What does Foreign Capital include 1 Foreign Direct Investment 2 Trade Credit 3 NRI Deposits 4 Extern...........

Economic Affairs Balance of Payments

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What does Foreign Capital include?

1. Foreign Direct Investment

2. Trade Credit

3. NRI Deposits

4. External Commercial Borrowings

Select the correct answer using the code given below:

1 and 3 Only

1, 3 and 4 Only

2, 3 and 4 Only

1, 2, 3 and 4

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Explanation:

Foreign capital refers to the capital flows from resident entity of one country to the resident entity of another country. The resident entity may be an individual, corporate firm or a Government. International investment or capital flows fall into four principal categories:

! Commercial loans

! Official flows

! Statement 1 is correct: Foreign direct investment (FDI) - Foreign direct investment (FDI) is an investment made by a company or individual in one country in business interests in another country. Generally, FDI takes places when an investor establishes foreign business operations or acquires foreign business assets, including establishing ownership or controlling interest in a foreign company.

! Foreign portfolio investment (FPI):

The major category is foreign investment including FDI (Foreign Direct Investment) and FPI (Foreign Portfolio Investment).

! Similarly, there are other types of foreign capital like:

! Statement 2 is correct:Trade credit

! Statement 3 is correct: NRI Deposits

! Statement 4 is correct: External Commercial Borrowings (ECBs)

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