UPSC CSE Prelims
Question 77
Which of the following would include Foreign Direct Investment in India?
- Subsidiaries of foreign companies in India
- Majority foreign equity holding in Indian companies
- Companies exclusively financed by foreign companies
- Portfolio investment
Select the correct answer using the codes given below:
View correct answer and explanation
Correct answer: D
Correct Option: D
Explanation: FDI normally denotes lasting foreign ownership/control or significant influence in domestic business, unlike short-term portfolio investments.
Statement/Item-wise Analysis:
1: Correct - Foreign companies’ Indian subsidiaries embody direct investment.
2: Correct - Majority foreign equity provides ownership/control characteristic of FDI.
3: Correct - An Indian entity exclusively financed/owned by a foreign enterprise can represent direct investment.
4: Incorrect - Portfolio holdings without a lasting managerial interest are classified as FPI rather than FDI.
Option-wise Analysis:
A: Incorrect - includes incorrect item 4.
B: Incorrect - includes incorrect item 4; omits correct items 1, 3.
C: Incorrect - omits correct item 2.
D: Correct - includes exactly the valid statements/items and excludes the invalid ones.
Review Note: Exact cross-border thresholds and financing structures matter for balance-of-payments classification.