UGC NET COMMERCE December 2018 Q57

0. Foreign investment can be made through which of the following routes?
(i) Foreign Direct Investment (FDI)
(ii) Foreign Portfolio Investment (FPI)
(iii) Private Equity Investment (PEI)
(iv) Foreign Venture Capital Investors (FVCI)
Choose the correct answer from the code given below:

  • Option : B
  • Explanation : Types of Investments
    Foreign investment into India may take place through foreign direct investment, foreign portfolio investment, foreign venture capital investment, and other investments.
    Foreign direct investment: Foreign direct investment may be made in a new company or an existing company. It is now freely permitted up to 100 per cent in almost all sectors. Such investment can be made in shares, convertible debentures, and preference shares of Indian companies in accordance with the FDI Policy.
    Foreign portfolio investment: Under the portfolio investment scheme, foreign institutional investors (FIIs) can invest in shares and convertible debentures issued by Indian companies. FIIs are allowed to invest in securities traded on both primary and secondary capital markets as well as through private placement or arrangement. These securities include shares, debentures, warrants, units of mutual funds, government securities, and derivative instruments. FIIs are, however, not permitted to invest in equity issued by an asset reconstruction company.
    Foreign venture capital investment: A foreign venture capital investor (FVCI) is permitted to invest in an Indian venture capital undertaking, an Indian venture capital fund, or in a scheme floated by a venture capital fund. FVCIs are permitted to purchase equity, equity linked instruments, debt, debt instruments, and debentures of a venture capital undertaking or a venture capital fund through initial public offer or private placement in units of schemes or funds set up by a ventures capital funds.
    Other investments: FIIs can also buy dated government securities or treasury bills, listed nonconvertible debentures, bonds issued by Indian companies, and units of domestic mutual funds, either directly from the issuer of such securities or through a registered stockbroker on a recognized stock exchange in India.
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