Question
With reference to Foreign Direct Investment in India, which one of the following is considered its major characteristic?
(a) It is the investment through capital instruments essentially in a listed company.
(b) It is a largely non-debt creating capital flow.
(c) It is the investment which involves debt-servicing.
(d) It is the investment made by foreign institutional investors in the Government securities.
Answer:
B
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Explanation:
Foreign Direct Investment (FDI) refers to the investment made by a foreign entity (individual or company) in the form of capital, technology, or expertise to establish or expand a business enterprise in another country. One of the major characteristics of FDI is that it is a largely non-debt creating capital flow. Unlike loans or debt financing, FDI involves the direct investment of funds without creating an immediate debt obligation.
Option (a) is not the major characteristic of FDI as it refers to investment through capital instruments in a listed company, which is a specific form of investment but not representative of all FDI.
Option (c) is not a characteristic of FDI as it mentions debt-servicing, which is generally associated with debt financing such as loans or bonds, but not with FDI.
Option (d) is not a characteristic of FDI as it refers to foreign institutional investors investing in government securities, which is a different category of investment and not exclusive to FDI.