Source: BS
Context: During Indian Prime Minister Narendra Modi’s visit to the US, there has been an increase in both inbound foreign direct investment (FDI) to India and Indian investment in the US.
What are FDI and FPI?
FDI stands for Foreign Direct Investment, which refers to the investment made by a foreign entity or individual in a business or venture located in another country.
- FDI involves a direct investment by a foreign entity or individual in a business or venture located in another country, with the aim of establishing ownership or control.
FPI stands for Foreign Portfolio Investment, which involves the purchase of financial assets such as stocks, bonds, or other securities by foreign individuals, institutions, or funds.
- FPI involves the purchase of financial assets such as stocks, bonds, or securities by foreign individuals, institutions, or funds, without seeking ownership or control of the invested business.
The trend of FDI and FPI to the US:
- The average annual US FDI flows into India have risen from $2.7 billion to $8.7 billion in the past four years.
- Indian outward investment in the US has increased from an average of $1.7 billion to $3.2 billion.
- The US is the largest foreign portfolio investor in India, accounting for 38% of India’s FPI holding.
- In terms of trade, India exports more to the US than it imports, with exports reaching $79 billion and imports at $50 billion in 2022-23.
- Imports from the US include crude, petroleum products, and coal
- Exports from India include pharmaceutical products and cotton garments.
- Imports from the US have risen a little faster than exports in the last five years.
