{"id":91855,"date":"2025-06-01T11:07:54","date_gmt":"2025-06-01T11:07:54","guid":{"rendered":"https:\/\/exam.pscnotes.com\/mcq\/?p=91855"},"modified":"2025-06-01T11:07:54","modified_gmt":"2025-06-01T11:07:54","slug":"consider-the-following-1-foreign-currency-convertible-bonds-2-f","status":"publish","type":"post","link":"https:\/\/exam.pscnotes.com\/mcq\/consider-the-following-1-foreign-currency-convertible-bonds-2-f\/","title":{"rendered":"Consider the following :\n  1. Foreign currency convertible bonds  2. F"},"content":{"rendered":"<p>Consider the following :<\/p>\n<ul>\n<li>1. Foreign currency convertible bonds<\/li>\n<li>2. Foreign institutional investment with certain conditions<\/li>\n<li>3. Global depository receipts<\/li>\n<li>4. Non-resident external deposits<\/li>\n<\/ul>\n<p>Which of the above can be included in Foreign Direct Investments?<\/p>\n<p>[amp_mcq option1=&#8221;1, 2 and 3&#8243; option2=&#8221;3 only&#8221; option3=&#8221;2 and 4&#8243; option4=&#8221;1 and 4&#8243; correct=&#8221;option1&#8243;]<\/p>\n<div class=\"psc-box-pyq-exam-year-detail\">\n<div class=\"pyq-exam\">\n<div class=\"psc-heading\">This question was previously asked in<\/div>\n<div class=\"psc-title line-ellipsis\">UPSC IAS &#8211; 2021<\/div>\n<\/div>\n<div class=\"pyq-exam-psc-buttons\"><a href=\"\/pyq\/pyq-upsc-ias-2021.pdf\" target=\"_blank\" class=\"psc-pdf-button\" rel=\"noopener\">Download PDF<\/a><a href=\"\/pyq-upsc-ias-2021\" target=\"_blank\" class=\"psc-attempt-button\" rel=\"noopener\">Attempt Online<\/a><\/div>\n<\/div>\n<section id=\"pyq-correct-answer\">\nForeign Direct Investment (FDI) refers to investment made by a firm or individual in one country into business interests located in another country. FDI involves a degree of management control or significant influence over the foreign enterprise. According to international standards and Indian regulations (like the classification by RBI\/DPIIT), an investment is typically classified as FDI if a foreign investor acquires 10% or more of the equity shares of an Indian company. Based on this definition:<br \/>\n1. Foreign currency convertible bonds (FCCBs): While primarily debt instruments, they are convertible into equity. If converted, and the resulting equity holding is 10% or more, the investment originating from the FCCB can be classified as FDI.<br \/>\n2. Foreign institutional investment with certain conditions: Foreign Portfolio Investment (FPI), previously FII, is typically for portfolio diversification with less than 10% equity holding. However, if an FII\/FPI invests with &#8220;certain conditions&#8221; implying the acquisition of 10% or more of the equity shares of an Indian company, it is reclassified and included under FDI.<br \/>\n3. Global depository receipts (GDRs): Similar to FCCBs, GDRs represent underlying equity shares of an Indian company listed abroad. If a foreign investor acquires GDRs leading to a 10% or more equity holding in the underlying Indian company, this investment can be treated as FDI.<br \/>\n4. Non-resident external deposits (NRE deposits): These are bank deposits held by non-resident Indians. They are financial liabilities of the banking system and do not represent equity investment or control in Indian companies. Therefore, they are not considered FDI.<br \/>\nGiven the potential for 1, 2, and 3 to meet the FDI threshold based on the underlying equity acquisition and intent, they can be included in FDI under specific conditions, whereas 4 cannot.<br \/>\n<\/section>\n<section id=\"pyq-key-points\">\nFDI is primarily distinguished by the level of equity investment (typically >=10%) and the intent to gain control or significant influence, irrespective of the specific instrument used (equity shares, convertible instruments, etc.).<br \/>\n<\/section>\n<section id=\"pyq-additional-information\">\nIndia&#8217;s foreign investment framework differentiates between FDI and FPI based primarily on the 10% equity holding threshold. FDI also includes reinvested earnings of foreign companies operating in India and inter-company debt between related entities.<br \/>\n<\/section>\n","protected":false},"excerpt":{"rendered":"<p>Consider the following : 1. Foreign currency convertible bonds 2. Foreign institutional investment with certain conditions 3. Global depository receipts 4. Non-resident external deposits Which of the above can be included in Foreign Direct Investments? [amp_mcq option1=&#8221;1, 2 and 3&#8243; option2=&#8221;3 only&#8221; option3=&#8221;2 and 4&#8243; option4=&#8221;1 and 4&#8243; correct=&#8221;option1&#8243;] This question was previously asked in &#8230; <\/p>\n<p class=\"read-more-container\"><a title=\"Consider the following :\n  1. Foreign currency convertible bonds  2. F\" class=\"read-more button\" href=\"https:\/\/exam.pscnotes.com\/mcq\/consider-the-following-1-foreign-currency-convertible-bonds-2-f\/#more-91855\">Detailed Solution<span class=\"screen-reader-text\">Consider the following :<br \/>\n  1. Foreign currency convertible bonds  2. F<\/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":[1110,1226],"class_list":["post-91855","post","type-post","status-publish","format-standard","hentry","category-upsc-ias","tag-1110","tag-external-sector-of-economy","no-featured-image-padding"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v22.2 (Yoast SEO v23.3) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Consider the following :  1. Foreign currency convertible bonds 2. F<\/title>\n<meta name=\"description\" content=\"Foreign Direct Investment (FDI) refers to investment made by a firm or individual in one country into business interests located in another country. FDI involves a degree of management control or significant influence over the foreign enterprise. According to international standards and Indian regulations (like the classification by RBI\/DPIIT), an investment is typically classified as FDI if a foreign investor acquires 10% or more of the equity shares of an Indian company. Based on this definition: 1. Foreign currency convertible bonds (FCCBs): While primarily debt instruments, they are convertible into equity. If converted, and the resulting equity holding is 10% or more, the investment originating from the FCCB can be classified as FDI. 2. Foreign institutional investment with certain conditions: Foreign Portfolio Investment (FPI), previously FII, is typically for portfolio diversification with less than 10% equity holding. However, if an FII\/FPI invests with &quot;certain conditions&quot; implying the acquisition of 10% or more of the equity shares of an Indian company, it is reclassified and included under FDI. 3. Global depository receipts (GDRs): Similar to FCCBs, GDRs represent underlying equity shares of an Indian company listed abroad. If a foreign investor acquires GDRs leading to a 10% or more equity holding in the underlying Indian company, this investment can be treated as FDI. 4. Non-resident external deposits (NRE deposits): These are bank deposits held by non-resident Indians. They are financial liabilities of the banking system and do not represent equity investment or control in Indian companies. Therefore, they are not considered FDI. Given the potential for 1, 2, and 3 to meet the FDI threshold based on the underlying equity acquisition and intent, they can be included in FDI under specific conditions, whereas 4 cannot. FDI is primarily distinguished by the level of equity investment (typically &gt;=10%) and the intent to gain control or significant influence, irrespective of the specific instrument used (equity shares, convertible instruments, etc.).\" \/>\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\/consider-the-following-1-foreign-currency-convertible-bonds-2-f\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Consider the following :  1. Foreign currency convertible bonds 2. F\" \/>\n<meta property=\"og:description\" content=\"Foreign Direct Investment (FDI) refers to investment made by a firm or individual in one country into business interests located in another country. FDI involves a degree of management control or significant influence over the foreign enterprise. According to international standards and Indian regulations (like the classification by RBI\/DPIIT), an investment is typically classified as FDI if a foreign investor acquires 10% or more of the equity shares of an Indian company. Based on this definition: 1. Foreign currency convertible bonds (FCCBs): While primarily debt instruments, they are convertible into equity. If converted, and the resulting equity holding is 10% or more, the investment originating from the FCCB can be classified as FDI. 2. Foreign institutional investment with certain conditions: Foreign Portfolio Investment (FPI), previously FII, is typically for portfolio diversification with less than 10% equity holding. However, if an FII\/FPI invests with &quot;certain conditions&quot; implying the acquisition of 10% or more of the equity shares of an Indian company, it is reclassified and included under FDI. 3. Global depository receipts (GDRs): Similar to FCCBs, GDRs represent underlying equity shares of an Indian company listed abroad. If a foreign investor acquires GDRs leading to a 10% or more equity holding in the underlying Indian company, this investment can be treated as FDI. 4. Non-resident external deposits (NRE deposits): These are bank deposits held by non-resident Indians. They are financial liabilities of the banking system and do not represent equity investment or control in Indian companies. Therefore, they are not considered FDI. Given the potential for 1, 2, and 3 to meet the FDI threshold based on the underlying equity acquisition and intent, they can be included in FDI under specific conditions, whereas 4 cannot. FDI is primarily distinguished by the level of equity investment (typically &gt;=10%) and the intent to gain control or significant influence, irrespective of the specific instrument used (equity shares, convertible instruments, etc.).\" \/>\n<meta property=\"og:url\" content=\"https:\/\/exam.pscnotes.com\/mcq\/consider-the-following-1-foreign-currency-convertible-bonds-2-f\/\" \/>\n<meta property=\"og:site_name\" content=\"MCQ and Quiz for Exams\" \/>\n<meta property=\"article:published_time\" content=\"2025-06-01T11:07:54+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=\"2 minutes\" \/>\n<!-- \/ Yoast SEO Premium plugin. -->","yoast_head_json":{"title":"Consider the following :  1. Foreign currency convertible bonds 2. F","description":"Foreign Direct Investment (FDI) refers to investment made by a firm or individual in one country into business interests located in another country. FDI involves a degree of management control or significant influence over the foreign enterprise. According to international standards and Indian regulations (like the classification by RBI\/DPIIT), an investment is typically classified as FDI if a foreign investor acquires 10% or more of the equity shares of an Indian company. Based on this definition: 1. Foreign currency convertible bonds (FCCBs): While primarily debt instruments, they are convertible into equity. If converted, and the resulting equity holding is 10% or more, the investment originating from the FCCB can be classified as FDI. 2. Foreign institutional investment with certain conditions: Foreign Portfolio Investment (FPI), previously FII, is typically for portfolio diversification with less than 10% equity holding. However, if an FII\/FPI invests with \"certain conditions\" implying the acquisition of 10% or more of the equity shares of an Indian company, it is reclassified and included under FDI. 3. Global depository receipts (GDRs): Similar to FCCBs, GDRs represent underlying equity shares of an Indian company listed abroad. If a foreign investor acquires GDRs leading to a 10% or more equity holding in the underlying Indian company, this investment can be treated as FDI. 4. Non-resident external deposits (NRE deposits): These are bank deposits held by non-resident Indians. They are financial liabilities of the banking system and do not represent equity investment or control in Indian companies. Therefore, they are not considered FDI. Given the potential for 1, 2, and 3 to meet the FDI threshold based on the underlying equity acquisition and intent, they can be included in FDI under specific conditions, whereas 4 cannot. FDI is primarily distinguished by the level of equity investment (typically >=10%) and the intent to gain control or significant influence, irrespective of the specific instrument used (equity shares, convertible instruments, etc.).","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\/consider-the-following-1-foreign-currency-convertible-bonds-2-f\/","og_locale":"en_US","og_type":"article","og_title":"Consider the following :  1. Foreign currency convertible bonds 2. F","og_description":"Foreign Direct Investment (FDI) refers to investment made by a firm or individual in one country into business interests located in another country. FDI involves a degree of management control or significant influence over the foreign enterprise. 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Global depository receipts (GDRs): Similar to FCCBs, GDRs represent underlying equity shares of an Indian company listed abroad. If a foreign investor acquires GDRs leading to a 10% or more equity holding in the underlying Indian company, this investment can be treated as FDI. 4. Non-resident external deposits (NRE deposits): These are bank deposits held by non-resident Indians. They are financial liabilities of the banking system and do not represent equity investment or control in Indian companies. Therefore, they are not considered FDI. Given the potential for 1, 2, and 3 to meet the FDI threshold based on the underlying equity acquisition and intent, they can be included in FDI under specific conditions, whereas 4 cannot. FDI is primarily distinguished by the level of equity investment (typically >=10%) and the intent to gain control or significant influence, irrespective of the specific instrument used (equity shares, convertible instruments, etc.).","og_url":"https:\/\/exam.pscnotes.com\/mcq\/consider-the-following-1-foreign-currency-convertible-bonds-2-f\/","og_site_name":"MCQ and Quiz for Exams","article_published_time":"2025-06-01T11:07:54+00:00","author":"rawan239","twitter_card":"summary_large_image","twitter_misc":{"Written by":"rawan239","Est. reading time":"2 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/exam.pscnotes.com\/mcq\/consider-the-following-1-foreign-currency-convertible-bonds-2-f\/","url":"https:\/\/exam.pscnotes.com\/mcq\/consider-the-following-1-foreign-currency-convertible-bonds-2-f\/","name":"Consider the following : 1. Foreign currency convertible bonds 2. F","isPartOf":{"@id":"https:\/\/exam.pscnotes.com\/mcq\/#website"},"datePublished":"2025-06-01T11:07:54+00:00","dateModified":"2025-06-01T11:07:54+00:00","author":{"@id":"https:\/\/exam.pscnotes.com\/mcq\/#\/schema\/person\/5807dafeb27d2ec82344d6cbd6c3d209"},"description":"Foreign Direct Investment (FDI) refers to investment made by a firm or individual in one country into business interests located in another country. FDI involves a degree of management control or significant influence over the foreign enterprise. According to international standards and Indian regulations (like the classification by RBI\/DPIIT), an investment is typically classified as FDI if a foreign investor acquires 10% or more of the equity shares of an Indian company. Based on this definition: 1. Foreign currency convertible bonds (FCCBs): While primarily debt instruments, they are convertible into equity. If converted, and the resulting equity holding is 10% or more, the investment originating from the FCCB can be classified as FDI. 2. Foreign institutional investment with certain conditions: Foreign Portfolio Investment (FPI), previously FII, is typically for portfolio diversification with less than 10% equity holding. However, if an FII\/FPI invests with \"certain conditions\" implying the acquisition of 10% or more of the equity shares of an Indian company, it is reclassified and included under FDI. 3. Global depository receipts (GDRs): Similar to FCCBs, GDRs represent underlying equity shares of an Indian company listed abroad. If a foreign investor acquires GDRs leading to a 10% or more equity holding in the underlying Indian company, this investment can be treated as FDI. 4. Non-resident external deposits (NRE deposits): These are bank deposits held by non-resident Indians. They are financial liabilities of the banking system and do not represent equity investment or control in Indian companies. Therefore, they are not considered FDI. Given the potential for 1, 2, and 3 to meet the FDI threshold based on the underlying equity acquisition and intent, they can be included in FDI under specific conditions, whereas 4 cannot. FDI is primarily distinguished by the level of equity investment (typically >=10%) and the intent to gain control or significant influence, irrespective of the specific instrument used (equity shares, convertible instruments, etc.).","breadcrumb":{"@id":"https:\/\/exam.pscnotes.com\/mcq\/consider-the-following-1-foreign-currency-convertible-bonds-2-f\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/exam.pscnotes.com\/mcq\/consider-the-following-1-foreign-currency-convertible-bonds-2-f\/"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/exam.pscnotes.com\/mcq\/consider-the-following-1-foreign-currency-convertible-bonds-2-f\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/exam.pscnotes.com\/mcq\/"},{"@type":"ListItem","position":2,"name":"UPSC IAS","item":"https:\/\/exam.pscnotes.com\/mcq\/category\/upsc-ias\/"},{"@type":"ListItem","position":3,"name":"Consider the following : 1. 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