UPSC Prelims Practice Questions — Will removing curbs on Chinese FDI help India?

Q1. Which one of the following is the nodal department of the Government of India responsible for issuing and amending Press Note 3 (2020 Series) governing FDI from land-border countries?

  • A. Department of Economic Affairs, Ministry of Finance
  • B. Department for Promotion of Industry and Internal Trade, Ministry of Commerce & Industry
  • C. Department of Revenue, Ministry of Finance
  • D. Department of Commerce, Ministry of Commerce & Industry

Q2. In the context of India's FDI policy, the term 'Government route' refers to which one of the following?

  • A. FDI that requires only post-facto intimation to the Reserve Bank of India through an authorised dealer bank
  • B. FDI that is permitted only after prior approval of the concerned administrative ministry or department of the Government of India
  • C. FDI auctioned through a centralised electronic bidding platform managed by the Ministry of Finance
  • D. FDI permitted only through Government-owned holding companies and sovereign wealth funds

Q3. With reference to the original Press Note 3 (2020 Series) and the amendment approved by the Union Cabinet in March 2026, consider the following statements: 1. The original Press Note 3 (2020) mandated prior government approval for any FDI from an entity of a country sharing a land border with India. 2. The March 2026 amendment permits investors from land-border countries holding up to a 10 per cent non-controlling stake to invest under the Automatic route in specified sectors. 3. The March 2026 amendment fixes a 30-day timeline for processing investment proposals from land-border countries in the specified strategic sectors. Which of the statements given above is/are correct?

  1. The original Press Note 3 (2020) mandated prior government approval for any FDI from an entity of a country sharing a land border with India.
  2. The March 2026 amendment permits investors from land-border countries holding up to a 10 per cent non-controlling stake to invest under the Automatic route in specified sectors.
  3. The March 2026 amendment fixes a 30-day timeline for processing investment proposals from land-border countries in the specified strategic sectors.
  • A. 1 and 2 only
  • B. 2 and 3 only
  • C. 1 and 3 only
  • D. 1, 2 and 3

Q4. The March 2026 amendment easing the prior-approval requirement on FDI from countries sharing a land border with India was formally approved by which one of the following authorities?

  • A. Union Cabinet on the recommendation of DPIIT
  • B. Foreign Investment Promotion Board (FIPB) under the Ministry of Finance
  • C. Reserve Bank of India under the Foreign Exchange Management Act, 1999
  • D. NITI Aayog Governing Council under Article 263 of the Constitution

Q5. Which one of the following is the apex policy think-tank of the Government of India that in 2025 recommended permitting Chinese FDI up to a 24 per cent threshold without prior government approval?

  • A. Indian Council for Research on International Economic Relations (ICRIER)
  • B. NITI Aayog
  • C. National Council of Applied Economic Research (NCAER)
  • D. Reserve Bank of India's Department of Economic and Policy Research