CSEET · Economic and Business Environment · Global Environment
Which of the following best describes Foreign Portfolio Investment (FPI) in the Indian context?
FPI is investment by foreign investors in Indian financial securities such as shares and bonds without gaining control or a lasting managerial interest in the company. Plant setting up is FDI, bank loans are external borrowings, and remittances are transfers, so they do not describe FPI.
- AInvestment by a foreign entity in Indian securities such as shares and bonds without acquiring control or a lasting managerial interestCorrect
- BInvestment by a foreign company to set up a wholly owned manufacturing plant in India
- CLoans taken by an Indian firm from a foreign bank for working capital
- DRemittances sent home by Indians working abroad
Explanation
FPI involves purchase of financial securities like equities and debt by non-resident investors, usually without control over the investee company. Setting up a plant is foreign direct investment, loans are external commercial borrowings, and remittances are private transfers.
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