CSEET · Economic and Business Environment · Global Environment
In India, which of the following best describes Foreign Direct Investment (FDI)?
FDI is investment by a foreign entity in an Indian company's equity that gives a lasting interest and some control or influence over management. It differs from short-term portfolio trading, government borrowing and remittances, which carry no long-term controlling stake in the business.
- AInvestment by a foreign entity in the equity of an Indian company that gives it a lasting interest and a degree of control or influenceCorrect
- BShort-term purchase of listed Indian shares by a foreign investor purely for quick trading gains
- CA loan taken by the Indian Government from a foreign government
- DRemittances sent home by Indians working abroad
Explanation
FDI involves a lasting interest in an enterprise, usually through equity that gives control or significant influence. Short-term trading in listed shares with small holdings is portfolio investment, not FDI. Government loans and remittances are different capital or current account flows.
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