Question
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
Answer:
A
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Explanation:
Foreign Direct Investment (FDI) refers to the investment made by a foreign entity in the form of direct ownership or controlling interest in an enterprise located in another country.
Out of the options given:
Foreign currency convertible bonds (FCCBs) are financial instruments that can be converted into equity shares of the issuing company. They do not directly represent foreign direct investment.
Foreign institutional investment (FII) refers to investments made by foreign institutional investors in the stock markets of a country. While FIIs contribute to capital flows, they are not considered as Foreign Direct Investment.
Global depository receipts (GDRs) are financial instruments issued by a company outside the country where its shares are listed. They represent ownership of shares and can be included in Foreign Direct Investment.
Non-resident external deposits (NRE deposits) are bank deposits made by non-resident Indians (NRIs) in the currency of the home country. They do not directly represent foreign direct investment.