries can issue shares
to foreign investors up to 100% of their paid up capital in Indian companies
• Government Approval Route: Certain activities that are not covered under the
automatic route require prior Government approval for FDIs.
• Investors are advised to check for government approval and other related sector
condition in latest FDI Circular Section 5.
• Category 1- Sectors in which FDI is permitted up to 100% under automatic route
• Category 2- Sectors in which FDI is permitted up to 100% under Government Route
• Category 3- Sectors in which FDI is permitted beyond certain limit with Government
• Category 4- Sectors wherein FDI is permitted up to certain limit under both
Government and Automatic routes subject to applicable laws/ regulations security
and other conditionalities.
Procedure for Government Approval

•Foreign Investment Facilitation Portal (FIFP) is the new online single point interface of the Government of
India for investors to facilitate Foreign Direct Investment. This portal is designed to facilitate the single window
clearance of applications which are through approval route. Upon receipt of the FDI application, the
concerned Administrative Ministry/Department shall process the application as per the Standard Operation
Procedure (SOP).

•Subsequent to abolition of the Foreign Investment Promotion Board (FIPB) by the Government, the work of
granting government approval for foreign investment under the extant FDI Policy and FEMA Regulations, has
been entrusted to the concerned Administrative Ministries/Departments.

• The eleven notified sectors/activities requiring government approval are:

•Mining, Defence/cases relating to FDI in small arms

•Broadcasting
•Print media

•Civil Aviation

•Satellites

•Telecom

•Private Security Agencies

•Trading(Single, Multi brand and Food Products)

•Financial services not regulated or regulated by more than one regulator/ Banking Public and Private (as per FDI
Policy)

•Pharmaceuticals.
FDI Reporting Requirements
• Within 30 days of receipt of money from the foreign investor, the
Indian company will report to the Regional Office of Reserve Bank of
India (RBI) under whose jurisdiction its registered office is located.
• Within 30 days from the date of issue of shares a report in Form FC-
GPR together with the following documents should be filed with the
Regional Office of RBI:
• Certificate from the Company Secretary of the company accepting
investment from persons resident outside
• Certificate from Statutory Auditors or Chartered Accountant indicating
the manner of arriving at the price of the shares issued to the persons
resident outside India
fdi in india
SECTORS ALLOWED SECTORS NOT ALLOWED

Agriculture & Animal Husbandry Lottery Business

Plantation Sector, E-Commerce Gambling and Betting, Chit Funds, Nidhi Company

Petroleum & Natural Gas, Mining Manufacturing of Cigars, Cigarillos, Cigarettes,

Tobacco Products, etc.

Defence Manufacturing, Food Products

Broadcasting, Print Media
Asset Reconstruction Companies
Banking- Private Sector, and many more
FACTORS AFFECTING fdi in india
FAVOURABLE FACTORS UNFAVOURABLE FACTORS
 Strong Economic Growth Poor Infrastructure
Huge Labour Force and High Educated Rigidity in the Labour Market
Workforce
Access to Capital and Institutional Legal Delays
Support
FDI INFLOWS TO INDIA SINCE 2014-19

YEAR-WISE FDI INFLOW

70000
64375
61963
60220
60000
55559

50000
45148

40000

30000

20000

10000

0
FDI INFLOWS (IN USD MILLION)

2014-15 2015-16 2016-17 2017-18 2018-19

FDI INFLOWS TO INDIA SINCE 2015-19
Sector-wise Inflow(Amt in USD $ Billion)
9
8
7
6
5
4
3
2
1
0
to
r s on g ile ls ls r
on ti in b a i ca we
Se
c
a ti c a d o tic o
ic tru Tr to
m e u em P
vi ce un ns u ac Ch
Se
r m Co A rm
co
m Ph
le d
Te an
ug
Dr

2015-16 2016-17 2017-18 2018-19

Countries investing in india
 On Top Countries like
Mauritius with total inflow of
US$ 13,145 Million for FY
2017-18

 Followed by Singapore US
$9,273 Million

 Netherland US $ 2,677
Million
Reasons behind increasing fdi inflows

• Wage Rates and Labour Skills

• Political Stability
• Potential Growth
• Exchange Rate
• Tax Benefits
Benefits to Indian economy

• Economic Development
• Creation of Employment
Opportunities
• Technology Diffusion and
Knowledge Transfer
• Increase Competition and
standard of Living
Recent norms to promote fdi in india
• Revival of FDI Policy on Digital
Media, Manufacturing and Coal
Mining
• Revival of FDI Policies
• No Government approval for FDI
in Real Estate Broking Services
• Release of “National Digital
Communications Policy, 2018”
and Draft of “National E-
Commerce Policy”
 Foreign Institutional
Investors
An institution established outside India, which invests in securities
traded on the markets in India
 Background

 Started September 14, 1992 with suitable restrictions

 Permitted to invest in all the securities traded on the primary and secondary markets

 Reputed foreign investors, such as Pension Funds etc., were allowed to invest in Indian capital
market.

 Since 1995 the flow of FII is being increasing with new investors coming into the market.
Financial Institutional Investors

 Financial Institutional Investors are organizations which pool large sums of money and invest those sums
in securities, real property and other investment assets.

 They can also include operating companies which decide to invest their profits to some degree in these types of assets.

 Types of typical investors include banks, insurance companies, retirement or pension funds, hedge funds, investment
advisors and mutual funds.

 Foreign Institutional Investors (FIIs), Non-Resident Indians (NRIs), and Persons of Indian Origin (PIOs) are allowed
to invest in the primary and secondary capital markets in India through the portfolio investment scheme (PIS).
Under this scheme, FIIs/NRIs can acquire shares/debentures of Indian companies through the stock exchanges in
India
What is the legal framework governing FII in India

• The Foreign Institutional Investors are regulated by the Securities and

Exchange Board of India (SEBI) through the SEBI (Foreign Institutional
Investors) Regulations, 1995 along with the Reserve Bank of India
through Regulation 5(2) of the Foreign Exchange Management Act
(FEMA), 1999.

• The FIIs have to comply with such special focus regulations and obtain
approval from both the authorities SEBI and RBI to operate which
shall enable them to engage in buying and selling of securities, open
foreign currency, remit, repatriate funds, etc.
ADVANTAGES OF FII
• Enhanced flow of capital
• The growth rate of the country is enhanced as the funds are inflowing which can help
boost the production as well as the rate of employment in the host country.
• A competitive spirit is encouraged
• It promotes a healthy environment for competition and growth of both the parties
which are involved in the transaction that can help strengthen the bond. It can prove
to be beneficial to invest in certain countries because of their economies.
• Improved Business 
• The foreign institutional investors build professionals and they are planted in various
countries for investment purposes which increases and improves corporate
governance when they solve the firm’s operation which helps achieve desired goals.
DISADVANTAGES OF FII
• Shortage of Funds
• In case of a bad economy in any country, the withdrawal of funds by the investors
can cause a sudden outflow from the market which can prove to be a turbulent
hard to handle for the host country.
• Inflation
• The huge inflow of foreign institutional investors funds creates a high demand for
the rupee and thereby pumping a huge amount of money by the RBI into the
market. This creates excess liquidity creating inflation.
• Adverse impact on exports
• Foreign institutional investors inflows leading to an appreciation of the currency,
exports become expensive which ultimately leads to lower demand and hence a
shortfall in the export of goods and reduces competitiveness.
FII Route
As FII

Overseas pension funds, mutual funds, investment trust, asset management company, nominee
company, bank, institutional portfolio manager,etc

As Sub-accounts

The sub account is generally the underlying fund on whose behalf the FII invests. The following
entities are eligible to be registered as sub-accounts, viz. partnership firms, private company, public
company, pension fund, investment trust, and individuals.

FIIs registered with SEBI fall under the following categories:

 Regular FIIs- those who are required to invest not less than 70 % of their investment in equity-
related instruments and 30 % in non-equity instruments.

 100 % debt-fund FIIs- those who are permitted to invest only in debt instruments.
Forbidden Territories
Not allowed to invest in any company which is engaged or proposes to engage in the following activities:

 Business of chit fund

 Nidhi Company

 Agricultural or plantation activities

 Real estate business or construction of farm houses (Except development of townships, construction of
residential/commercial premises, roads or bridges)
Role of FII
 Act as highly specialized investors on behalf of others

 Act as Funds Management for Pension Investments

 Lot of influence in the management of corporations because they will be entitled to exercise the voting rights
in a company

 They can actively engage incorporate governance

 Play a large part in which companies stay solvent, and which go under.

 Influencing the conduct of listed companies

 Providing capital to companies

A Foreign Institutional Investor may invest
only in the following

 Securities in the primary and secondary markets

 Units of schemes floated by domestic mutual funds including Unit Trust of India

 Dated Government securities

 Derivatives traded on a recognized stock exchange

 Commercial paper

 Security receipts
Foreign Institutional Investments in India  
 Portfolio investments in India include investments in American Depository
Receipts (ADRs)/ Global Depository Receipts (GDRs), Foreign Institutional
Investments and investments in offshore funds.

 Before 1992, only Non-Resident Indians (NRIs) and Overseas Corporate Bodies
were allowed to undertake portfolio investments in India.

 Thereafter, the Indian stock markets were opened up for direct participation by
FIIs.

 They were allowed to invest in all the securities traded on the primary and the
secondary market.
 Investment Limits
• The eligible categories of FIIs have been expanded to include university funds, endowments, foundations,
charitable trusts and charitable societies which have a track record of 5 years and which are registered with a
statutory authority in their country of incorporation or establishment

• Each FII or sub-account of an FII has been permitted to invest upto 10% of the equity of any one company,
subject to the overall limit of 24% on investments by all FIIs, NRIs and OCBs

• The 24% limit may be raised to 30% in the case of individual companies who have obtained shareholder
approval for the same.

• FIIs have been permitted to invest in unlisted securities

• FIIs have been allowed to invest their proprietary funds

• FIIs who obtain specific approval from SEBI have been permitted to invest 100% of their portfolios in debt
securities. Such investment may be in listed or to be listed corporate debt securities or in dated government
securities, and is treated to be part of the overall limit on external commercial borrowing.
• Foreign investment in Indian securities has also been made possible through
the purchase of Global Depository Receipts, Foreign Currency Convertible
Bonds and Foreign Currency Bonds issued by Indian issuers which are listed,
traded and settled overseas. Foreign investors, whether registered as FII or
not, may also invest in Indian securities outside the FII route. Such
investment requires case by case approval from the Foreign Investment
Promotion Board (FIPB) and the RBI, or only by the RBI depending the size of
investment and the industry in which this investment is to be made.
• Foreign financial services institutions have also been allowed to set up joint
ventures in stock broking, asset management companies, merchant banking
and other financial services firms along with Indian partners. The foreign
participation in financial services requires the approval of FIPB. In 1996-97,
the FIPB announced guidelines for foreign investment in the non-banking
financial services sector.
Companies in which NRIs/PIOs
investment is allowed up to 24% of their
Paid-up Capital
1 Alembic Chemical Works Co. Ltd
2 Amar Investments Ltd, Calcutta.
3 Anglo-India Jute Mills Co.Ltd
4 Arvind Mills, Ahmedabad
5 Ashima Syntex Ltd, Ahmedabad
6 Ashoka Viniyoga Ltd
7 Bharat Nidhi Ltd
8 BLB Shares & Financial Services Ltd
9 BPL Ltd
10 Burr Brown (India) Ltd
11 Camac Commercial Company Ltd
12 Ceenik Exports (India) Ltd
13 Cifco Finance Ltd, Mumbai
14 Classic Financial Services & Enterprises Ltd, Calcutta
15 CPPL Ltd,(Reliance Ind. Infrastructure Ltd), Mumbai
16 CRISIL
17 DCM Shriram Consolidated Ltd
18 Dharani Sugars & Chemicals Ltd.
19 Dolphin Offshore Enterprises (I) Ltd
20 Essar Oil Ltd
21 Essar Shipping Ltd, B'lore
22 Essar Steel Ltd
Companies in which NRIs/PIOs investment is
allowed up to 17% of their Paid-up Capital

1 Garware Shipping Corporation Ltd

Companies where NRI investment has reached 8% and
further purchases are allowed only with prior approval
RBI

1. Astra IDL Ltd.

2. M/s. Codura Exports Ltd.
3. IDL Industries Ltd.
4. Nexus Software Ltd.
5. Dalmia Cement (Bharat) Ltd.
Companies where NRI investment has already
reached 10% and no further purchases can be allowed

1. DSQ Biotech Ltd

2. Global Trust Bank Ltd.
3. Madras Aluminium Co. Ltd
4. SPL Ltd
5. Seirra Optima Ltd
6. The Baroda Rayon Corp
7. Tai Industries Ltd.
Companies in which FII Investment is
allowed upto 30% of their paid up capital
1. Aptech Ltd
2. Asian Paints (India) Ltd
3. Capital Trust Ltd
4. Container Corporation of India
5. Ferro Alloys Corporation Ltd
6. Garware Polyester Ltd
7. GIVO Ltd (formerly KB&T Ltd)
8. Gujarat Ambuja Cements Ltd
9. Infotech Enterprises Ltd.
10. Mastek Ltd

11. Orchid Chemicals and Pharmaceuticals Ltd

12. Pentasoft Technologies Ltd (Pentafour Communications Ltd)

13. Polyplex Corporation Ltd

14. Ranbaxy Laboratories Ltd

15. Software Solutions Integrated Ltd

16. Sonata Software Ltd

17. The Credit Rating Information Services of India Ltd.

18. The Paper Products Ltd

19. Vikas WSP Ltd

Companies in which FII Investment is allowed upto 40% of their paid up capital

1. Balaji Telefilms Ltd.

2. M/s. Burr Brown (India) Ltd.
3. M/s. Elbee Services Ltd.
4. Hero Honda Motors Ltd.
Issues and challenges -There are various challenges
faced in the due process

• The quality of capital needs to improve.

• There are more inflows in the form of FII and not FDI which can help boost the
economy and the state of the country which cannot be achieved by the FIIs.
FDI will bring in resources to the host country and help create a better financial
market standing too.
• Need for Better regulation to monitor and supervise these flows. It is also
pertinent to note that there are no bad types of funds but the focus is to make
money but secondarily the aim is to provide a stronger economy in return.
• RBI does not have enough government bonds left to balance the market. These
interjectory funds will lead to the creation of additional liquidity which will
prove to be inflationary.
• These markets can be really shallow and volatile in nature which can
prove to be bad for investors as the price may have a sharper increase
just because the Influential entities many other companies exit and they
cause manipulation in the market. Due to this high degree of volatility is
caused as there are many companies that suffer wrongful losses due to
influential investing entities.
• RBI will not be able to regulate capital flows and not be able to continue
the exchange rate policy. No country follows three policies that consist
of a capital account policy, a currency policy, and monetary policy. For
example, China has decided that it requires external capital flows for
employment and economic growth and has decided to have a fixed
exchange rate, and almost no monetary policy, Other developed
countries do not engage in all three types of policies like India does
which makes it tough to regulate but RBI steers through.
Critical analysis

• The influencers in the market have a negative impact on the market

as it is to be noted that there are more than 4800 companies listed on
the stock market but BSE Sensex only incorporates 30 which goes out
to show that only influential people have standing in these markets.
• This shows that the Financial market is a bit narrow.
• This shallowness would also mean that the effects of FII activity would
be augmented only if they can influence and start to create a herd-
like mentality to follow the FIIs when making their investment
decisions.
Indian stock markets induce a high degree of
variety of trading prices over a period of time:-
• Due to correction, it can lead to FII pull-out which can cause an immediate
decline in prices.
• An increase in investment by FIIs triggers a sharp price increase, it would
provide additional incentives for FII investment which would increase the
purchases
• Exchange rate Conversion can also prove to be volatile as When, FIIs are
attracted to the market by expectations of a price increase that tend to be
automatically realized, the inflow of foreign capital can result in an
appreciation of the rupee to the dollar ratio. This increases the return
earned in foreign exchange when rupee assets are converted into dollars. As
a result, the investments turn even more attractive which would encourage
an investment that would imply a sharper fall.
• The growing realization of how shallow these markets can be and
speculation is done for choosing the right moment to exit this can also
cause manipulation in the market and a high degree of volatility is
caused as there are many companies that suffer wrongful losses due
to influential investing entities.
Taxation
Nature of Income Tax Rate

 Long-term capital gains 10%

 Short-term capital gains 30%

 Dividend Income Nil

 Interest Income 20%

Economic Theory
 Institutional investors as financial intermediaries

 Act as intermediaries between lenders and borrowers.

 Important in the functioning of the financial markets.

 Economies of scale imply that they increase returns on investments and diminish the cost of
capital for entrepreneurs.

 Acting as savings pools, they also play a critical role in guaranteeing a sufficient diversification
of the investors’ portfolios.

 Their greater ability to monitor corporate behaviour as well to select investors profiles implies
that they help diminish agency costs
Types
 Pension fund

 Mutual fund

 Investment trust -  Collective Investment

 Unit trust and Unit Investment Trust – Stocks and Bonds

 Investment banking – High Net worth Investors

 Hedge fund

 Sovereign wealth fund - State-Owned Investment Fund

 Endowment fund - transfer of money or property donated to an institution like charity,University

 Insurance Companies
Role in Indian Stock Market
 Provide exposure to various foreign financial market

 Global Importance and attraction

 Provide liquidity

 Efficiency in the market

 Inflow of foreign funds into the domestic markets

 Spread the Risk

 Decrease the Volatility

 Competence in the Companies to avoid takeovers and acquisitions

 Inflow of foreign Currency

 Leading More Regulated Market

Index Correlated with flow of FIIs
 S&P CNX Nifty

Bank Nifty

CNX 100

CNX IT

CNX NIFTY JUNIOR

S&P CNX 500

CONCLUSION
• Foreign institutional investors(FII) main aim is to propose investment
in India which must register with the SEBI) along with the Reserve
Bank of India (RBI) to function in the market. They are generally
investing in Indian companies in stock and debenture under the rules
and regulations of different companies. FII pull-out can cause serious
problems to the Financial sector of the Country. As it can be seen the
FDI inflow has reduced, there is hope that one day FDI will be equal to
FII by reforming policies and not being fixed to all three policies of the
Exchange rate, Capital Rate Policy, and Current Rate Policy which can
help RBI to regulate and monitor all kinds of Capital inflows.