What are FII and FDI?

FII (Foreign Institutional Investor) is an investor investing outside of their registered country. Outside entities investing in a nation’s financial market is called as FII. The FII may include hedge funds, insurance companies, pension funds, investment banks, and mutual funds. The FIIs are an important source of capital for developing countries but still some countries placed restrictions on the size of investment by FII to limit their influence.

FDI (Foreign Direct Investment) is a type of investment in a business registered in one country by an entity based on another country. The investment may include mergers, acquisitions, building new infrastructure, reinvesting profits, etc by a company in a different country.