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FDI (Foreign Direct Investment) attracted by globalisation in India belongs to the
  • a)
    World Bank
  • b)
    multinationals
  • c)
    foreign governments
  • d)
    none of the above
Correct answer is option 'B'. Can you explain this answer?
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Most Upvoted Answer
FDI (Foreign Direct Investment) attracted by globalisation in India be...
FDI (Foreign Direct Investment) in India

Foreign Direct Investment (FDI) is an investment made by a company or individual in one country into a business located in another country. FDI has become an important aspect of globalisation and has played a significant role in India's economic growth. Let's see which entities attract FDI in India.

Multinational Corporations (MNCs)

MNCs are companies that operate in multiple countries through subsidiaries, affiliates, or branches. They are the primary source of FDI in India. MNCs invest in India to take advantage of the country's large consumer base, low-cost labor, and favorable investment policies. Some of the top MNCs that have invested in India are:

- Coca-Cola
- PepsiCo
- Microsoft
- IBM
- Samsung
- Toyota
- Ford

Foreign Governments

Foreign governments can also invest in India through FDI. However, this is relatively rare as most governments invest in other countries through foreign aid or other forms of financial assistance.

World Bank

The World Bank is an international financial institution that provides loans and grants to developing countries. It does not directly invest in businesses but can provide financial assistance to governments to create an environment that is conducive to FDI.

Conclusion

In conclusion, FDI attracted by globalisation in India belongs primarily to multinational corporations. These corporations invest in India to take advantage of the country's favorable investment policies, large consumer base, and low-cost labor. While foreign governments can also invest in India, this is relatively rare. The World Bank provides financial assistance to governments to create a conducive environment for FDI.
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Community Answer
FDI (Foreign Direct Investment) attracted by globalisation in India be...
Multinationals
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Similar UPSC Doubts

Read the following passageand answer the itemthat follow. Your answerto these itemshould be based on the passageonly.Passage-1Private investment in general is volatile. Foreign private investment is more volatile because the available investment avenues are significantly greater (i.e., the entire worl d). Therefore, the responsibility of providing employment cannot be left to Foreign Direct investment (FDl).The current FDI inflows are volatile over time and across sectors and regions, which is a necessary consequence of their search for the highest returns. The adverse consequences are unstable employment and an accentuation of income and regional inequalities. A probable positive consequence of foreign investment is the inflow of new technology and its subsequent diffusion. However, the technology diffusion is not at all certain because the existing state of physical and human capital in India may prove inadequate for the diffusion.With reference to the above passage, the following assumptions have been made:1. Relying on foreign investment in the long run is not an economically sound policy.2. Policies must be undertaken to reduce volatility in foreign private investment.3. Policies must be undertaken to strengthen domestic private investment.4. Public investment should be given priority over private investment.5. Substantial public investment in education and health should be undertaken.Which of the above assumptions is/are valid?

PASSAGE IIIThe need for Competition Law becomes more evident when foreign direct investment (FDI) is liberalised. The impact of FDI is not always pro-competitive. Very often FDI takes the form of a foreign corporation acquiring a domestic enterprise or establishing a joint venture with one. By making such an acquisition the foreign investor may substantially lessen competition and gain a dominant position in the relevant market, thus charging higher prices. Another scenario is where the affiliates of two separate multinational companies (MNCs) have been established in competition with one another in a particular developing economy, following the liberisation of FDI. Subsequently, the parent companies overseas merge. With the affiliates no longer remaining independent, competition in the host country may be artificially inflated. Most of these adverse consequences of mergers and acquisitions by MNCs can be avoided if an effective competition law is in place. Also, an economy that has implemented an effective competition law is in a better position to attract FDI than one that has not. This is not just because most MNCs are expected to be accustomed to the operation of such a law in their home countries and know how to deal with such concerns but also that MNCs expect competition authorities to ensure a level playing field between domestic and foreign firms.Q. According to the passage, how does a foreign investor dominate the relevant domestic market?1. Multinational companies get accustomed to domestic laws.2. Foreign companies establish joint ventures with domestic companies.3. Affiliates in a particular market/sector lose their independence as their parent companies overseas merge.4. Foreign companies lower the cost of their products as compared to that of products of domestic companies. Which of the statements given above are correct?

PASSAGE IIIThe need for Competition Law becomes more evident when foreign direct investment (FDI) is liberalised. The impact of FDI is not always pro-competitive. Very often FDI takes the form of a foreign corporation acquiring a domestic enterprise or establishing a joint venture with one. By making such an acquisition the foreign investor may substantially lessen competition and gain a dominant position in the relevant market, thus charging higher prices. Another scenario is where the affiliates of two separate multinational companies (MNCs) have been established in competition with one another in a particular developing economy, following the liberisation of FDI. Subsequently, the parent companies overseas merge. With the affiliates no longer remaining independent, competition in the host country may be artificially inflated. Most of these adverse consequences of mergers and acquisitions by MNCs can be avoided if an effective competition law is in place. Also, an economy that has implemented an effective competition law is in a better position to attract FDI than one that has not. This is not just because most MNCs are expected to be accustomed to the operation of such a law in their home countries and know how to deal with such concerns but also that MNCs expect competition authorities to ensure a level playing field between domestic and foreign firms.Q. With reference to the passage, consider the following statements:1. It is desirable that the impact of Foreign Direct investment should be pro-competitive.2. The entry of foreign investors invariably leads to the inflated prices in domestic markets.Which of the statements given above is/are correct?

PASSAGE IIIThe need for Competition Law becomes more evident when foreign direct investment (FDI) is liberalised. The impact of FDI is not always pro-competitive. Very often FDI takes the form of a foreign corporation acquiring a domestic enterprise or establishing a joint venture with one. By making such an acquisition the foreign investor may substantially lessen competition and gain a dominant position in the relevant market, thus charging higher prices. Another scenario is where the affiliates of two separate multinational companies (MNCs) have been established in competition with one another in a particular developing economy, following the liberisation of FDI. Subsequently, the parent companies overseas merge. With the affiliates no longer remaining independent, competition in the host country may be artificially inflated. Most of these adverse consequences of mergers and acquisitions by MNCs can be avoided if an effective competition law is in place. Also, an economy that has implemented an effective competition law is in a better position to attract FDI than one that has not. This is not just because most MNCs are expected to be accustomed to the operation of such a law in their home countries and know how to deal with such concerns but also that MNCs expect competition authorities to ensure a level playing field between domestic and foreign firms.Q. What is the inference from this passage?

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