🔴How is Foreign Direct Investment (FDI) different from Foreign Portfolio Investment (FPI)? Foreign Direct Investment (FDI) refers to investment by a foreign entity (individual, firm, or government) directly into a business or asset in another country. It includes not just funds but also control, technology, and a long-term role in the host country’s economy. Key Features of FDI: Covers setting up new units (greenfield), buying firms (brownfield), or reinvestment of profits. Usually involves ownership of 10% or more, giving influence over business decisions. Enters via Automatic (no approval) or Government (needs approval) routes. Sectors like telecom, defence, and retail have specific FDI limits and rules. 🟢Foreign Direct Investment (FDI) Nature: Long-term, strategic in real assets. Control: Involves ownership/control (10% or more). Stability: Stable and long-term. Regulators: DPIIT and RBI. Examples: Foreign firm opens a factory in India. Walmart acquiring Flipkart. 🔵 Foreign Portfolio Investment (FPI) Nature: Short-term, in financial markets. Control: No control; less than 10% stake. Stability: Volatile and quick-moving. Regulators: SEBI and RBI. Examples: Foreigners buying shares or bonds in India. Global funds investing in Indian stocks.