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Which of the following is a valid reason why India encourages inflow of FDI?

India encourages FDI because it brings in capital, technology and management expertise and can generate employment and exports. It supplements domestic savings rather than replacing them, and foreign companies remain subject to Indian law and regulation.

  1. AIt brings capital, technology and managerial skills, and can add to employment and exportsCorrect
  2. BIt eliminates the need for any domestic savings
  3. CIt guarantees a permanent trade surplus
  4. DIt removes the need for regulation of foreign companies

Explanation

FDI supplements domestic capital and brings technology, skills and market access, helping jobs and exports. It cannot replace domestic savings, guarantee a trade surplus, or exempt investors from Indian regulation, so the other options overstate its effect.

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