Consider the following statements Foreign Direct Investment FDI policy in the defence sector which a...........

Economic and Social Issues Liberalization, Privatization and Globalisation

Download Solution PDF

Consider the following statements

Foreign Direct Investment (FDI) policy in the defence sector which allows the FDI through automatic approval is increased to 74%.
FDI is an investment made by a firm or individual in one country into business interests located in another country.

Select the correct statement.

1 only

2 only

Both

None

छोटे Courses बड़े Results

Master Liberalization, Privatization and Globalisation

Prepare through Micro-courses

Try Now

Explanation:

FDI is an investment made by a firm or individual in one country into business interests located in another country.
Routes through which India gets FDI:

Automatic Route: In this, the foreign entity does not require the prior approval of the government or the RBI.
Government route: In this, the foreign entity has to take the approval of the government.

Recently, the Union Cabinet approved a new Foreign Direct Investment (FDI) policy in the defence sector which allows the FDI through automatic approval to be increased from 49% to 74%.

Earlier, the defence industry can bring FDI up to 49% under the automatic route, and above it under government route.
However, the new policy has a ‘National Security’ clause as a condition which has been proposed by the Ministry of Commerce and Industry.

Hence both statements are correct.