{"id":91760,"date":"2025-06-01T11:05:09","date_gmt":"2025-06-01T11:05:09","guid":{"rendered":"https:\/\/exam.pscnotes.com\/mcq\/?p=91760"},"modified":"2025-06-01T11:05:09","modified_gmt":"2025-06-01T11:05:09","slug":"with-reference-to-foreign-direct-investment-in-india-which-one-of-the","status":"publish","type":"post","link":"https:\/\/exam.pscnotes.com\/mcq\/with-reference-to-foreign-direct-investment-in-india-which-one-of-the\/","title":{"rendered":"With reference to Foreign Direct Investment in India, which one of the"},"content":{"rendered":"

With reference to Foreign Direct Investment in India, which one of the following is considered its major characteristic ?<\/p>\n

[amp_mcq option1=”It is the investment through capital instruments essentially in a listed company.” option2=”It is a largely non-debt creating capital flow.” option3=”It is the investment which involves debt-servicing.” option4=”It is the investment made by foreign institutional investors in the Government securities.” correct=”option2″]<\/p>\n

\n
\n
This question was previously asked in<\/div>\n
UPSC IAS – 2020<\/div>\n<\/div>\n
Download PDF<\/a>Attempt Online<\/a><\/div>\n<\/div>\n
\nThe question asks for a major characteristic of Foreign Direct Investment (FDI) in India.
\n<\/section>\n
\n– A) FDI can be made in both listed and unlisted companies, not essentially limited to listed ones. Incorrect.
\n– B) FDI primarily involves equity investment, meaning the foreign investor takes ownership stake in the domestic company. This inflow of capital is largely non-debt creating for the host country’s balance of payments, unlike external commercial borrowings or portfolio debt. This is a major characteristic. Correct.
\n– C) While the business receiving FDI might take on debt, the FDI inflow itself is equity, which leads to profit sharing or capital gains, not debt servicing in the traditional sense for the host economy’s external liabilities related to the FDI equity. Incorrect.
\n– D) Investment by foreign institutional investors (now Foreign Portfolio Investors – FPIs) in government securities is classified as Foreign Portfolio Investment (FPI), not FDI. FDI involves acquiring a lasting interest and control in an enterprise. Incorrect.
\n<\/section>\n
\nFDI is distinguished from FPI by the level of ownership and control acquired by the foreign investor. FDI typically involves a significant stake aimed at influencing management, while FPI is usually passive investment in securities.
\n<\/section>\n","protected":false},"excerpt":{"rendered":"

With reference to Foreign Direct Investment in India, which one of the following is considered its major characteristic ? [amp_mcq option1=”It is the investment through capital instruments essentially in a listed company.” option2=”It is a largely non-debt creating capital flow.” option3=”It is the investment which involves debt-servicing.” option4=”It is the investment made by foreign institutional … <\/p>\n

Detailed SolutionWith reference to Foreign Direct Investment in India, which one of the<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1092],"tags":[1288,1226],"class_list":["post-91760","post","type-post","status-publish","format-standard","hentry","category-upsc-ias","tag-1288","tag-external-sector-of-economy","no-featured-image-padding"],"yoast_head":"\nWith reference to Foreign Direct Investment in India, which one of the<\/title>\n<meta name=\"description\" content=\"The question asks for a major characteristic of Foreign Direct Investment (FDI) in India. - A) FDI can be made in both listed and unlisted companies, not essentially limited to listed ones. Incorrect. - B) FDI primarily involves equity investment, meaning the foreign investor takes ownership stake in the domestic company. This inflow of capital is largely non-debt creating for the host country's balance of payments, unlike external commercial borrowings or portfolio debt. This is a major characteristic. Correct. - C) While the business receiving FDI might take on debt, the FDI inflow itself is equity, which leads to profit sharing or capital gains, not debt servicing in the traditional sense for the host economy's external liabilities related to the FDI equity. Incorrect. - D) Investment by foreign institutional investors (now Foreign Portfolio Investors - FPIs) in government securities is classified as Foreign Portfolio Investment (FPI), not FDI. FDI involves acquiring a lasting interest and control in an enterprise. Incorrect.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/exam.pscnotes.com\/mcq\/with-reference-to-foreign-direct-investment-in-india-which-one-of-the\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"With reference to Foreign Direct Investment in India, which one of the\" \/>\n<meta property=\"og:description\" content=\"The question asks for a major characteristic of Foreign Direct Investment (FDI) in India. - A) FDI can be made in both listed and unlisted companies, not essentially limited to listed ones. Incorrect. - B) FDI primarily involves equity investment, meaning the foreign investor takes ownership stake in the domestic company. This inflow of capital is largely non-debt creating for the host country's balance of payments, unlike external commercial borrowings or portfolio debt. This is a major characteristic. Correct. - C) While the business receiving FDI might take on debt, the FDI inflow itself is equity, which leads to profit sharing or capital gains, not debt servicing in the traditional sense for the host economy's external liabilities related to the FDI equity. Incorrect. - D) Investment by foreign institutional investors (now Foreign Portfolio Investors - FPIs) in government securities is classified as Foreign Portfolio Investment (FPI), not FDI. FDI involves acquiring a lasting interest and control in an enterprise. Incorrect.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/exam.pscnotes.com\/mcq\/with-reference-to-foreign-direct-investment-in-india-which-one-of-the\/\" \/>\n<meta property=\"og:site_name\" content=\"MCQ and Quiz for Exams\" \/>\n<meta property=\"article:published_time\" content=\"2025-06-01T11:05:09+00:00\" \/>\n<meta name=\"author\" content=\"rawan239\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"rawan239\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"1 minute\" \/>\n<!-- \/ Yoast SEO Premium plugin. -->","yoast_head_json":{"title":"With reference to Foreign Direct Investment in India, which one of the","description":"The question asks for a major characteristic of Foreign Direct Investment (FDI) in India. - A) FDI can be made in both listed and unlisted companies, not essentially limited to listed ones. 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Incorrect.","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/exam.pscnotes.com\/mcq\/with-reference-to-foreign-direct-investment-in-india-which-one-of-the\/","og_locale":"en_US","og_type":"article","og_title":"With reference to Foreign Direct Investment in India, which one of the","og_description":"The question asks for a major characteristic of Foreign Direct Investment (FDI) in India. - A) FDI can be made in both listed and unlisted companies, not essentially limited to listed ones. Incorrect. - B) FDI primarily involves equity investment, meaning the foreign investor takes ownership stake in the domestic company. This inflow of capital is largely non-debt creating for the host country's balance of payments, unlike external commercial borrowings or portfolio debt. This is a major characteristic. Correct. - C) While the business receiving FDI might take on debt, the FDI inflow itself is equity, which leads to profit sharing or capital gains, not debt servicing in the traditional sense for the host economy's external liabilities related to the FDI equity. Incorrect. - D) Investment by foreign institutional investors (now Foreign Portfolio Investors - FPIs) in government securities is classified as Foreign Portfolio Investment (FPI), not FDI. FDI involves acquiring a lasting interest and control in an enterprise. Incorrect.","og_url":"https:\/\/exam.pscnotes.com\/mcq\/with-reference-to-foreign-direct-investment-in-india-which-one-of-the\/","og_site_name":"MCQ and Quiz for Exams","article_published_time":"2025-06-01T11:05:09+00:00","author":"rawan239","twitter_card":"summary_large_image","twitter_misc":{"Written by":"rawan239","Est. reading time":"1 minute"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/exam.pscnotes.com\/mcq\/with-reference-to-foreign-direct-investment-in-india-which-one-of-the\/","url":"https:\/\/exam.pscnotes.com\/mcq\/with-reference-to-foreign-direct-investment-in-india-which-one-of-the\/","name":"With reference to Foreign Direct Investment in India, which one of the","isPartOf":{"@id":"https:\/\/exam.pscnotes.com\/mcq\/#website"},"datePublished":"2025-06-01T11:05:09+00:00","dateModified":"2025-06-01T11:05:09+00:00","author":{"@id":"https:\/\/exam.pscnotes.com\/mcq\/#\/schema\/person\/5807dafeb27d2ec82344d6cbd6c3d209"},"description":"The question asks for a major characteristic of Foreign Direct Investment (FDI) in India. - A) FDI can be made in both listed and unlisted companies, not essentially limited to listed ones. 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