Which one of the following would be considered as Foreign Direct Investment?

The correct answer is Option 4.

Key Points

• Foreign direct investment (FDI)
  • It is an investment made by a firm or individual in one country into business interests located in another country.
  • FDI is different from foreign portfolio investment where the foreign entity merely buys equity shares of a company.
  • The following include FDIs-
    • Subsidiaries of foreign companies in India.
    • Majority of foreign equity holding in Indian companies.
    • Day to Day operations of the company.
    • It is a major source of nondebt financial resources.
    • Companies are exclusively financed by foreign companies.
  • Therefore, A foreign entity setting up an educational institution in India is FDI. Hence, Option 4 is correct.
  • There are a few industries where FDI is strictly prohibited under any route. These industries are
    • Atomic Energy Generation
    • Any Gambling or Betting businesses
    • Lotteries (online, private, government, etc)
    • Investment in Chit Funds
    • Nidhi Company
    • Agricultural or Plantation Activities
    • Trading in TDRs
    • Cigars, Cigarettes, or any related tobacco industry