Foreign Direct Investment (FDI) is an investment made by a firm or individual in one country into business interests located in another country. FDI typically involves establishing a lasting interest or controlling ownership in a foreign enterprise. This can be done by establishing a new business (greenfield investment) or acquiring a significant stake in an existing one. - Options A, B, and C describe portfolio investment, which involves buying shares purely for financial return without seeking management control. Investing in stock markets (unless it's a significant stake aiming for control) is typically portfolio investment. - Option D, setting up a new educational institution, involves creating physical infrastructure, employing staff, and operating a business in India, representing a clear instance of greenfield FDI.
Which one of the following would be considered as Foreign Direct Investment ?
Asked in UPSC CDS 1 2022 · Topic: Foreign Direct Investment (FDI) and Foreign Portfolio Investment (FPI) (Definition, Features, and Distinction between FDI and FPI)
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Answer: D. A foreign entity setting up an educational institution in India
Read the notes: Foreign Direct Investment (FDI) and Foreign Portfolio Investment (FPI) →
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