FDI - General awareness questions on current affairs

1)   What is the percentage of FDI through automatic route at present according to the Budget?

a. 60 percent
b. 70 percent
c. 80 percent
d. 90 percent
Answer  Explanation 

ANSWER: 90 percent

Foreign Direct Investment is an investment to own a stake or control ownership in a business linked to one country.
It is made by an individual or company from another country.

FDI offers direct control either ‘organically’- where a company expands the operations of its business in a foreign country, or ‘inorganically’ where a company buys a company in a foreign country.

FDI was first introduced in India under the period of radical economic change, the year 1991, where India saw its economy open under Liberalisation Privatisation and Globalisation.

It was under Manmohan Singh as FM.

It was introduced under the Foreign Exchange Management Act (FEMA) and has since been a critical monetary source for economic development and business expansion.

There are two routes by which India gets FDI:

  • Automatic route, where FDI is allowed without prior approval by the government or RBI
  • Government route, where a prior approval is required– Foreign Investment Promotion Board (FIPB) oversees this route.
In 2014, under PM Modi’s Make in India initiative, the FDI policy for 25 sectors was liberalised.

In defence, FDI beyond 49 percent and up to 100 percent has been permitted through the government approval route.

There is 100 percent FDI under the government route for trading, including e-commerce.

The government has permitted 74 percent FDI under automatic route in existing pharmaceutical ventures, after which an approval will be required to continue beyond 74 percent and up to 100 percent.

The government has allowed 100 percent FDI in India-based airlines, but a foreign carrier can only own up to 49 percent stake in the venture and the rest can come from private investors including those overseas.

Last year’s budget allowed 100 percent foreign investment in processed food retailing on the condition that it was manufactured in India.

Budget 2016 eased FDI in the insurance and pension sectors through the automatic route, from 26 percent to up to 49 percent.

Presently, infrastructure, automobile, services, railway, pharmaceuticals, telecom, aviation, computer hardware and software are some key sectors for FDI.

2)   India has crossed which milestone between April 2000 and Sept 2016?

a. 300 billion FDI
b. 400 billion FDI
c. 300 billion GDP
d. 400 billion GDP
Answer  Explanation 

ANSWER: 300 billion FDI

India crossed the $300 billion foreign direct investment (FDI) milestone between April 2000 and September 2016.

  • It has succeeded in firmly establishing its credentials as a safe investment destination in the world. Thirty-three per cent of the FDI came through the Mauritius route.
This is because the investors wanted to take advantage of India’s double taxation avoidance treaty with the island nation.

India received $101.76 billion from Mauritius between April 2000 and September 2016.

The cumulative FDI inflows during the period amounted to $310.26 billion.

The inflows in the first half of the current financial year were $21.62 billion, according to data compiled by the Department of Industrial Policy and Promotion.
  • The other big investors have been from Singapore, the US, UK and the Netherlands.
  • According to the World Investment Report 2016, global FDI flows rose by 38 per cent to $1.76 trillion, the highest level since the global economic and financial crisis began in 2008.

  • About Indian economy FDI Flows

  • Liberalisation of the FDI policy framework has benefitted India.

  • Major national development programmes that made India the destination for foreign funds include:

  • Start Up India
  • Stand Up India
  • Make in India
  • Digital India
  • Skill India
  • Besides increasing competitiveness, it has boosted investment.
  • India last crossed the $300 billion mark at a time when the global economic slowdown has had a dampening impact on FDI flows.

3)   India is the fourth largest FDI source for which Arab nation?

a. Iran
b. Iraq
c. Qatar
d. None of the above
Answer  Explanation 


India currently ranks 4th in terms of FDI to the Arab kingdom according to Qatar Financial Centre/QFC. QFC us a completely onshore business and financial centre under the Qatar government. A multi-city roadshow has been organised to boost investments in the Gulf state currently

  • Many domestic companies have invested USD 450 million in the Arab nation in the past 7 years, creating 2,000 jobs in Qatar
  • A total of 21 Indian companies have invested in Qatar between January 2010 and May 2016- USD 225 million was invested in Doha alone
  • Indian companies invested in Qatar included LIC, TCS, L&T, ICICI Bank, HDFC, SBI, Voltas and Shapoorji Pallonji.
  • Qatar has invested in world class infrastructure and aims to grow in the run-up to the 2022 FIFA World Cup and also attain the Kingdom’s 2030 vision for sustainable growth
  • Non-hydrocarbon exports are growing at a healthy rate of 12 percent, a positive sign for growth from India
  • Investments are in diverse areas such as IT, BFSI and professional services.

4)   Foreign direct investment in the country grew by what percent to USD 10.55 billion during Q1, 2016?

a. 6
b. 7
c. 8
d. 9
Answer  Explanation 


FDI in India grew by 7 percent to USD 10.55 billion during Q1 of 2016-2017. Foreign investment inflows were at USD 9.88 billion in January-March 2015 according to Department of Industrial Policy and Promotion.

  • Sectors which attracted maximum FDI during this period included computer hardware and software, services, telecommunications, power, pharmaceuticals and trading business.
  • In terms of nations, India received the maximum overseas inflows from the US, Singapore, Japan, Mauritius and the Netherlands.
  • Further liberalisation of the foreign investment policies for services sector in the budget means more inflows will come.
  • Government has recently relaxed FDI norms in 8 sectors namely defence, civil aviation, food processing, private security agencies and pharmaceuticals.
  • Foreign investment is critical for India which needs USD 1 trillion for overhauling infrastructure such as ports, airports and highways for boosting growth.
  • Strong inflow of foreign investments will help improve the country’s BOP situation and strengthen the rupee value against other global currencies including the US dollar.

5)   Government has raised FDI level in brownfield pharma to what percent under the automatic route to attract capital and technologies in the pharmaceutical sector?

a. 74
b. 49
c. 50
d. 56
Answer  Explanation 


Government of India has raised FDI limit in pharmaceutical companies to attract and retain latest technologies, capital and follow international best practices.

  • FDI cap in brownfield pharma was recently raised to 74 percent under the automatic route from 49 percent earlier.
  • Beyond 74 percent, foreign investment is permitted under the approval route for attracting capital and technological advancement.
  • Government has also put in place necessary safeguards by providing non-compete clause will not be permitted.
  • Indian promoters will operate in the same line of business in new ventures.
  • Close to 3088 Industrial Entrepreneurs Memorandum were signed between January 2015 and July 2016 envisaging an investment of INR 4.8 lakh crore.
  • Close to 427 IEMs were signed in the electrical equipment sector followed by textiles and food processing.
  • Maximum IEMs were inked in Maharashtra followed by Gujarat, Karnataka and Telangana.

6)   India has retained its ranking as the 10th highest recipient of FDI in 2015, according to which UNCTAD report?

a. World Investment Report 2016
b. World Investment Report 2015
c. World Investing Report 2016
d. World Investing Report 2015
Answer  Explanation 

ANSWER: World Investment Report 2016

India has retained the ranking as the tenth highest recipient of FDI in 2015 receiving USD 44 billion in investment that year compared to US $35 billion in 2014, as per the UN

  • World Investment Report 2016 released by UNCTAD found India also jumped a place in terms of attractiveness as a business destination in 2015 to sixth place with 14 percent of respondents naming it as destination of their choice

7)   Union government on 20th June 2016 changed the FDI policy with the aim of providing major impetus to employment and job creation. FDI beyond 49 percent in Defence Sector was allowed through which route?

a. Approval
b. Automatic
c. Both of the above
d. None of the above
Answer  Explanation 

ANSWER: Approval

Changes introduced in the policy include increase in sectoral caps, bringing more activities under automatic route and easing of conditionality for foreign investment. These amendments seek to further simplify the regulations governing FDI in India.

  • To permit 100 percent FDI under government approval route for trading in respect of food products manufactured in India.
  • FDI beyond 49% has been permitted through government approval route, in cases resulting in access to modern technology. FDI limit for defence sector has also been made applicable to Manufacturing of Small Arms and Ammunitions covered under Arms Act
  • 100 percent FDI allowed under automatic route for Teleports, Direct to Home, Cable Networks and Mobile TV.
  • Moreover, infusion of FDI beyond 49% in a company not seeking permission from Ministry will result in change in the ownership pattern.
  • To permit 100% FDI under automatic route in Brownfield Airport projects. In Scheduled Air Transport Service and regional Air Transport Service, it has now been decided to raise FDI limit to 100%. For NRIs, 100% FDI will continue to be allowed under automatic route.
  • FDI up to 49% is now permitted under automatic route in this sector and FDI beyond 49% and up to 74% would be permitted with government approval route.

8)   Apple Store will open its first outlet following revision of FDI norms. What percentage of FDI has been announced in existing brownfield pharmaceutical companies through automatic route?

a. 71 percent
b. 72 percent
c. 73 percent
d. 74 percent
Answer  Explanation 

ANSWER: 74 percent

FDI in brownfield pharma under automatic route was up to 74 percent. Government on June 20 allowed up to 74 percent FDI in existing pharmaceutical companies via automatic route with the aim to promote the sector.

  • Earlier 100 percent FDI was permitted through the government approval route
  • It has been decided to permit up to 74 percent FDI in automatic route for brownfield pharma and the government approval route beyond 74 percent will continue.
  • 100 percent FDI under automatic route in greenfield pharma is permitted while approval route for 100 percent FDI in brownfield pharma is under the approval route.
  • FDI in brownfield projects has been an issue impacting accessibility and growth of the generic industry in the nation
  • Market size of India’s pharma company is USD 20 billion. Acquisitions in this field include Daiichi Sankyo’s purchase of Ranbaxy, Abbot Lab’s acquisition of Piramal Health Care domestic business. Mylan purchased Matrix Lab while Dabur Pharma was acquired by Fresenius and Sanofi Aventis recently purchased Shanta Biotech

9)   Government has released updated compendium through policy changes and unnecessary explanations to make which type of investment policy simpler?

a. FDI
b. FII
c. Foreign Investment
d. Domestic Investment
Answer  Explanation 


Aiming to make FDI policy simpler, government on June 8 2016 released an updated compendium for incorporating policy changes and doing away with unneeded explanations

  • The earlier’s regime’s policy for opening multi-brand retail for foreign investment has also been carried forward
  • FDI policy has been made simpler and investor friendly and the compendium also provides provisions for the issue of sweat equity to NRI employees and directors and defines the term private security agencies, private security and armoured car service.
  • Department of Industrial Policy and Promotion also said it clarified on private security agencies by borrowing definition of few terms from Private Security Agencies Regulation Act 2005

10)   Government of India has deferred approval to FDI in an Indian JV with AgustaWestland and which Indian company?

a. Godrej
b. Reliance Defence
c. TATA Sons
d. Mahindra & Mahindra
Answer  Explanation 


Government of India has deferred approval to the Agusta Westland FDI in Indian JV among charges over alleged kickback in the helicopter deal. FIPB has deferred a decision on increase in FDI in the Italian firm’s joint venture with TATA Sons.

  • Previously, Rotorcraft, a joint venture of AgustaWestland (Finmeccanica firm) and TATA Sons was set up for an assembly line for AW119Ke helicopters.
  • It had sought post facto approval of FIPB for increasing FDi inflow of INR 19.64 crore against INR 17.6 crore approved in September 2011
  • Apart from the increased FDI inflow, approval was also sought for a change of foreign investor from Agusta Westland to Finmeccanica by way of merger of the two.

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