India attracts billions in foreign investment. But how do investors actually invest? Through two main routes — FDI and FPI.
What is FDI?
Foreign Direct Investment (FDI)
Long-term investments where foreign players acquire ownership or set up operations — bringing capital, control, and stability.
Examples of FDI in Action
From Walmart’s Flipkart deal to Tesla’s India plans — FDI often means factories, jobs, and full control over business.
What is FPI?
Foreign Portfolio Investment (FPI)
Short-term investments in stocks, bonds, mutual funds aimed at profits without taking business control.
Real-World Examples of FPI
Hedge funds buying Reliance shares or BlackRock investing in Indian bonds are classic FPI moves — fast, liquid, and flexible.
Key Differences: FDI vs FPI
FDI = Long-term + Control
FPI = Short-term + No Control
FDI builds infrastructure; FPI boosts financial liquidity.
Risk & Volatility: Which is Safer?
FDI is stable but slow.
FPI is fast but highly volatile — impacted by market trends, interest rates, and global cues.
Why India Needs Both
FDI creates jobs and growth.
FPI powers capital markets.
Together, they shape India’s economic momentum.