Foreign Portfolio Investment:
Foreign Institutional Investors (FII) are allowed to invest in securities traded in the primary and secondary capital market under the portfolio investment scheme, provided the FII has met with certain qualifying criteria.
FIIs are required to "register" with the Securities and Exchange Board of India (SEBI), which examines whether the grant of registration is in the interest of the development of the Indian securities market. If approved, the FII has to comply with the exchange control regulations set out by the Reserve Bank of India.
However, there are guidelines and regulations that regulate such investments, except where such investment is made by the FII through and offshore fund, GDRs or Euro-convertible bonds.
Additionally, a Foreign Venture Capital Investment may register with SEBI and invest in an Indian Venture Capital Undertaking or an Indian Venture Capital Fund. Such an entity must comply with the regulations under the Foreign Exchange Management Act of 1999.