Which of the following would include Foreign Direct Investment in India?

1. Subsidiaries of foreign companies in India
2. Majority foreign equity holding in Indian companies
3. Companies exclusively financed by foreign companies
4. Portfolio investment

Select the correct answer using the codes given below:

[UPSC Civil Services Exam – 2012 Prelims]

(a) 1, 2, 3 and 4

(b) 2 and 4 only

(c) 1 and 3 only

(d) 1, 2 and 3 only

Answer: (d)        

Explanation:

• A foreign direct investment (FDI) is an investment made by a firm or individual in one country into business interests located in another country.
• The following include FDIs-
  • Subsidiaries of foreign companies in India.
  • Majority of foreign equity holding in Indian companies.
  • Day to Day operations of the company.
  • It is a major source of nondebt financial resources.
  • Companies exclusively financed by foreign companies.
• Hence 1, 2 and 3 are correct.