A project cannot be completed alone. It requires the effort of many individuals. I take this opportunity to thank all those people who helped me to complete this project.

I express my sincere and deep gratitude to Father Dominic Savio, Vice Principal (St. Xavier’s College, Kolkata) for giving me the privilege of being part of the ‘Project’ in partial fulfillment of the requirement in regard to B.com 3rd year degree course.

I express my sincere gratitude to Prof. S.S. SAHA for giving us the opportunity to undergo this project. I further thank him for lending a helping hand when it came to solving my problems related to this project. This project would not have been possible without his valuable time and support.

This project is an attempt to talk about the SCENARIO OF FDI & FII IN INDIA IN THE LAST

Last but not the least I am very much thankful to all the sources which I have approached and collected data from.


Table of contents

Serial no. 1. 1.1 1.2 1.3 1.4 1.5 2. 2.1 2.2 3. 4. 4.1 4.2 Chapter – I : Introduction A Brief Summary Research Problem Literature Review Research Methodology Limitations


Pages 5 6 7 8 10 10 11 12 22 29 39 40 41

Chapter – II : FDI & FII An Overview Foreign Direct Investment Foreign Institutional Investment Chapter – III : FDI vs FII, Comparative Analysis Chapter – IV : Conclusion Areas Of Further Research References & Bibliography


List of Tables

Serial no. 1. 2. 3. 4. 5. 6. 7. Sectors attracting highest FDI SEBI Registered FIIs


Pages 17 27 30 31 33 35 37

Net Foreign Institutional Investment (FII) in the last 10 Years Foreign Direct Investment in India in the last 10 Years A Comparison between the Net FII, FDI & the Sensex A Comparison between the GDP, Net FII & FDI of the last 10 Years Foreign Exchange Rate, Net FII & FDI Inflow of last 10 Years


6. 5. 1. 8. 7. 4. 3. 9.A Comparison Diagram showing comparison between FDI Inflow & Sensex Diagram showing comparison between net FII & Sensex Diagram showing comparison between GDP & FDI Diagram showing comparison between GDP & Net FII Graphical representation of Net FII & the Foreign Exchange Rate Graphical representation of FDI & the Foreign Exchange Rate 5 . 2. FDI Across Various Sectors TITLE Pages 19 29 31 32 33 34 35 36 37 38 39 Pictorial Representation of Registered FIIs Net Investments shown graphically Graphical Representation of FDI FDI & FII Inflows in the last 10 Years .List of Charts Serial no. 11. 10.


does not seem be working in India. 7 . This has attracted unprecedented amount of foreign investment in the last decade. including India. which tarnish democracy and discourage outside investors. Labor unrest. As FPI essentially interacts with the real economy via the stock market. it is much more stable than the foreign institutional investment which comes via the stock market route. if it translates into order and political stability. outside help is needed and domestic house is to be placed under strict discipline. but of the two forms of foreign investment – foreign portfolio investment (FPI)2 and foreign direct investment (FDI). Research shows that the perceived benefits of foreign portfolio investment have not been realized in India. South Asia Analysis Group 2 Foreign Portfolio Investment: Entry of funds into a country where foreigners make purchases in the country’s stock and bond markets. the surge in foreign portfolio investment in the Indian economy has introduced some serious problems of macroeconomic management for the policymakers like inflation. it has bought about a number of changes in its economic policies and has put in its practice a liberal and more transparent FDI and FII policy with a view to attract more foreign direct institutional investment inflows into its economy. To sustain it. except for an occasional burst of activity. the former has reached our shores much more than the latter. like the one in 2003.1 But the current government in both its terms has opened up the economy to welcome foreign investment to keep up with the strong domestic demand for quality goods and services. Paper no. education etc. 1208. Of its own. This makes it imperative to evaluate the relative merits and demerits of a stock market 1 Hari Sud. sometimes for speculation. the effect of stock market on the country’s economic development will also be examined. On the other hand. The dependence on FPI is pushing many developing countries. not only as an addition to its own domestic capital but also as an important source of technology and other global trade practices. currency appreciation etc. Democracy is a great buzzword. But the supposed linkage effects with the real economy have not worked in the way the mainstream model predicts. the Indian economy will find it difficult to reach this target. It can be seen that the mainstream argument that the entry of foreign portfolio investors will boost a country's stock market and consequently the economy. political opportunism and corporate irregularities are a few issues. The latter is a key index. Instead there has been an increased uncertainty and skepticism about the stock market in this country. Growth of Indian economy is playing hide and seek with the double digit growth (Gross Domestic Product) mark. and has more accountability and brings fundamental and tangible benefits to the economy. These changes have heralded the liberalization era of the foreign investment policy regime into India and have brought about a structural breakthrough in the volume of FDI and FII inflows in the economy. On the other hand FDI is what the government really needs to attract in various sectors like infrastructure. which the foreign investors check before committing large sums of money for investment.A BRIEF SUMMARY The Government of India has recognized the key role of the foreign direct investment (FDI) and foreign institutional investment (FII) in its process of economic development. In order to attract the required amount of FDI and FII. towards a more stock market oriented financial system. The influx of FIIs has indeed influenced the secondary market segment of the Indian stock market.

8 . The global recession in 2008 proved how volatile the money pumped in by the FIIs into the secondary segment of the financial market is. this report is going to analyze the trends and patterns of foreign direct investment (FDI) and foreign institutional investment (FII) flows into India during the post liberalization period. It is important to keep record of all such inflows to form strict regulatory procedures. Whereas the sectors where there was FDI didn’t experience such knee-jerk reactions. In this context. leading to huge losses for the domestic investors who had to bear the brunt even though the economy as such was insulated from the adverse effects of the recession. search for areas or sectors that needs more investment etc.e. RESEARCH PROBLEM The opening up of the Indian economy served as a great boon for our country as the foreign investors saw vast opportunities in it and started investing through the various routes allowed by the government of India. As it is seen that FII is a volatile investment as compared to FDI the factors affecting the inflow of both types of investment are explored and their investment annually is compared on the basis of certain common parameters.based financial system in a developing country as compared to the Chinese model where conditions are conducive to foreign investment in the real sector. collect data regarding inflow of foreign direct investment and foreign institutional investment from credible sources for a specified timeline and tabulate such data to perform trend analysis of these investments to understand whether these investments fluctuate rapidly or move in a fixed pattern and also what provides impetus to these investments or what are the parameters that trigger a massive pull-out of them. which is what this research proposes to do i.

40. That can be achieved partially (though very successfully) by a reasonably high 'capital gains' tax. 1235-1237 5. 11-17. 40. 42 (Oct. The industrial reforms have gone far. No. which are a critical missing link. 24 (Jun. Vol. No. Thus the impact of the reforms in India on the policy environment for Foreign Direct Investment presents a mixed picture. It is time to realize that in spite of the impression given by the financial media. (Mar 2005).LITERATURE REVIEW 1. 1995). Vol. pp. 8 (Feb. 2005). 2005). 40. The combination of trading driven substantially by conditions in other markets and large price pressures from the trading of foreigners raises the possibility that foreign trading can be destabilizing in emerging markets. Vol. Institutional investors have grown in importance in the mature economies in recent years and come to supplant banks as the primary custodians of people's savings. No. 2395-2399 2. Vol. though they need to be supplemented by more infrastructure reforms. 1-27 6.T . pp. 2729-2732 4. Kishore C. Kulwinder Singh 9 . Parthapratim Pal Economic and Political Weekly. One must prevent the inflow/outflow of speculative 'hot money'. 30. 32. pp. Economic and Political Weekly. 21 (May 27. Vol. 1997). Samal Economic and Political Weekly.T Ram Mohan. . pp. the movements on the stock markets and the Sensex do not necessarily imply any fundamental changes in the economy and these movements affect a very small minority of the country's population. Anthony Richards The Journal of Financial and Quantitative Analysis. 765-772 3. The main emerging feature of India's equity market is its gradual integration with the global market and its consequent problems due to the hot money movement by Foreign Institutional Investors (FIIs). Arun Ghosh Economic and Political Weekly. 18-24. pp. 19-25. No.

Therefore this study makes a humble effort to get an overview of both types investments first then study their trends and make a comparative analysis between the two to see which factors are they most sensitive to. 3 Speculation: Speculation typically involves the lending of money or the purchase of assets.Jun. The secondary data collected regarding the foreign direct investment and foreign institutional investment is for a time period of ten years starting from the year 2000-01 till 2009-10. journals. questionnaires etc. RESEARCH METHODOLOGY The research has been carried out by collection of secondary data with the use of primarily the internet. it would seem that foreign firms have greater credibility amongst consumers for offering quality products and providing customer satisfaction. The denomination for the inflows has been converted to rupees in crores from US dollars by taking an average exchange rate for both types of investments. 10 . If at all. 6. India Finds Itself Awash in Foreign Investment REVIEW GAP It is seen that that eminent scholars have greatly established the ill effects of ‘speculative’ 3 money or ‘hot’ money and suggested ways to put forth stricter norms and procedures to control the flow of such money and protect the financial markets from getting artificially inflated and create a bubble which could explode at the slightest provocation. Ganesh Economic and Political Weekly. various business magazines. No primary data has been used here like face to face interviews or telephonic interviews. No. books on banking and finance. Vol. newspapers. pp. Also it can be gathered from previous studies that there is a clamour for easing of policy restrictions to allow more foreign direct investment. equity or debt but in a manner that has not been given thorough analysis or is deemed to have low margin of safety or a significant risk of the loss of the principal investment. Vikas Bajaj The New York Times. For a country that quarantined its economy from the rest of the world for much of the last 60 years. 22 (May 31 .Centre for Civil Society. which is borrowing money to pay for welfare programs and subsidies. 1265-1274 8. S. whether the two types of investment are equally sensitive to the same factors. 1997). 32. which is more stable and also which type of investment direct or portfolio is preferred by an emerging economy like India. New Delhi Research Internship Programme. 2005 7. It has helped bridge the gap between domestic savings and the growing capital needs of the private sector and the government. Policies regarding FDI have not moved with the same pace as the policies regarding FII i. India has increasingly relied on foreign investment in recent years. the former’s policies are still considered conservative by the foreign investors.e.

These are statistical tools used to read their pattern and conduct trend analysis. The FDI and FII have been compared with various variables that affect their inflow in to the country by the above mentioned tools with the use of spreadsheets. Information collected first hand from professionals and scholars through interviews would have given the report a larger perspective. 11 .For the purpose of comparison between FDI and FII the raw data has been arranged into a table for better observation and then this numerical data has been incorporated into bar charts and line charts. Since the sample size is small so the results can be different from actual facts and may not give an appropriate judgement. LIMITATIONS Limitations are conditions that restricts the scope of the study period or may affect the results of the research. It cannot be controlled by the researchers and can even affect the analysis of reseach adversely. Also all the data have been collected from secondary sources. One of the limiting factors of my project was that I have taken only three variables for a time period of ten years for analysis due to time constraints.


insurance. mining. telecommunications. Its definition can be extended to include investments made to acquire lasting interest in enterprises operating outside of the economy of the investor. 13 . Domestic policy tended towards protectionism. 4 International business is a term used to collectively describe topics relating to the operations of firms with interests in multiple countries. water. It is the establishment of an enterprise by a foreigner. Five-Year Plans of India resembled central planning in the Soviet Union. with a strong emphasis on import substitution. business regulation. and central planning. and by those leaders' exposure to democratic socialism as well as the progress achieved by the economy of the Soviet Union. while trade and foreign investment policies were relatively liberal. which was seen by Indian leaders as exploitative. industrialization. among other industries. Types of Foreign Direct Investors A foreign direct investor may be classified in any sector of the economy and could be any one of the following: 1) An individual 2) A group of related individuals 3) An incorporated or unincorporated entity 4) A public company or private company 5) A group of related enterprises 6) A government body 7) An estate (law) 8) Trust or other societal organization 9) Any combination of the above Pre-liberalization Period (1947–1991) Indian economic policy after independence was influenced by the colonial experience. machine tools. were effectively nationalized in the mid-1950s. a large public sector. and electrical plants. The FDI relationship consists of a parent enterprise and a foreign affiliate which together form an international business 4 or a multinational corporation (MNC). Steel. economic interventionism.Foreign direct investment (FDI) It is defined as a company from one country making a physical investment into building a factory in another country.

These include interest loans. Vertical Foreign Direct Investment takes place when a multinational corporation owns some shares of a foreign enterprise. By the turn of the 20th century. Some foreign direct investments involve the transfer of strategic assets. grants. Factors detrimental to the growth of FDIs include necessities of differential performance and limitations related with ownership patterns. FDI activities may also be carried out to ensure optimization of available opportunities and economies of scale. The reforms did away with the License Raj (investment. which was India's major trading partner. Prime Minister Narasimha Rao. This form of FDI is subject to tax incentives as well as disincentives of various forms. along with his finance minister Manmohan Singh. which are also known as 'direct investments abroad. Horizontal foreign direct investments happen when a multinational company carries out a similar business operation in different nations. subsidies. An outward-bound FDI is backed by the government against all types of associated risks. although the beneficiaries have largely been urban residents.' Different economic factors encourage inward FDIs. with a substantial reduction in state control of the economy and increased financial liberalization. allowing automatic approval of foreign direct investment in many sectors. India had progressed towards a free-market economy. and the removal of restrictions and limitations. which found itself facing the prospect of defaulting on its loans. literacy rates and food security. However. Categories of Foreign Direct Investment: An Overview FDIs can be broadly classified into two types: outward FDIs and inward FDIs. the subsequent government policy of Fabian socialism hampered the benefits of the economy. Risk coverage provided to the domestic industries and subsidies granted to the local firms stand in the way of outward FDIs. FDIs that are undertaken to strengthen the existing market structure or explore the opportunities of new markets can be called 'market-seeking FDIs. Other categorizations of FDI exist as well. caused a major balance-of-payments crisis for India.' 'Resourceseeking FDIs' are aimed at factors of production which have more operational efficiency than those available in the home country of the investor. removed price controls. and the various prerequisites required for these investments. This has been accompanied by increases in life expectancy. This classification is based on the types of restrictions imposed. The collapse of the Soviet Union. tax breaks. initiated the economic liberalization of 1991. the foreign direct investment is termed as 'efficiency-seeking. and the first Gulf War. India asked for a $1.Post-liberalization Period (since 1991) In the late 1970s.' 14 .8 billion bailout loan from the International Monetary Fund (IMF). leading to high fiscal deficits and a worsening current account. industrial and import licensing). reduced corporate taxes and promoted the creation of small scale industries in large numbers. reduced tariffs and interest rates and ended many public monopolies. In response. In this case. the government led by Morarji Desai eased restrictions on capacity expansion for incumbent companies. which in return demanded reforms. which caused a spike in oil prices. which supplies input for it or uses the output produced by the MNC. Foreign Direct Investment is guided by different motives.

prepayment or scheduled repayment of earlier external borrowings. Use of GDRs – The proceeds of the GDRs can be used for financing capital goods imports. and equity investment in JV/WOSs in India. 1.Foreign Direct Investment in India In India. ports. telecommunication. capital expenditure including domestic purchase/installation of plant. GDR investments are treated as FDI and are designated in dollars and are not subject to any ceilings on investment. A company engaged in the manufacture of items covered under Annex-III of the New Industrial Policy whose direct foreign investment after a proposed Euro issue is likely to exceed 51% or which is implementing a project not contained in Annex-III. via Euro issues Through private placements or preferential allotments Foreign Investment through GDRs (Euro Issues) – Indian companies are allowed to raise equity capital in the international market through the issue of Global Depository Receipt (GDRs). would need to obtain prior FIPB clearance before seeking final approval from Ministry of Finance. Foreign direct investments in India are approved through two routes – 15 . Foreign Direct Investment Policy allows for investment only in case of the following form of investments:     Through financial alliance Through joint schemes and technical alliance Through capital markets. This condition would be relaxed for infrastructure projects such as power generation. airports and roads. 2. Clearance from FIPB – There is no restriction on the number of Euro-issue to be floated by a company or a group of companies in the financial year. equipment and building and investment in software development. petroleum exploration and refining. An applicant company seeking Government's approval in this regard should have consistent track record for good performance (financial or otherwise) for a minimum period of 3 years.

manganese. 16 . 2. zinc FDI in India across Different Sectors - Hotel & Tourism Hotels include restaurants. chrome. transmission and distribution other than atomic Exports Bulk Imports Cash and Carry wholesale trading. 100 per cent FDI is permitted for this sector through the automatic route. sulfur. The lists are comprehensive and cover most industries of interest to foreign companies. 74% and 100% is allowed depending on the category of industries and the sector wise caps applicable. Investments in high priority industries or for trading companies primarily engaged in exporting are given almost automatic approval by the RBI. transport facilities. The portion of the equity not proposed to be held by the foreign investor can be offered to the public. amusement. Tourism would include travel agencies. gold. and rejections are few. leisure. 51%. beach resorts and business ventures providing accommodation and food facilities to tourist. Normal processing time is 4 to 6 weeks. Foreign Direct Investment in India is not allowed under the following industrial sectors:      Arms and ammunition Atomic Energy Coal and lignite Rail Transport Mining of metals like iron. entertainment.1. The FIPB Route – Processing of non-automatic approval cases – FIPB stands for Foreign Investment Promotion Board which approves all other cases where the parameters of automatic approval are not met. copper. sports and health units. Trading For trading companies 100 per cent FDI is allowed for    Power For business activities in power sector like electricity generation. even when the foreign investor wishes to hold less than the entire equity of the company. tour operators. It is not necessary for foreign investors to have a local partner. 50%. Its approach is liberal for all sectors and all types of proposals. Automatic approval by RBI – The Reserve Bank of India accords automatic approval within a period of two weeks (subject to compliance of norms) to all proposals and permits foreign equity up to 24%. diamonds.

FDI is allowed up to 74 per cent. NRI's And OCB's They can have direct investment in industry. FDI is 49 per cent. radio-paging and end to end bandwidth. subject to the fact that the venture does not attract compulsory licensing. Private Banking FDI of 49 per cent is allowed in the Banking sector through the automatic route provided the investment adheres to guidelines issued by RBI. Drugs & Pharmaceuticals For the production of drugs and pharmaceutical a FDI of 100 per cent is allowed. Insurance Sector For the Insurance sector FDI allowed is 26 per cent through the automatic route on condition of getting license from Insurance Regulatory and Development Authority (IRDA). For ISPs with gateways. Diagnostic Centers Shipping Deep Sea Fishing Oil Exploration Power Housing and Real Estate Development Highways. value added services and mobile personal communications by satellite. Business Processing Outsourcing FDI of 100 per cent is permitted provided such investments satisfy certain prerequisites. trade and infrastructure Up to 100 per cent equity is allowed in the following sectors            34 High Priority Industry Groups Export Trading Companies Hotels and Tourism-related Projects Hospitals. does not involve use of recombinant DNA technology. cellular. Bridges and Ports Sick Industrial Units 17 . Telecommunication   For basic.plants the FDI allowed is up to 100 per cent. But any FDI above 49 per cent would require government approval.

dipp. 3.40 3. Cr 1.49 10.33 Percentage with total inflows (%) Source: Department of Industrial Policy & Promotion (www. Cement & Gypsum Industries TOTAL FDI INFLOWS 145154 4329 2.82 23. Industries Requiring Compulsory Licensing Industries Reserved for Small Scale Sector Table 1: Sectors attracting highest FDI Cumulative Inflows Rank Sector (from August 1991 to March 2007) Amount in Rs. 5. Electrical Equipments Services Sector Telecommunications Transportation Industry Fuels (Power + Oil Refinery) 6.nic.54 9510 6396 5281 6. 4.62 8.58 11.63 36034 34238 16691 15427 12105 24. 7. Chemicals Construction Activities Drugs & Pharmaceuticals 9.55 4. 2.in) 18 . Food Processing Industries 10. 8.98 5143 3.

the introduction of modern management and accounting methods. and expensive. since the transfer of technology to firms with no previous experience of using it is difficult. and even if it were not. 19 . it would still be difficult to import the necessary technology from abroad. Over a long period of time FDI creates many externalities in the form of benefits available to the whole economy which the TNCs cannot appropriate as part of their own income. risky. FDI in services affects the host country's competitiveness by raising the productivity of capital and enabling the host country to attract new capital on favorable terms.Chart 1: FDI Across Various Sectors Cumulative FDI Inflows Electrical Equipments Telecommunications Fuels (Power + Oil Refinery) Construction Activities Food Processing Industries 4% 4% 7% 8% 3% 3% Services Sector Transportation Industry Chemicals Drugs & Pharmaceuticals Cement & Gypsum Industries 25% 11% 11% 24% The Importance of foreign direct investment Foreign direct investment (FDI) provides a major source of capital which brings with it up-to-date technology. These include transfers of general knowledge and of specific technologies in production and distribution. It would be difficult to generate this capital through domestic savings. the establishment of finance related and trading networks. industrial upgrading. work experience for the labor force. and the upgrading of telecommunications services. It also creates services that can be used as strategic inputs in the traditional export sector to expand the volume of trade and to upgrade production through product and process innovation.

which is enormously benefited from foreign direct investment. 20 . FDI has been a booming factor that has bolstered the economic life of India. which is a major step towards the economic growth of the country. It helps in developing the know-how process in India in terms of enhancing the technological advancement in India. Employment and skill levels FDI has also ensured a number of employment opportunities by aiding the setting up of industrial units in various corners of India. production level. The incorporation of a range of well. FDI ensures a huge amount of domestic capital. The effects of FDI are by and large transformative. but on the other hand it is also being blamed for ousting domestic inflows. Some of the biggest advantages of FDI enjoyed by India have been listed as under: Economic growthThis is one of the major sectors.composed and relevant policies will boost up the profit ratio from Foreign Direct Investment higher.Advantages of FDI Attracting foreign direct investment has become an integral part of the economic development strategies for India. FDI is also claimed to have lowered few regulatory standards in terms of investment patterns. Technology diffusion and knowledge transfer FDI apparently helps in the outsourcing of knowledge from India especially in the Information Technology sector. A remarkable inflow of FDI in various industrial units in India has boosted the economic life of country. Trade Foreign Direct Investments have opened a wide spectrum of opportunities in the trading of goods and services in India both in terms of import and export production. Products of superior quality are manufactured by various industries in India due to greater amount of FDI inflows in the country. and employment opportunities in the developing countries.

The maximum amount of the profits gained by the foreign firms through these joint ventures is spent on the Indian market. At times it has been observed that certain foreign policies are adopted that are not appreciated by the workers of the recipient country. The various disadvantages of foreign direct investment are understood where the host country has some sort of national secret – something that is not meant to be disclosed to the rest of the world. The situations in countries like Ireland. governance and social regulations that have been laid down in the country. the condition of the host country could be important factors in the case of the foreign direct investment. at times. Foreign direct investment may entail high travel and communications expenses. as well as. In case the host country is not well connected with their more advanced neighbors. It has been observed that the defense of a country has faced risks as a result of the foreign direct investment in the country. They should be making sure that the entities that are making the foreign direct investment in their country adhere to the environmental. Chile and China corroborate such an opinion. Singapore. This causes a lot of inconvenience to the investor.Linkages and spillover to domestic firms Various foreign firms are now occupying a position in the Indian market through Joint Ventures and collaboration concerns. distribution of the profits made on the investment and the personnel. It is normally the responsibility of the host country to limit the extent of impact that may be made by the foreign direct investment. Disadvantages of FDI The disadvantages of foreign direct investment occur mostly in case of matters related to operation. is also disadvantageous for the ones who are making the investment themselves. This has often caused many companies to approach foreign direct investment with a certain amount of caution. The size of the market. The differences of language and culture that exist between the country of the investor and the host country could also pose problems in case of foreign direct investment. One of the most indirect disadvantages of foreign direct investment is that the economically backward section of the host country is always inconvenienced when the stream of foreign direct investment is negatively affected. it poses a lot of challenge for the investors. At times it has been observed that there is considerable instability in a particular geographical region. Yet another major disadvantage of foreign direct investment is that there is a chance that a company may lose out on its ownership to an overseas company. It has less control over the functioning of the company that is functioning as the wholly owned subsidiary of an overseas company. Foreign direct investment. At times it has been observed that the governments of the host country are facing problems with foreign direct investment. 21 .

The investor does not have to be completely obedient to the economic policies of the country where they have invested the money. 22 . At times there have been adverse effects of foreign direct investment on the balance of payments of a country.This leads to serious issues. Even in view of the various disadvantages of foreign direct investment it may be said that foreign direct investment has played an important role in shaping the economic fortunes of a number of countries around the world.

for the first time. mutual funds. Because of the very nature of such investment. debentures or other securities by an FII. FII money is also called ‘hot money’. however did not elaborate on the objectives of the suggested policy. investment trusts. the Government under its New Industrial Policy revamped its foreign investment policy recognizing the growing importance of foreign direct investment as an instrument of technology transfer. debentures and warrants issued by companies which were listed or were to be listed on the Stock Exchanges in India. Since FIIs are very sensitive. asset management companies. pension funds and mutual funds. Institutional investors include hedge funds. The entry of FIIs seems to be a follow up of the recommendation of the Narsimhan Committee Report on Financial System. International institutional investors must register with the Securities and Exchange Board of India to participate in the market. a mere change 23 . 1992 with suitable restrictions. The term is used most commonly in India to refer to outside companies investing in the financial markets of India. In contrast to FDI. While presenting the Budget for 1992-93. nominee companies and incorporated/institutional portfolio managers. the Committee. the Government. Portfolio Investment It refers to the purchase of stocks. the Government of India embarked on liberalization and economic reforms with a view of bringing about rapid and substantial economic growth and move towards globalization of the economy. the then Finance Minister Dr. As a part of the reforms process. The committee only suggested that the capital market should be gradually opened up to foreign portfolio investments. such as Pension Funds etc. This is a major contributing factor to the increasing volatility and instability of the global financial system. From September 14. Compared to FDI. insurance companies. FIIs do not invest with the intention of gaining controlling interest in a company. The rapid outflow of ‘hot money’. permitted portfolio investments from abroad by foreign institutional investors in the Indian capital market. has created exchange-rate problems in Argentina and in Southeast Asia. These investments are made-to. They typically make short-term investments. History of Foreign Institutional Investors Since 1990-91. a portfolio investor can enter and exit countries with relative ease.book profits. Manmohan Singh had announced a proposal to allow reputed foreign investors. While recommending their entry.Foreign Institutional Investment (FII) An investor or investment fund that is from or registered in a country outside of the one in which it is currently investing.. Foreign Institutional Investors were permitted to invest in all the securities traded on the primary and secondary markets. including shares. Simultaneously. bonds. augmentation of foreign exchange reserves and globalization of the Indian economy. to invest in Indian capital market. FIIs include pension funds. in the recent past. One of the major market regulations pertaining to FIIs involves placing limits on FII ownership in Indian companies.

nominee company. 2003. In fact the Single Stock Futures (SSF) market in India is one of the most successful SSF market in Asia after Korea. foundations. institutional portfolio manager. inter alia. A Working Group for Streamlining of the Procedures relating to FIIs. Currently. university funds. This recommendation was implemented in December 2003. Market design in India for foreign institutional investors in India . SEBI and RBI leading to high levels of efficiency in trading. • F and O Segment: The highly successful derivatives market in India has provided additional depth to the markets with high traded volumes and multiple instruments by which investors can participate in the Indian equity markets. settlements and transparent dealings enhancing the confidence level of FIIs in increasing allocations to India. endowments. mutual funds. 24 . The following factors contributed significantly to the FII flows to India • Regulation and Trading Efficiencies: Indian stock markets have been well regulated by the stock exchanges. and suggested that dual approval process of SEBI and RBI be changed to a single approval process of SEBI. • New Issuance: We have witnessed extremely high quality issuance during the year from companies such as NTPC. bank. charitable trusts. recommended streamlining of SEBI registration procedure. constituted in April. investment trust.in perception about an economy can prompt them to pull out investments from a country. asset management company. charitable societies.Foreign Institutional Investors means an institution established or incorporated outside India which proposes to make investment in India in securities. yet another record for the year. ONGC and TCS leading to strong FII participation with successful new issuance of over $ nine billion. entities eligible to invest under the FII route are as follows: i) As FII: Overseas pension funds. a trustee or power of attorney holder incorporated or established outside India proposing to make proprietary investments or with no single investor holding more than 10 per cent of the shares or units of the fund.

Business of chit fund Nidhi Company5 Agricultural or plantation activities 5 Nidhi Company is a company registered under Companies Act and notified as a nidhi company by Central Government under Section 620-A of Companies Act. It is a non-banking finance company doing the business of lending and borrowing with its members or shareholders. investment trust. entities such as asset management companies. private company. While the guidelines did not have a specific provision regarding clients. FIIs registered with SEBI fall under the following categories: a) Regular FIIs. They are also not allowed to invest in any company which is engaged or proposes to engage in the following activities: 1. Hence. inter-alia. 3. b) 100 % debt-fund FIIs.accounts. in the application form the details of clients on whose behalf investments were being made were sought. Asset management companies/portfolio managers are basically in the business of managing funds and investing them on behalf of their funds/clients. pension fund.those who are required to invest not less than 70 % of their investment in Equity-related instruments and 30 % in non-equity instruments. the intention of the guidelines was to allow these categories of investors to invest funds in India on behalf of their 'clients'.those who are permitted to invest only in debt instruments. partnership firms. who would be registered as FIIs in India. intermediated through institutional investors. permission was also granted for making investments in the names of such clients. The broad strategy consisted of having a wide variety of clients. 2. and individuals. These 'clients' later came to be known as sub-accounts. Prohibitions on Investments: FIIs are not permitted to invest in equity issued by an Asset Reconstruction Company. While granting registration to the FII. 25 . The following entities are eligible to be registered as sub. public company. nominee companies and incorporated/institutional portfolio managers or their power of attorney holders (providing discretionary and non-discretionary portfolio management services) to be registered as FIIs.ii) As Sub-accounts: The sub account is generally the underlying fund on whose behalf the FII invests. FIIs are eligible to purchase shares and convertible debentures issued by Indian companies under the Portfolio Investment Scheme. viz. including individuals. The Government guidelines for FII of 1992 allowed.

c) an asset management company. b) an International or Multilateral Organization or an agency thereof or a Foreign Governmental Agency or a Foreign Central Bank. Investment Conditions and Restrictions for FIIs: 1. Trading in Transferable Development Rights (TDRs) Registration Process of FIIs FIIs are required to obtain a certificate by SEBI for dealing in securities. 5. nominee company. investment manager or advisor. investment trust. unlisted. endowments. insurance company or reinsurance company. Real estate business or construction of farm houses (real estate business does not include development of townships. general reputation of fairness and integrity. experience. roads or bridges). vi) Whether the applicant is a fit and proper person. debentures and warrants of companies. v) Whether the grant of certificate to the applicant is in the interest of the development of the securities market. 1973 (46 of 1973) by the Reserve Bank of India for making investments in India as a Foreign Institutional Investor. bank or institutional portfolio manager. listed or to be listed on a recognized stock exchange in India. The SEBIs initial registration is valid for a period of three years from the date of its grant of renewal. mutual fund. professional competence. foundations or charitable trusts or charitable societies. ii) Whether the applicant is regulated by an appropriate foreign regulatory authority. A Foreign Institutional Investor may invest only in the following:(a) Securities in the primary and secondary markets including shares. financial soundness. construction of residential/commercial premises. SEBI grants the certificate SEBI by taking into account the following criteria: i) The applicant's track record. iii) Whether the applicant has been granted permission under the provisions of the Foreign Exchange Regulation Act. iv) Whether the applicant is a) an institution established or incorporated outside India as a pension fund.4. 26 . established or incorporated outside India and proposing to make investments in India on behalf of broad based funds and its proprietary funds in if any or d) university fund.

(d) Derivatives traded on a recognized stock exchange. It can be observed from the table below that India is one of the preferred investment destinations for FIIs over the years. Foreign Institutional Investments and investments in offshore funds. (f) Security receipts 2. However. The total investments in equity and equity related instruments (including fully convertible debentures. 27 . this is not applicable to any investment of the foreign institutional investor either on its own account or on behalf of its sub-accounts in debt securities which are unlisted or listed or to be listed on any stock exchange if the prior approval of the SEBI has been obtained for such investments. Before 1992. (e) Commercial paper. Even investments made by FIIs in security receipts issued by securitization companies or asset reconstruction companies under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act. Increasing Trend of FIIs Portfolio investments in India include investments in American Depository Receipts (ADRs)/ Global Depository Receipts (GDRs). No foreign institutional investor should invest in security receipts on behalf of its sub-account. should not be less than seventy per cent of the aggregate of all the investments of the Foreign Institutional Investor in India. A foreign corporate or individual is not eligible to invest through the hundred percent debt route. the Indian stock markets were opened up for direct participation by FIIs. convertible portion of partially convertible debentures and tradable warrants) made by a Foreign Institutional Investor in India.accounts. 2002 are not eligible for the investment limits mentioned above.(b) Units of schemes floated by domestic mutual funds including Unit Trust of India. whether on his own account or on account of his sub. Further. only NonResident Indians (NRIs) and Overseas Corporate Bodies were allowed to undertake portfolio investments in India. They were allowed to invest in all the securities traded on the primary and the secondary market including the equity and other securities/instruments of companies listed/to be listed on stock exchanges in India. SEBI while granting approval for the investments may impose conditions as are necessary with respect to the maximum amount which can be invested in the debt securities by the foreign institutional investor on its own account or through its sub-accounts. Thereafter. made on his own account and on account of his sub-accounts. whether listed or not listed in a recognized stock exchange (c) Dated Government securities.

sebi. Treasurer of the State North Carolina Equity Investment Fund Pooled Trust.gov. and AIM Funds Management Inc. The names of some prominent FIIs registered are: California Public Employees' Retirement System (CalPERS). United Nations for and on behalf of the United Nations Joint Staff Pension Fund. the Growth Fund of America. Commonwealth of Massachusetts Pension Reserves Investment Trust. Public School Retirement System of Missouri.Table 2: SEBI Registered FIIs Year 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 Source: www.in Number of FIIs 527 490 502 540 685 882 996 1219 1334 1729 Chart 2: Pictorial Representation of Registered FIIs Number of FIIs 2009-10 19% 2008-09 15% 2007-08 14% 2006-07 11% 2000-01 6% 2001-02 5% 2002-03 6% 2003-04 6% 2004-05 8% 2005-06 10% The diversity of FIIs has been increasing with the number of registered FIIs in India steadily rising over the years. 28 .


Cr) Table 4: Foreign Direct Investment in India in the last 10 Years Crores) (Rs. Crores) Year 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 Net FII 9933 8763 2689 45764 45880 41467 30841 66179 -45811 142658 Source: SEBI Annual Report After the liberalization of the economy the net investments made by the foreign investors started thronging the Indian markets via the portfolio investment route. As Indian industries grow with more and more firms have used the capital markets to raise their finances. 30 .e. Now due to strong demand in the domestic market these companies have been doing well pushing our economy to high levels of GDP (Gross Domestic Product) growth rate thus luring huge foreign investment in the secondary capital market as the foreign fund managers saw this as a great opening for getting high returns on their funds at a pretty low risk. This boom in the Indian industry coupled with easy entry requirements has given an impetus to the FIIs who show an increasing trend. It was only in 2008 when the global recession broke out that the net investments declined sharply due to heavy selling pressure from the FIIs i.Table 3: Net Foreign Institutional Investment (FII) in the last 10 Years (Rs. Chart 3: Net Investments shown graphically Net FII (Rs.Cr) 200000 150000 100000 50000 0 -50000 -100000 Net FII (Rs. they pulled out virtually all the monies invested in the stock market thus causing a crash in the benchmark indices of the country.

Year FDI Inflow 2000-01 12645 2001-02 19361 2002-03 14932 2003-04 14103 2004-05 12117 2005-06 24613 2006-07 70630 2007-08 98664 2008-09 122919 2009-10 123377 Source: Department of Industrial Policy & Promotion (www.00 80.000.00 40. 11968 Crores from the year 2000-01 to 2005-06 while the increase from 2005-06 to 2009-10 has been a phenomenal 401% i. Rs.000. liberal investment rules. and operational flexibility helped increase the inflow of Foreign Direct Investment or FDI. 1 lakh crore mark. from Rs.00 60. There has been an increase of 94% i. In percentage terms FDI inflow increased by 25% from 2007-08 to 2008-09. 24613 Cr to Rs.000. deregulation.000. Despite the global financial credit squeeze brought by the recession India continues to be an attractive destination for investment as there is tremendous potential for growth in the vast and diverse markets of our country.00 0.in) It can be seen that the flow of FDI has consistent and gradually increasing over the years.000.000.00 20.e.00 FDI Inflow The bars from 2000-01 to 2004-05 have been almost hovering the same levels but importantly haven’t gone down which is because the foreign investors saw immense potential but were not getting enough incentives to enter with huge business propositions. In fact during 2008-09 the chart shows that FDI breached the Rs.dipp. Chart 4: Graphical Representation of FDI FDI Inflow 140. 31 . The breakout came from the year 2005-06 when the investment nearly doubled as compared to 2000-01. 123377 Cr which can be attributed to relaxation of foreign investment rules.e.000.00 100.nic.00 120. after which there was no looking back as consistent economic growth. So much so that even during the year 2008-09 when the recession had taken its toll on the western countries there was no indication of falling investment via the FDI route as can be seen from the chart.

But it can also be said that the policies governing the entry of FII were relaxed and made less complex which made investment via the FII route attractive for the foreign investors. Now from the year 2006-07 to 2008-09 again FDI was greater than FII and this time by big margins.e. Also during the year 2008-09 net foreign institutional investment was in the negative indicating heavy selling and virtually no buying but the foreign direct investment on the other hand rose by 25% from the previous year. This is significant because as it proves that the effects of recession apparently did not affect the inflow of FDI at all whereas it totally sent the FII out of the country.Chart 5: FDI & FII Inflows in the last 10 Years . But the difference between the FDI and FII was not much during the first three years but in the next three years when the FII went past FDI the difference between them were huge as can be seen from the blue and red bars in the chart. from 2000-01 to 2002-03 the FDI was higher than FII but in the next three years the opposite case happened where the FII was greater than FDI from 2003-04 to 2005-06.Cr) 9933 8763 2689 45764 45880 41467 30841 66179 -45811 FDI Inflow (Rs.A Comparison 200000 150000 100000 50000 0 -50000 -100000 Net FII (Rs. Table 5: A Comparison between the Net FII.Cr) FDI Inflow This presents an important picture from where a number of things can be gathered.Cr) 12645 19361 14932 14103 12117 24613 70630 98664 122919 32 . The first three years i. FDI & the Sensex Year 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 Sensex Close 3262 3377 5839 6603 9398 13787 20287 9647 17465 Net FII (Rs.

33 . In the corresponding period net FII has increased by more than 315% and the FDI has gone up by 94%.000 level which is the time when the recessionary effects took place.2009-10 20509 Source: www. The Sensex fell down by 10640 points in early 2008 i. an increase of nearly 25%. 1. The blue line or the Sensex has a rapid rise from the years 2000-01 to 2006-07 after which it goes down in early 2008 i. speculation etc.2 lakh crore of investment becomes stable. From 2005-06 to 2009-10 the Sensex gained 6722 points. an increase of more than 320%. bankruptcy.e. This turned the FIIs into net sellers and hence during 2008-09 the net FII figure is in negative. 122919 Cr. in 2007-08 but recovers from 2008-09 and goes past the 15000 mark in 2008-09 and finally breaches the 20000 mark again in 2009-10. an increase of 49% and in the corresponding period the net FII went up by 244% and the FDI inflows went up by 401%. The FDI on the other hand surged ahead at Rs. by 52% due to heavy selling by the FIIs who pulled out their money from the stock market due to the sub-prime crisis. The red line or the FDI from 2000-01 to 2004-05 shows an even path with a slight decline but has taken off 2004-05 itself and shown a rapidly increasing trend as the red line can be seen rising sharply upwards breaching the Rs. Chart 6: Diagram showing comparison between FDI Inflow & Sensex 140000 120000 20000 100000 80000 60000 40000 5000 20000 0 0 15000 FDI Inflow (Rs. credit crunch. 1 lakh crore mark roughly in 2007-08 and after peaking in 2008-09 with more than Rs. This implies that FDI inflow did not get affected by the recession worldwide and even if it was it is not possible to pull out money invested through the FDI route as easily as it could be done in the case of FII.Cr) Sensex Close 25000 10000 The blue and red line depicting Sensex and FDI respectively have been tracked for the last 10 years and it can be seen that the Sensex peaked during 2006-07 whereas the FDI line has peaked during 2008-09 almost at the same time when the Sensex crashed as the blue line can be seen falling sharply going down and even below the 10.bseindia.com 142658 123377 The Sensex has increased by 10525 points between 2000-01 and 2005-06.e.

But the FIIs started pouring in again from the end of 2009 after the governments abroad started providing bail-out packages.4 Net FII (Rs.4 5.rbi. Net FII & FDI of the last 10 Years Year 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 Source: www.org. The net FII started declining from 2007-08 till the middle of 2008-09 which caused a sharp fall in Sensex also which went below the 10000 level in 2007-08 falling by almost 52% as compared to the previous year.7 7.5 7.8 3.Chart 7: Diagram showing comparison between net FII & Sensex 200000 25000 150000 20000 100000 15000 50000 10000 0 5000 Net FII (Rs.in GDP (at factor cost) 4. Table 6: A Comparison between the GDP.5 9.Crores) 12645 19361 14932 14103 12117 24613 70630 98664 122919 123377 34 . sops and various other incentives to the ailing companies.2 6.Cr) Sensex Close -50000 -100000 0 The red line denoting the net FII can be called a volatile line from the chart as there are sudden sharp drops and sharp rises. The Sensex also rises sharply from 2008-09 after the FIIs turned into net buyers and hence a similar pattern can be found between these two. It has no fixed pattern. Crores) 9933 8763 2689 45764 45880 41467 30841 66179 -45811 142658 FDI Inflow (Rs.7 9.8 8.5 9.

30841 Crs a fall of almost 26%. which hit the western countries hard.2% in 2007-08 to 6.The GDP has increased from 4. Chart 8: Diagram showing comparison between GDP & FDI 12 10 8 6 60000 4 2 0 40000 20000 0 140000 120000 100000 80000 GDP at factor cost FDI The GDP growth rate was around the reasonably healthy levels of 4.4 and 5. gas and water supply.8 percent during 2000-01 and 200102 but it declined to 3. the exports dried up. in others (financial services. for example).7% when the net FII declined from Rs.4% from 2000-01 to 2009-10. After 2002-03 the GDP has shown an increasing trend as well as the FDI as can be seen from the blue and red lines in the chart.7% in 2008-09 which can be attributed to very slow industrial growth specially the manufacturing sector.. India felt just the tip of the iceberg of the destructive economic recession. the deceleration was substantial. whereas the FDI grew by 187% and stood at Rs. peaking in 2006-07 at 9. In some sectors (manufacturing is one) the slowdown was marginal. as it can be seen how the net FII turned into negative figures. Also in the industrial sectors barring the sub-sector of electricity. The GDP fell from 9. In the corresponding period the FDI increased by 300% and the net FII increased by 60%. The GDP remained above the 9% mark for three years from 2005-06 to 2007-08. The pattern can said to be roughly familiar. 70630 Crs. In the same year the FDI can be seen falling by 23%.8 percent in 2002-03 which happened due to the massive drought caused by the monsoon failure resulting in low production of agricultural products. 41467 Crs to Rs. growth in all industrial and service sub-sectors slowed in the third quarter of 2002-03 compared to what was recorded in the second quarter of the year. 35 .4% to 7. inflationary pressure etc.

Crores) 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 9933 8763 2689 45764 45880 41467 30841 66179 -45811 12645 19361 14932 14103 12117 24613 70630 98664 122919 36 .5% to 9. 45764 Crs to Rs. 30841 Crs.26 44. 1 lakh Crore mark.63 46.4%. a decrease of 33% whereas in the corresponding the GDP increases from 8. Crores) FDI Inflow (Rs. low demand for Indian goods abroad hurting exports.39 48.7%.59 45. in 2009-10 the FII shows again a very steep rise breaching the Rs. Similarly the GDP has also recovered but gradually from 6.33 Net FII (Rs.18 43. rising interest rates etc.00 45.19 41. sluggish manufacturing industry. inflation.22 48. Table 7: Foreign Exchange Rate. Both the net FII and GDP showed sharp declines in the year 2008-09 owing to various factors like the global recession.7% to 7. Net FII & FDI Inflow of last 10 Years Year USD in terms of Indian Rupee 47.Chart 9: Diagram showing comparison between GDP & Net FII 200000 12 150000 10 100000 8 Net FII GDP at factor cost 50000 6 0 4 -50000 2 -100000 0 The FII curve (red line) is one with many sharp fluctuations and presents at first an increasing trend from 200001 to 2003-04 and then becomes stable but has a very gradual declining slope from 2003-04 to 2006-07 going down from Rs.

41.18 in 2006-07 and correspondingly the Net FII has increased from Rs.39 in 200708 to Rs. 8763 Crs in 2001-02 to Rs.18. It can be seen that whenever the red line (foreign exchange rate) goes up the green line (Net FII) goes down.43. In 200809 when the Net FII has crashed and went into negative figures the exchange rate went from Rs. 48. The foreign exchange rate became the lowest in 2006-07 at Rs. 37 . Chart 10: Graphical representation of Net FII & the Foreign Exchange Rate 200000 50 48 46 100000 44 50000 42 0 40 -50000 38 36 FII (Rs.57 or 3. 41.33 in 2008-09.3%. 48.com. Crores) USD in terms of INR 150000 -100000 The above diagram brings to light a very important occurrence regarding Net FII and the Foreign Exchange Rate.63 in 2001-02 to Rs. SEBI Annual Report 142658 123377 In the ten years from 2000-01 to 2009-10 the net effect has been a decline of Rs 1.30841 Crs in 2006-07. During the year 2008-09 the FIIs turned sellers and hence net FII went into negative figures while the FDI increased by 25%.2009-10 45.ratesfx.65 Source: www. The exchange rate has steadily declined from Rs.

Chart 11: Graphical representation of FDI & the Foreign Exchange Rate 140000 50 120000 48 100000 46 80000 44 FDI (Rs. The exchange rate again recovers from 2006-07 and rises again till 2008-09 after which we can again see a sharp decline in 2009-10 but the FDI line remains stable. 24613 Crs to Rs.41 from 2005-06 to 2006-07 due to unrestricted inflow of dollars thus increasing its supply thereby reducing the exchange rate but in the same period the FDI has increased from Rs. 70630 Crs. Crores) USD in terms of INR 60000 42 40000 40 20000 38 0 36 Not much relationship can be gathered between these two variables from the chart. The green line denoting FDI has an overall increasing trend after being stable and rather gradually declining during the period 2000-01 to 2004-05. 45 to Rs. 38 . The foreign exchange rate sharply declines from around Rs.

Chapter – IV CONCLUSION 39 .

inflation rate. Hence FII is to be welcomed with strict political and economical discipline. Pharmaceuticals. full grown infrastructure. the FII flies away at the shortest political or economical disturbance. favorable labor law. It is not exactly brick and mortar money. India should welcome both and work hard to retain both. 40 . It comes only when all the criteria to set up an export industry are met. The FII (Foreign Institutional Investor) is monies. If India plays its cards right India may be the hub for the service sector. On the contrary. reduced taxes. Also research can be carried out to determine why various caps on investment set by the government across various sectors like infrastructure. It provides employment potential to semi skilled and skilled labor.FDI or FII FDI usually is associated with export growth. That includes. insurance should be removed and how much inflow would be required in those sectors to fulfill the strong domestic demand which cannot be met by the Indian companies either due to lack of technical expertise or shortage of funds etc. The Global Recession of 2008 is a key example of the latter. but in the long run it may translate into brick and mortar. pharmaceuticals. It is permanent and stays in the country for a very long time. China receives mainly the FDI. They do not have instruments to receive the FII i. drug testing. institutions and political and judicial framework. Still high end manufacturing in auto parts and pharmaceuticals should be India’s target. which chases the stocks in the market place. medical care etc are key sectors for foreign investment. Sudden influx of this drives the stock market up as too much money chases too little stock. government assistance to acquire land. unexplored service sectors including accounting. Where FDI is a bit of a permanent nature. Manufacturing is a brick and mortar investment.What does India Need . BPO. Both are needed in India. it leaves ruined economy and ruined lives behind. Areas of Further Research This report can be further stretched to include other factors affecting the FDI inflow and net FII like interest rates determined by the Reserve Bank of India. freedom to move money in and out of country. industrial growth etc. Huge investments are needed to set this industry. IT. Once this money leaves. On the other hand the service sector requires fewer but highly skilled workers. laws.e. Auto Parts. reduced bureaucratic involvement etc.

2002. 1997). Vol. 1995) pp. Klapper L. No. Banking and Finance (Feb 2228. Vol.in www.com www... Economic and Political Weekly. 21 (May 27. pp.bseindia.in www. The Dynamics of Foreign Portfolio Inflows and Equity Returns in India. 8 (Feb 19-25.nic. Vol. 1998.. Money.  Kohli Renu...dipp. No. 38. 1-27 Ghosh Arun. Foreign Portfolio Investment in Indian Equity Markets: Has the Economy Benefitted? 41 .com  www. Vol. 32. A.com     Pal Parthapratim. Vol. Annual Report 2009-10 www.com www. India.. 40. 2729-2732 Batra. ICRIER.rbi. Economic and Political Weekly. 761-762+764-768         SEBI.. No. Economic and Political Weekly. Economic and Political Weekly. 18-24.thehindu. New Delhi. 765-772 Richards Anthony... 2005). 2003).org www. and Wysocki PD. Working Paper No. The Journal Financial and Quantitative Analysis.wikipedia. 8. pp.REFERENCES & BIBLIOGRAPHY  Aggarwal R.gov. 1 pp. pp.sebi.authorstream. No..in www. Portfolio Preferences of Foreign Institutional Investors. 109. 40. Samal.mbaknol. 1235-1237 Banaji J. Working Paper   Kishore C. 30. No. 42 (Oct. 2003.org.

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