{"id":1696,"date":"2024-03-28T19:06:51","date_gmt":"2024-03-28T13:36:51","guid":{"rendered":"https:\/\/lotusarise.com\/qna\/?p=1696"},"modified":"2024-04-03T07:17:42","modified_gmt":"2024-04-03T01:47:42","slug":"q-consider-the-following-10","status":"publish","type":"post","link":"https:\/\/lotusarise.com\/qna\/upsc\/q-consider-the-following-10","title":{"rendered":"Q.\u00a0Consider the following:"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\">1. Foreign currency convertible bonds<br>2. Foreign institutional investment with certain conditions<br>3. Global depository receipts<br>4. Non-resident external deposits<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Which of the above can be included in Foreign Direct Investments?<\/p>\n\n\n\n<ul class=\"mcq wp-block-list\">\n<li>1, 2 and 3<\/li>\n\n\n\n<li>3 only<\/li>\n\n\n\n<li>2 and 4<\/li>\n\n\n\n<li>1 and 4<\/li>\n<\/ul>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p class=\"wp-block-paragraph\"><strong>Answer: a) 1, 2 and 3<\/strong><\/p>\n<\/blockquote>\n\n\n\n<h5 class=\"wp-block-heading\" id=\"foreign-direct-investment-fdi\">Foreign Direct Investment (FDI)<\/h5>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Foreign direct investment (FDI)<\/strong>&nbsp;is a type of&nbsp;<strong>cross-border investment in which an investor from one country establishes a lasting interest in an enterprise in another country.<\/strong><\/li>\n\n\n\n<li>FDI can take various forms, such as\u00a0<strong>acquiring shares, establishing a subsidiary or a joint venture, or providing loans or technology transfers.<\/strong>\n<ul class=\"wp-block-list\">\n<li>FDI is considered to be a key driver of&nbsp;<strong>economic growth, as it can bring in capital, technology, skills, market access and employment opportunities to the host country.<\/strong><\/li>\n<\/ul>\n<\/li>\n\n\n\n<li>It is different from foreign portfolio investment where the foreign entity merely buys equity shares of a company.\n<ul class=\"wp-block-list\">\n<li><strong>Foreign Portfolio Investment&nbsp;<\/strong>is any investment made by a person resident outside India in capital instruments where such investment is\n<ul class=\"wp-block-list\">\n<li>(a)<strong>&nbsp;less than 10 percent of the post issue paid-up equity capital on a fully diluted basis of a listed Indian company&nbsp;<\/strong>or<\/li>\n\n\n\n<li>(b)<strong>&nbsp;less than 10 percent of the&nbsp;paid up&nbsp;value&nbsp;<\/strong>of each series of capital instruments of a listed Indian company.&nbsp;&nbsp;<\/li>\n\n\n\n<li>It is the percentage which defines whether it is direct or&nbsp;institutional&nbsp;investment.&nbsp;&nbsp;<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>FII made above 10 percent&nbsp;of the post issue paid-up equity capital will be considered as FDI.<\/strong>&nbsp;But&nbsp;<strong>Once an FDI always an FDI.&nbsp;<\/strong>&nbsp;<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>In FDI, the foreign entity has a say in the day-to-day operations of the company.<\/strong><\/li>\n\n\n\n<li>It is a major source of&nbsp;<strong>non-debt financial resources<\/strong>&nbsp;for the economic development of a country.<\/li>\n\n\n\n<li>FDI generally takes place in an economy which has the prospect of growth and also a skilled workforce.<\/li>\n\n\n\n<li>FDI has developed radically as a major form of international capital transfer since the last many years.<\/li>\n\n\n\n<li>The advantages of FDI are not evenly distributed. It depends on the host country\u2019s systems and infrastructure.&nbsp;<\/li>\n\n\n\n<li><strong>The determinants of FDI in host countries are:<\/strong>\n<ul class=\"wp-block-list\">\n<li>Policy framework<\/li>\n\n\n\n<li>Rules with respect to entry and operations\/functioning (mergers\/acquisitions and competition)<\/li>\n\n\n\n<li>Political, economic and social stability<\/li>\n\n\n\n<li>Treatment standards of foreign affiliates<\/li>\n\n\n\n<li>International agreements<\/li>\n\n\n\n<li>Trade policy (tariff and non-tariff barriers)<\/li>\n\n\n\n<li>Privatisation policy<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li>Foreign investment in Indian securities has been made possible through\u00a0<strong>the purchase of&nbsp;Global Depository Receipts, Foreign Currency Convertible Bonds&nbsp;and Foreign Currency Bonds<\/strong>\u00a0issued by Indian issuers\u00a0which\u00a0are listed, traded and settled overseas.\n<ul class=\"wp-block-list\">\n<li><strong>\u2018Foreign Currency Convertible Bond\u2019 (FCCB)&nbsp;<\/strong>is a bond issued under the Issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Receipt Mechanism) Scheme, 1993, as amended from time to time.\n<ul class=\"wp-block-list\">\n<li><strong>Automatic Route for Issue of Foreign Currency Convertible Bonds (FCCBs) is allowed.&nbsp;<\/strong>&nbsp;<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>A Non-Resident External (NRE) account is a rupee dominated account opened by an NRI to facilitate deposit of foreign currency earnings.&nbsp;It is not an FDI.<\/strong><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>1. Foreign currency convertible bonds2. Foreign institutional investment with certain conditions3. Global depository receipts4. Non-resident external deposits Which of the above can be included in Foreign Direct Investments? Answer: a) 1, 2 and 3 Foreign Direct Investment (FDI)<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_kad_blocks_custom_css":"","_kad_blocks_head_custom_js":"","_kad_blocks_body_custom_js":"","_kad_blocks_footer_custom_js":"","_kad_post_transparent":"","_kad_post_title":"","_kad_post_layout":"","_kad_post_sidebar_id":"","_kad_post_content_style":"","_kad_post_vertical_padding":"","_kad_post_feature":"","_kad_post_feature_position":"","_kad_post_header":false,"_kad_post_footer":false,"_kad_post_classname":"","footnotes":""},"categories":[1,3],"tags":[38],"years":[52],"class_list":["post-1696","post","type-post","status-publish","format-standard","hentry","category-upsc","category-prelims","tag-indian-economy","years-52"],"acf":[],"taxonomy_info":{"category":[{"value":1,"label":"UPSC"},{"value":3,"label":"Prelims"}],"post_tag":[{"value":38,"label":"Indian Economy"}],"years":[{"value":52,"label":"2021"}]},"featured_image_src_large":false,"author_info":{"display_name":"LotusArise","author_link":"https:\/\/lotusarise.com\/qna\/author\/team-lotusarise"},"comment_info":0,"category_info":[{"term_id":1,"name":"UPSC","slug":"upsc","term_group":0,"term_taxonomy_id":1,"taxonomy":"category","description":"","parent":0,"count":1269,"filter":"raw","cat_ID":1,"category_count":1269,"category_description":"","cat_name":"UPSC","category_nicename":"upsc","category_parent":0},{"term_id":3,"name":"Prelims","slug":"prelims","term_group":0,"term_taxonomy_id":3,"taxonomy":"category","description":"","parent":1,"count":1251,"filter":"raw","cat_ID":3,"category_count":1251,"category_description":"","cat_name":"Prelims","category_nicename":"prelims","category_parent":1}],"tag_info":[{"term_id":38,"name":"Indian Economy","slug":"indian-economy","term_group":0,"term_taxonomy_id":38,"taxonomy":"post_tag","description":"","parent":0,"count":225,"filter":"raw"}],"_links":{"self":[{"href":"https:\/\/lotusarise.com\/qna\/wp-json\/wp\/v2\/posts\/1696","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/lotusarise.com\/qna\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/lotusarise.com\/qna\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/lotusarise.com\/qna\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/lotusarise.com\/qna\/wp-json\/wp\/v2\/comments?post=1696"}],"version-history":[{"count":0,"href":"https:\/\/lotusarise.com\/qna\/wp-json\/wp\/v2\/posts\/1696\/revisions"}],"wp:attachment":[{"href":"https:\/\/lotusarise.com\/qna\/wp-json\/wp\/v2\/media?parent=1696"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/lotusarise.com\/qna\/wp-json\/wp\/v2\/categories?post=1696"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/lotusarise.com\/qna\/wp-json\/wp\/v2\/tags?post=1696"},{"taxonomy":"years","embeddable":true,"href":"https:\/\/lotusarise.com\/qna\/wp-json\/wp\/v2\/years?post=1696"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}