FPI inflows in India: Rs 2.74 lakh crores in 2021

In 2021, India has emerged as the largest recipient of Foreign Portfolio Investments. The net FPI inflow for the fiscal year 2020-21 was Rs 2.74 lakh crores.

Investment in equity segment

The investments in the equity segment for the year 2020-21 touched Rs 2,74,503.  This is the highest quantum of money recorded since the National Securities Depository Limited began to make the Foreign Portfolio Investment data publicly available. Earlier to this, the highest inflow in the equity segment was in 2012. And it has been recorded as RS 1.4 lakh crores.

Foreign Portfolio Investment in 2021

In the fiscal year 2020-21, the foreign portfolio investors have been the net buyers in all months except for September, March, April and May 2020. In the previous fiscal year, the foreign portfolio investors were net sellers.

The highest inflow of foreign portfolio investment seen in India has not been seen in other emerging markets. This clearly proves that the foreign portfolio investors had been expecting India’s economic recovery to be much faster than the other emerging economies.

What is the difference between FPI and FDI?

  • The Foreign Portfolio Investment refers to the purchase of securities and assets by investors from other country. This can be mutual funds, bonds, stocks, etc.
  • On the other hand, Foreign Direct Investment is the investment made by an individual or a firm (located in one country) in a business (located in another country). This includes establishing a subsidiary in another country, merging or acquiring an existing foreign company or starting a joint venture partnership with a company from a foreign land.
  • Portfolio Investment is seen as a short term move and direct investment is seen as a long-term move.

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