UPSC Prelims Practice Questions — Cabinet approves changes in guidelines on investments from countries sharing land border with India

Q1. With reference to Press Note 3 (2020) governing FDI from countries sharing a land border with India, consider the following statements: Which of the statements given above is/are NOT correct?

1. It was issued on 17 April 2020 amending the extant Consolidated FDI Policy.
2. Its stated rationale was to curb opportunistic takeovers/acquisitions of Indian companies during the COVID-19 pandemic.
3. It covers not only direct investors but also cases where the beneficial owner of an investment is situated in or is a citizen of a land bordering country.
4. It placed FDI from land bordering countries under the automatic route, requiring only post-facto reporting.

• A. 1 and 2
• B. 2 and 3
• C. 4 only
• D. 1 and 4

Q2. Press Note 3 (2020), which mandated prior Government approval for FDI from countries sharing a land border with India, was issued by which one of the following?

• A. Department for Promotion of Industry and Internal Trade (DPIIT)
• B. Department of Economic Affairs, Ministry of Finance
• C. Reserve Bank of India
• D. Department of Commerce, Ministry of Commerce & Industry

Q3. Press Note 3 (2020) applies to FDI originating from countries that share a land border with India. How many such countries are covered?

• A. Five
• B. Six
• C. Seven
• D. Eight

Q4. The definition and criteria for determination of 'beneficial owner' adopted in the March 2026 amendment to the land-bordering-countries FDI regime are drawn from which one of the following?

• A. Prevention of Money-Laundering (Maintenance of Records) Rules, 2005
• B. Foreign Exchange Management (Non-debt Instruments) Rules, 2019
• C. Companies Act, 2013 (Significant Beneficial Owner rules)
• D. Foreign Contribution (Regulation) Act, 2010

Q5. The March 2026 amendment to the FDI policy on investments from land bordering countries falls under the administrative purview of which one of the following Union Ministries?

• A. Ministry of Commerce and Industry
• B. Ministry of Finance
• C. Ministry of External Affairs
• D. Ministry of Electronics and Information Technology

Q6. The Press Note 3 regime and its March 2026 amendment regulating FDI derive their statutory authority primarily from which one of the following legislations?

• A. Foreign Exchange Management Act, 1999
• B. Foreign Exchange Regulation Act, 1973
• C. Foreign Contribution (Regulation) Act, 2010
• D. Companies Act, 2013

Q7. With reference to the routes and institutional architecture for FDI in India, consider the following statements: Which of the statements given above is/are correctly identified?

1. The Foreign Investment Promotion Board was abolished in 2017 and the work of granting approvals was entrusted to the concerned administrative ministries/departments.
2. DPIIT is the nodal department facilitating the FDI approval process.
3. Under the automatic route, the investor must obtain prior approval from the Reserve Bank of India.
4. Press Note 3 (2020) placed FDI from land bordering countries under the automatic route.

• A. 1 and 2
• B. 2 and 3
• C. 3 and 4
• D. 1, 2 and 4

Q8. With reference to the Government approval route for FDI in India, consider the following statements: Which of the statements given above is/are NOT correct?

1. After abolition of the FIPB, FDI proposals under the Government route are processed by the concerned administrative ministry/department in consultation with DPIIT.
2. The Foreign Investment Facilitation Portal replaced the FIPB following its abolition in 2017.
3. Under the automatic route, no prior Government approval is required for FDI.
4. All FDI from land bordering countries, regardless of size, continues to require prior Government approval even after the March 2026 amendment.

• A. 1 and 2
• B. 2 and 3
• C. 1, 2 and 3
• D. 4 only

Q9. All proposals seeking Government approval under the FDI route, including those falling under Press Note 3, are required to be submitted through which one of the following platforms?

• A. National Single Window System (NSWS)
• B. Government e-Marketplace (GeM)
• C. PARIVESH portal
• D. SAMADHAAN portal

Q10. With reference to the geopolitical context of India's land-bordering-countries FDI restrictions, consider the following statements: Which of the statements given above is/are correctly identified?

1. China, including Hong Kong, is covered by the Press Note 3 restriction.
2. Press Note 3 (2020) was introduced as a direct response to the Galwan Valley clash that occurred in June 2020.
3. Even prior to Press Note 3 (2020), FDI from Pakistan and Bangladesh was already permitted only under the Government route.
4. Myanmar shares a land border with India and is covered under Press Note 3.

• A. 1 and 2
• B. 1, 3 and 4
• C. 2 and 4
• D. 1, 2, 3 and 4

Q11. Under the March 2026 amendment, non-controlling beneficial ownership from land bordering countries up to what percentage is permitted under the automatic route (subject to reporting)?

• A. 5 per cent
• B. 10 per cent
• C. 24 per cent
• D. 26 per cent

Q12. The semiconductor and electronics manufacturing ecosystem—such as the India Semiconductor Mission—that the 2026 FDI relaxation seeks to bolster is implemented primarily by which one of the following Ministries?

• A. Ministry of Electronics and Information Technology (MeitY)
• B. Ministry of Heavy Industries
• C. Department for Promotion of Industry and Internal Trade
• D. Ministry of Commerce and Industry