Foreign institutional investor means an entity established or
incorporated outside India which proposes to make investment in India.
Positive tidings about the Indian economy combined with a fast-growing
market have made India an attractive destination for foreign
institutional investors.
Entry Options For FII
A foreign company planning to set up business operations in India has
the following options:
Incorporated Entity
By incorporating a company under the Companies Act,1956 through
- Joint Ventures; or
- Wholly Owned Subsidiaries
Foreign equity in such Indian companies can be up to 100% depending
on the requirements of the investor, subject to equity caps in respect
of the area of activities under the Foreign Direct Investment (FDI)
policy.
Unincorporated Entity
As a foreign Company through
- Liaison Office/Representative Office
- Project Office
- Branch Office
Such offices can undertake activities permitted under the Foreign
Exchange Management Regulations,2000.
Economic Figures
- In 2004, FII investments crossed $9 billion, the highest in the
history of Indian capital markets.
- The total net investment for the year up to December 29 stood at
US$9,072 million while foreign investors pumped in about US$2,113
million in December.
- Korea and Taiwan have always been the biggest recipients of FII
money. It was only in 2004 that India managed to receive the second
highest FII inflow at over $8.5bn.
- In 2005 FIIs invested more in Indian equities than in Korean or
Taiwanese equities.
