UPSC Previous Year Question | Prelims GS | 2021

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?

  1. 1, 2 and 3
  2. 3 only
  3. 2 and 4
  4. 1 and 4

Answer

Correct Answer

1, 2 and 3

Explanation

Foreign currency convertible bonds, foreign institutional investment (when it meets the conditions such as crossing the FDI ownership threshold) and global depository receipts can be counted as FDI under India's FDI policy. Non-resident external (NRE) deposits are bank deposits of NRIs and are not part of FDI.

Topics: economy, external sector, foreign investment, instruments counted as fdi