Definition
FDI vs FPI
FDI is long-term foreign investment in physical businesses and assets, while FPI is shorter-term foreign money invested in stocks and bonds.
Foreign Direct Investment involves setting up or acquiring stakes in companies, factories or operations in India, bringing stable, long-term capital. Foreign Portfolio Investment flows into listed shares and bonds and can move in or out quickly.
FPI flows heavily influence Indian stock market swings, since large foreign buying or selling moves the Nifty and the rupee. FDI, by contrast, signals long-term confidence and supports productive capacity and jobs.
Related terms
- Rupee DepreciationRupee depreciation is a fall in the rupee's value against foreign currencies, especially the US dollar, which makes imports and overseas spending costlier.
- Quantitative Easing / TighteningQuantitative easing is a central bank buying bonds to inject money into the economy; quantitative tightening is the reverse, draining money by reducing those holdings.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.