With reference to Foreign Direct Investment in India, which one of the following is considered its major…

With reference to Foreign Direct Investment in India, which one of the following is considered its major characteristic?
  1. It is the investment through capital instruments essentially in a listed company.
  2. It is a largely non-debt creating capital flow.
  3. It is the investment which involves debt-servicing.
  4. It is the investment made by foreign institutional investors in the Government securities.

Solution

FDI does not create any debt repayment obligation — it is a non-debt creating capital flow, unlike ECBs or NRI deposits. Answer: (b).

Asked in: UPSC Prelims 2020

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