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FDI and FII form an important segment of the foreign investment received

by India. Hence, these are extremely popular topics of discussions among

the economists and development planners. However, there was huge
ambiguity over the definition of FDI and FII. So the government
constituted the Mayaram Committee [1] to state the definitions of FDI and
FII in clear and explicit terms. According to the new definition, FDI is an
investment where the investor has more than 10% stake in the company.
On the other hand, when an investor has less than 10% stake, it is termed as
FII. FDI is mainly divided into three categories- equity, loans and guarantee
issued. Most investments are in the form of guarantee issued which is
followed by equity and then loans. FII investment is also made mainly
through two routes which include the equity investment and 100% debt
route. In equity investment route, investments are generally made in
securities, schemes of Unit Trust of India and warrants. While in the 100%
debt route investments are made in debentures, treasury bills, bonds, dated
government securities and other debt instruments.



provide ease of doing business in the country, leading to larger FDI inflows
and thereby contributing to the growth of investment, income and
Growth in FDI inflows: Slowing down post-2008-09
Going by the official data, the gross FDI inflows have been rising in
absolute numbers - from $4,029 million or Rs 17,557 crore in 2000-01 to
$64,375 million or Rs 449,616.6 crore in 2018-19. The equity component of
FDI has also been rising from $2,463 million or Rs 10,733 crore in 2000-01
to $ 44,366 million or Rs 309,867 crore in 2018-19.
However, in terms of annual growth in inflows or as a percentage of gross
fixed capital formation (GFCF), the FDI inflows have come down
significantly post-2008-09, contrary to the government's claim that the
Make in India initiative of 2014 gave it an "unprecedented" boost.