Apedia Logo Apedia
Join

Choose Language

Select your preferred reading language
🇬🇧
English
✔
🇮🇳
हिन्दी
✔
✕
Full View
Economy
External Sector
EN हिंदी
✕
UPSC Prelims 2021 Paper-1 📅 10 Oct, 2021

Consider the following:
1. Foreign currency convertible bonds
2. Foreign institutional investment with certain conditions
3. Global depository receipts
4. Non-resident external deposits

Which of the above can be included in Foreign Direct Investments?

A
1, 2 and 3
B
3 only
C
2 and 4
D
1 and 4
Result Summary
Logo

APEDIA

UPSC Prelims
2021 • 10 Oct, 2021 • Paper-1
Consider the following:
1. Foreign currency convertible bonds
2. Foreign institutional investment with certain conditions
3. Global depository receipts
4. Non-resident external deposits

Which of the above can be included in Foreign Direct Investments?
Correct Answer
1, 2 and 3
Instrument Classification: Foreign Currency Convertible Bonds (FCCBs) and Global Depository Receipts (GDRs) are capital instruments that can be converted into e......
Ref/Book : UPSC Prelims 2021
Ref. Subject Economy
Chapter -
Ref. Topic External Sector
Pg. No -
💡 Analysis & Explanation
Instrument Classification ▼
Foreign Currency Convertible Bonds (FCCBs) and Global Depository Receipts (GDRs) are capital instruments that can be converted into equity shares. Due to their equity-linked nature, they are treated as part of Foreign Direct Investment (FDI) inflows when issued to foreign entities.
Investment Thresholds ▼
Foreign Institutional Investment (FII) or Foreign Portfolio Investment (FPI) is typically distinct from FDI. However, if an FPI holds 10% or more of the post-issue paid-up equity capital of a listed Indian company, it is reclassified as FDI. Thus, FII under 'certain conditions' qualifies as FDI.
Debt Obligations ▼
Non-Resident External (NRE) deposits are standard bank accounts maintained by NRIs. They represent debt liabilities of the banking system, not equity investments in businesses, and therefore are never classified as FDI.
Conclusion ▼
Items 1, 2, and 3 are correct components or conditional components of FDI.
← Prev
7 / 100
Next →