Subject: Economics
Book: Comprehensive Indian Economy
Foreign Direct Investment (FDI) involves ownership/control of domestic enterprises by foreign investors, fostering technology transfers and job creation. Foreign Portfolio Investment (FPI) pertains to passive holdings in stocks/bonds. Both shape India’s capital account and currency stability. Policy liberalization across sectors (retail, defense, insurance) aims to attract FDI, yet concerns over portfolio outflows remain. Monitoring “hot money” flows is essential to avoid volatility. For exam readiness, clarify FDI vs. FPI differences, sectors with automatic vs. government routes, and how capital inflows can buffer or destabilize the balance of payments depending on global sentiments.
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