Foreign Direct Investment (FDI) and Portfolio Investment

FPIs remained in sell-off mode for third consecutive month, withdrawing USD 2.4 billion in May.

Published monthly by RBI. Updated till May 2020 (published on July 17th, 2020).

Brief Overview

Foreign Institutional Inflows (FIIs) imply investments registered in a country outside of the one in which it is investing. It constitutes Foreign Direct Investment(FDI), Equity inflows, Non-Residing Indian (NRI) Deposits, etc. However, FDI has been the most attractive form of capital inflow. By definition, FDI is an investment made by a company or individual in one country in business interests in another country, in the form of either establishing business operations or acquiring business assets in the other country, such as ownership or controlling interest in a foreign company. Portfolio investment, on the other hand, is a hands-off or passive investment of securities in a portfolio, and it is made with the expectation of earning a return. It is distinct with FDI which involves taking a sizable stake in a target company and possibly being associated with its day-to-day management. From a sectoral perspective, FDI has mostly flowed into the services sector, followed by the manufacturing sector. In India, foreign investment was mainly introduced in 1991 under the Foreign Exchange Management Act (FEMA). The two routes under which foreign investment can be made are the automatic route and the government route.

Historically, there has been a sea of change in India's approach towards foreign investment since the early 1990s. Pre-liberalisation, FDI through foreign collaboration was only allowed in specific sectors related to high technology. A major shift occurred post-1991 reforms, whereby, restrictions were gradually removed in low technology areas. Over the last decade, reform measures have steadily gained momentum, as is evident from the ever-increasing volumes of FDI inflows being received in India.

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Next Release Date:  August 18, 2020

Foreign Investment-Quarterly

Foreign Investment-Annual

Note: The years in the graph represent the fiscal year, for instance, the year 2009 represents the period Apr'09-Mar'10. The data for Total Foreign Portfolio Investment for the year 2020 is upto July 10, 2020.

Source of data: Foreign Direct Investment, Foreign Portfolio Investment

Country-wise FDI Inflow-Annual

Note: The years in the graph represent the Calendar year, for instance, the year 2009 represents the period Jan'09-Dec'09. The country-wise Foreign Direct Investment data for the year 2019 is upto September, 2019.