Foreign Direct And Institutional Investment (FDI/FII) - YouTube

hello everyone so how are you all,i think u probably heard of the terms fdi and fii

before and every time you hear these terms, these terms bring confusion in your mind that

what are these terms?

so our basically concern topic is FDI and FII,i will make you clear by taking simple

examples, we are not going deep to fdi and fii ,so myself naman jangid welcomes you to

channel deep talks lets get start.

so lets say this is the particular company of america xyz.ltd, this company belongs to

america,i mean this company manufacture its product and sell its product in america so

this company belongs to america but now this company wants to promote its business or promote

its product so what are the ways left with this company, one way is it can invest in

some other country so that it can promote its business so lets say this company wants

to invest in some other country and let say the country is India, this particular xyz.ltd

want to invest in India, it can invest in India by two ways.

one is fdi and second one is fii, so i am writing here.

first one is fdi and second one is fii so first of all we have to understand that what

fdi stands for.

fdi stands for foreign direct investment and fii stands for foreign institutional investment.

ok i am writing here foreign direct investment and foreign institutional investment or we

can say foreign indirect investment (fii) so these are the two method by which this

particular company of america can invest in India or any other country of the world.

so come to the fdi now.

so let say this is xyz.ltd this is the company of america now when its comes to the India

then it will become xyz India.ltd this mean this company partly be managed by xyz and

partly be managed by the Indian company.

why xyz India ltd.?

because this fdi is further categorised in to two parts or we can say two investment

one is greenfield investment and other one is brownfield investment so i am explaining

that so first one is greenfield investment and second one is brownfield investment so

basically what are the greenfield and brownfield investment.

come to the greenfield investment, when a parent company begins a new venture by constructing

its new facilities.

ok this comes to the greenfield investment ok and when a company purchases the existing

facility to begin new production i.e. brownfield investment.

let me take the example of both.

if we talk about the greenfield investment.

let me take the real example.

there is a company of china that names bbk electronics.

i think some of you heard this name.

bbk electronics.

actually this is the parent company of three companies which are running in India.

one is OPPO, ONE PLUS , and third company is VIVO.

lets come to the definition again.

what i said when a parent company begins new venture by constructing new facility in a

country.

this means the parent company is bbk electronics and parent company of these three companies.

oppo, one plus and vivo and these three companies are running in India and these three companies

are partly managed by the bbk electronics.so this is the example of greenfield investment

and now if we come to the brownfield investment when company purchase existing firm in order

to begin new production so it is simple when one company purchases the other company.

so if we take the example few years back microsoft purchases nokia so this is the perfect example

of brownfield investment.now i think you have

understood that why xyz.ltd become xyz.india.ltd because this particular company has open its

subsiduary which is partly managed by this company and partly managed by Indian company.

let me take you one more example few years back there was a company hero honda and we

know very well that hero company is different from honda but they were joint ventured ,they

were working together in order to promote its business so this was the example of greenfield

investment.

so i think you are very clear with fdi which is foreign direct investment when one company

directly investing in other country and this fdi further categorised in to greenfield investment

and brownfield investment so this is very clear, this is very simple you can call it

that when one company investing in other country by setting up industries and purchasing lands

and builds a new business there that comes under the foreign direct investment.now come

to fii,what is fii, fii means foreign institutional investment and we can say foreign indirect

investment.so if we talk about fii now.

in fii we bring some money to invest in the equity market of that company.equity market

means share market when we invest some money in share market of that particular country

and when we sell or purchases the share of the company of that country then this come

under fii i.e foreign institutional investment.

so this is clear to you like fdi we are not investing physically, we don't have to purchase

land, we don't have to build industries ok. in fii we simply brings money from other country

and we invest them to the share market of the country and we sell or purchase the share

of the company so this is fii i.e foreign institutional investment.second thing we can

say that fdi is the long term investment, why i am calling this the long term investment

because you know very well that we have to purchase land, we have to build industries,we

have to hire some employees to start some business so this is type of long term investment

but fii is the short term investment because anytime we can withdraw our money

from the share market, there is no liability we can say.

because we always bring some money and we invest in the share market and we can withdraw

them as we want ok, so this is the fii and we can call this short term investment ok.

now lets talk about some pro and cons of fdi not fii because fii we all know very well

fii is the foreign institutional investment or foreign indirect investment and in this

we simply bring some money and invest in the share market of that country, so this is not

impacting directly to the country but fdi is impacting directly to the country because

they are going to set up their industry,they are going to hire some employees.

so they are impacting directly the country.lets discuss some pros and cons and i can say advantages

and disadvantages of fdi.so if we see the first advantage then first advantage is the

increment in the employment, how fdi will increase the employment of the country, this

is obvious when some of the MNC are coming to the India then they will bring money ,they

will set up the industries so they will hire some employee also to work in their company

which will increase the employment.

so first thing is increasing employment.

second advantage is income in the tax revenue,how as they are coming they will build its industries,

they will hire some employees, they will get income to their employees so their employees

will pay tax also they are manufacturing their product so they have to pay tax on that manufactured

product so this will increase the tax value of the country.income of tax revenue.

the third point we can see is development of human captial.

let see how as employee will work in the mnc so they will gather some knowledge.by gathering

some knowledge they are increment human capital.

now come ti the forth point that increment in the

national income.i think i don't have to explain this because national income when will national

income rise when the more citizen of the country will get employed and then they will be paid

of and this will increase the national income automatically.this was hike forth advantage

of fdi.

now come to disadvantage of fdi, so very first disadvantage is destruction of more entrepreneur

why? because more entrepreneur can not able to withstand the tough competition of the

mnc.

let say this entrepreneur is having juice shop so this small entrepreneur can not able

to withstand the tough competition of the cold drink company.so this will lead to the

destruction of these small entrepreneur.second disadvantage is inflation in the economy.as

the mnc company spend more in advertisement and in consumer promotion this will automatically

rise the product price which will hike the price of product and this will bring inflation

in the market or we can say in economy.now third disadvantage is exchange crisis.as we

know with the coming of the mnc this will drop the export of the domestic country and

with the drop of the export the value of the domestic currency of the country come down

so this will bring the exchange crisis.so this was all about fdi and fii so i am telling

you again in short what is fdi and fii.

fdi stand for foreign direct investment and fii stand for foreIgn institutional investment.

in this we can directly invest in the other country by setting up the industry, by hiring

some employees and begin new manufacturing there so this is the fdi.

now what is in fii foreign indirect investment in this we simply brings the money and invest

in the share market or the equity market of the country or we can sell or purchase share

of the company there.

so this id fii so this was all about fdi and fii.

so i think this is very clear to you and i hope you like the video and if you like the

video please do not forget to subscribe our channel.thank you.

JAI HIND