Consider the following : 1. Foreign currency convertible bonds 2. Foreign institutional investment with certain conditions 3. Global depository receipts 4. Non-resident external deposits Which of the above can be included in Foreign Direct Investments?

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Q: (IAS/2021)
Consider the following :
1. Foreign currency convertible bonds
2. Foreign institutional investment with certain conditions
3. Global depository receipts
4. Non-resident external deposits
Which of the above can be included in Foreign Direct Investments?

question_subject: 

Economics

question_exam: 

IAS

stats: 

0,241,134,241,49,55,30

keywords: 

{'foreign direct investments': [0, 0, 0, 1], 'convertible bonds': [0, 0, 0, 1], 'foreign institutional investment': [0, 0, 0, 1], 'foreign currency': [0, 0, 0, 1], 'global depository receipts': [0, 0, 0, 1]}

Foreign Direct Investment (FDI) refers to investments made by a foreign company or individual in business interests located in another country.

1. Foreign Currency Convertible Bonds (FCCBs) are corporate bonds that an investor can convert into a specified number of equity shares of the issuing company at a predetermined exchange rate. They are counted as FDI as they allow foreign investors to convert their debt into equity.

2. Foreign Institutional Investment (FII) with certain conditions can also be categorized as FDI, especially when the FII takes an active role in managing the company or has a significant percentage of the voting shares.

3. Global Depository Receipts (GDRs) are bank certificates that represent a specific number of shares in a foreign company traded on an international exchange. They usually qualify as part of FDI because handling GDRs’ purchasing and selling involves transferring ownership of shares.

4. Non-Resident External (NRE) Deposits, typically, don`t qualify as FDI because they are funds deposited by an NRI in a bank account in India, and may not necessarily involve business investments.

Hence, options 1,2, and 3 can be included in FDI.

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