UPSC Prelims Practice Questions — The reality behind falling net FDI

Q1. With reference to the sharp fall in India's net FDI in FY 2024-25, consider the following statements: 1. A double-digit percentage rise in repatriation and disinvestment by foreign investors in existing Indian companies. 2. A sharp jump in outward FDI by Indian companies. 3. A contraction in gross FDI inflows below the level recorded in FY 2023-24. 4. A fall in reinvested earnings of foreign affiliates operating in India. Which of the statements given above is/are correct?

  1. A double-digit percentage rise in repatriation and disinvestment by foreign investors in existing Indian companies.
  2. A sharp jump in outward FDI by Indian companies.
  3. A contraction in gross FDI inflows below the level recorded in FY 2023-24.
  4. A fall in reinvested earnings of foreign affiliates operating in India.
  • A. 1 and 2 only
  • B. 2, 3 and 4
  • C. 1, 3 and 4
  • D. 1, 2 and 4

Q2. Which one of the following was the largest source country of FDI equity inflows into India in FY 2024-25?

  • A. Mauritius
  • B. United States
  • C. Singapore
  • D. Netherlands

Q3. Which one of the following is the nodal department for formulating India's Foreign Direct Investment (FDI) policy?

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

Q4. In the context of India's Balance of Payments statistics, the term 'net FDI' refers to:

  • A. Gross FDI inflows minus repatriation/disinvestment by foreign investors in India and minus outward FDI by Indian entities abroad
  • B. FDI equity inflows minus reinvested earnings of foreign affiliates
  • C. Gross FDI inflows minus dividends and royalty payments remitted abroad
  • D. FDI inflows received through the automatic route minus those through the government approval route

Q5. Foreign Direct Investment into India is presently regulated by the Reserve Bank of India under which one of the following statutes?

  • A. Foreign Exchange Regulation Act, 1973
  • B. Foreign Exchange Management Act, 1999
  • C. Foreign Contribution (Regulation) Act, 2010
  • D. Foreign Trade (Development and Regulation) Act, 1992