FII - Foreign Indirect Investment. Looking for abbreviations of FII? It is Foreign Indirect Investment. Foreign Indirect Investment listed as FII. Foreign indirect investmentSubmit too – Submited by – What is Foreign indirect investment • If the Indian investing company. Foreign direct investment (FDI) involves establishing a direct business interest in a foreign country, such as buying or establishing a manufacturing business, while foreign portfolio investment (FPI) refers to investing in financial assets such as stocks or bonds in a foreign.
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When making foreign investmentsinvestors have to consider economic factors as well as other risk factors, such as political instability and currency exchange risk.
The Hong Kong-based firm, traded on the TSX, was called out by analysts alleging the company orchestrated a foreign indirect investment fraud through fictitious foreign indirect investment claims and inflated timber holdings over many years.
Ryan Murphy, director and investment advisory specialist at UBS Private Wealth Management, suggests investors with strong knowledge of a particular foreign firm or economy make the best localized foreign spelunkers.
In all cases, investors should focus on businesses they understand and have the time to research.
- Foreign indirect investment | Advisor
- What is a Foreign Investment? - Definition & Examples - Video & Lesson Transcript |
- Foreign indirect investment
- What is a Foreign Investment? - Definition & Examples
- Assessing the risks
In general, this form of foreign investment is less favorable, as the domestic foreign indirect investment can easily sell off their investment very quickly, sometimes within days of the purchase.
This type of investment is also sometimes referred to as a foreign portfolio investment FPI.
FCCBs and DRs having underlying of instruments which can be issued under Schedule 5, being in the nature of debt, shall foreign indirect investment be treated as foreign investment. However, any equity holding by a person resident outside India resulting from conversion of any debt instrument under any arrangement shall be reckoned as foreign investment foreign indirect investment the composite cap.
Sectoral cap is as per table appended below.
foreign indirect investment Now this applies to Direct foreign investment itself. This may not have much significance as most of the sectors where there are caps, also have other regulators which have their own foreign investment conditions — like Banking, Insurance, etc.
foreign indirect investment There are 17 sectors where there are caps. Some other sectors are also there where automatic route has a cap and beyond that investment can be made with Government approval.
NRI investment under Schedule 4 is foreign indirect investment to be considered. Essentially we have to see foreign investment in first level company for investment in second level company; and foreign investment in second level and subsequent levels for further downstream investments.
Schedule 11 has not been foreign indirect investment as foreign investment as per the rules. One cannot take a view that investment by foreign owned or controlled IV will be considered as FDI but the recipient company will not be considered to have received FDI.
Therefore Schedule 11 also has to be considered. The schedule has very few restrictions compared to restrictions or conditions for FDI under Schedule 1.
That Indian foreign indirect investment can invest in downstream companies to undertake activities where FDI is restricted. Further, a company, trust or partnership outside India which is owned and controlled by NRIs, can invest in Indian entities under this Schedule 4. Thus foreigners foreign indirect investment invest in India through this route in almost any sector.
This route was misused in the past. As more foreign investment comes into a country, it can lead to even greater investments because others see the country as economically stable.
Foreign Portfolio Investment vs FDI
Foreign investments can be split into direct and indirect investments. Direct investments are when companies make physical investments and purchases in buildings, factories, machines, and other equipment outside of their home country. Indirect investments are when companies or financial institutions purchase positions or stakes in companies on a foreign stock foreign indirect investment.