Foreign Insitutional Investment (FII) vis-a-vis Foreign Direct Investment (FDI)

No.	Foreign Institutional Investment	No.	Foreign Direct Investment
1	FII is an investment made by an investor in the financial markets of a foreign nation.	1	FDI refers to an investment made by a company or entity based in one country, into a company or entity based in another country.
2	FIIs participate in the exchange-traded currency derivative segment to the extent of their Indian rupee exposure in India.	2	An example of FDI would be an American company taking a majority stake in a company in India.
3	The FII investment flows only into the secondary market.	3	FDI flows in the Primary market.
4	It helps in increasing capital availability in general rather than enhancing the capital of a specific enterprise. International institutional investors must register with the Securities and Exchange Board of India to participate in the market.	4	It aims to increase the enterprises capacity or productivity or change its management control. In an FDI, the capital inflow is translated into additional production.
5	FIIs are not allowed to conduct private transactions. FIIs attract 30% tax.	5	FDIs are allowed to conduct private transactions. FDIs attract up to 40% tax and are bound by lock-in periods in their investments as promoters.
6	Though the Foreign Institutional Investor helps in promoting good governance and improving accounting, it does not come out with any other benefits of the FDI.	6	FDI not only brings in capital but also helps in good governance practices and better management skills and even technology transfer.
7	FIIs are short-term investment.	7	FDI's are long term investment.
8	Foreign investors with less than 10% stake in a particular stock are considered as FII.	8	Foreign investors with more than 10% stake in a particular stock will be considered as FDI
9	FII can enter the stock market easily and also withdraw from it easily.	9	But FDI cannot enter and exit that easily. It is however considered more stable.