FDI refers to:

Question

FDI refers to:

1. A. Fixed Deposit Interest
2. B. Fixed Deposit Investment
3. C. Future Derivative Investment
4. D. Foreign Direct Investment (Correct answer)

Correct Answer

Option D — Foreign Direct Investment

Detailed Solution & Explanation

The correct answer is Foreign Direct Investment.

Key Points

• FDI stands for Foreign Direct Investment — investment by a foreign entity that establishes a lasting interest and a degree of control in an enterprise in another country.
• It is distinguished from FII/FPI (Foreign Portfolio Investment), which is investment in shares and bonds without control, and is far more easily withdrawn.

Additional Information

• FDI is regarded as more stable and desirable than portfolio flows, which is why it is often called "good money" against the "hot money" of FII.
• India permits FDI through the automatic route (no prior approval) and the government route, with sectoral caps set by the Department for Promotion of Industry and Internal Trade (DPIIT).
• FDI in defence, insurance, multi-brand retail and the media is capped or conditional; Singapore and Mauritius are consistently among the largest sources of FDI into India.