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?
In the Capital Account of the Balance of Payment, we can classify it into Investment, Borrowings, and External Assistance. Investment includes Equity flow in the economy. Foreign Currency Convertible Bonds (FCCB), Foreign Institutional Investment with certain conditions (subject to the overall limit of 24%), and Global Depository Receipts (GDR) are the instruments for foreign investment in India. Hence, options 1, 2, and 3 are correct. Non-Resident external deposits are a ‘debt-creating’ flow in the balance of payments accounts and, therefore, are not part of Foreign Direct investments. Hence, option 4 is not correct.