Which of the following would include Foreign Direct Investment in India? 1. Subsidiaries of foreign companies in India 2. Majority foreign equity holding in Indian companies 3. Companies exclusively financed by foreign companies 4. Portfolio investment Select the correct answer using the codes given below :

Foreign Direct Investment (FDI) in India is defined as investment by a non-resident entity with the objective of establishing a 'lasting interest' and significant influence over an enterprise [4]. This includes the establishment of subsidiaries of foreign companies in India. It also encompasses majority foreign equity holdings, as any investment of 10% or more in a listed company or any equity in an unlisted company is classified as FDI [5]. Furthermore, companies exclusively financed by foreign entities, such as Wholly Owned Subsidiaries, are standard forms of FDI. In contrast, Portfolio Investment (FPI) is distinct from FDI; it involves purchasing securities like stocks or bonds without the intent of management control and is generally restricted to stakes below 10% [2]. Therefore, statements 1, 2, and 3 represent FDI, while statement 4 refers to FPI.

Sources

1. [1] https://www.dpiit.gov.in/static/uploads/2025/09/898bd96803e8b0fef3b34d3350d0525e.pdf
2. [4] https://www.investindia.gov.in/team-india-blogs/advantages-foreign-direct-investment
3. [2] https://fifp.gov.in/Forms/FAQs_FDIPolicy.pdf
4. [5] Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 16: Balance of Payments > 1. FDI > p. 475