FPI

FPI

Subject : Economics

Context : Three countries – the US, Mauritius and Luxembourg — accounted for more than 50 per cent of the total foreign portfolio investment (FPI) that India received so far.

Concept :

• Out of Rs 44.62 lakh crore investment, US investors accounted for Rs 15.38 lakh crore, Mauritius Rs 5.29 lakh crore and Luxembourg Rs 3.74 lakh crore, according to data from National Securities Depository Ltd (NSDL).

Foreign Portfolio Investments

• Foreign portfolio investment (FPI) refers to investing in the financial assets of a foreign country, such as stocks or bonds available on an exchange.
• This type of investment is at times viewed less favorably than direct investment because portfolio investments can be sold off quickly and are at times seen as short-term attempts to make money, rather than a long-term investment in the economy.
• Portfolio investments typically have a shorter time frame for investment return than direct investments.
• As securities are easily traded, the liquidity of portfolio investments makes them much easier to sell than direct investments. With any equity investment, foreign portfolio investors usually expect to quickly realize a profit on their investments.
• Portfolio investments are more accessible for the average investor than direct investments because they require much less investment capital and research.
• Examples of foreign portfolio investments include stocks, bonds, mutual funds, exchange traded funds, American depositary receipts (ADRs), and global depositary receipts (GDRs).