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Under the current Indian framework, an investment by a single FPI (together with its investor group) in an Indian listed company beyond which level is generally treated as FDI rather than portfolio investment?

The threshold is 10% of the post-issue paid-up equity capital of the company on a fully diluted basis. If an FPI and its investor group cross it, the excess must be sold or the whole holding is reclassified as FDI, subject to sectoral conditions.

  1. A10% of the post-issue paid-up equity capital on a fully diluted basisCorrect
  2. B5% of paid-up equity capital
  3. C26% of paid-up equity capital
  4. D49% of paid-up equity capital

Explanation

Under the FEMA rules, FPI holding in a listed company is below 10% of the total paid-up equity capital on a fully diluted basis. If the limit is breached, the investor must either divest the excess or reclassify the entire holding as FDI. The other figures are not the FPI-versus-FDI threshold.

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