With reference to Foreign Direct Investment in India, which one of the following is considered its major characteristic?
(a) It is the investment through capital instruments essentially in a listed company.
(b) It is a largely non-debt creating capital flow.
(c) It is the investment which involves debt-servicing.
(d) It is the investment made by foreign institutional investors in the Government securities.

Stories on this topic

• Cabinet clears sale of 60.72% of IDBI Bank to Fairfax for ₹52,877 crore 15 October 2026

  Fairfax's purchase of a controlling stake is equity, not debt, which is why FDI is described as a largely non-debt creating flow (answer b).

  Facts from this story you can cite
  • The CCEA on 14 October 2026 approved selling 60.72% of IDBI Bank to a Fairfax Financial Holdings subsidiary for ₹52,877.07 crore.
  • The government sells 30.48% and LIC 30.24%; afterwards the government holds 15% and LIC 19%.
  • The government calls it the largest FDI in India's financial sector so far, and it is the biggest strategic disinvestment since Air India.
• FPIs pull ₹52,100 crore from equities in October; 2026 outflows reach ₹3.12 lakh crore 19 October 2026

  The FPI sell-off highlights why UPSC treats FDI as a largely non-debt creating and more stable flow than portfolio money.

  Facts from this story you can cite
  • FPIs sold a net ₹52,100 crore of Indian equities in October 2026 up to mid-month, after a ₹35,861 crore outflow in September.
  • Net FPI equity outflows in 2026 have reached ₹3.12 lakh crore, nearly 1.9 times the ₹1.66 lakh crore of all of 2025.
  • Analysts blamed high US bond yields, a stronger dollar, high crude prices and an AI-led rally in North Asian markets.

Where it sits in the syllabus

• Prelims: Economic and social development

  Economic and Social Development: Sustainable Development, Poverty, Inclusion, Demographics, Social Sector initiatives, etc.

Other questions these stories help answer

1. 2022 · GS3 · 10 marks Is inclusive growth possible under market economy? State the significance of financial inclusion in achieving economic growth in India.
2. 2019 · Prelims Which one of the following is not the most likely measure the Government/RBI takes to stop the slide of Indian rupee? (a) Curbing imports of non-essential goods and promoting exports (b) Encouraging…
3. 2018 · GS3 · 15 marks How would the recent phenomena of protectionism and currency manipulations in world trade affect macroeconomic stability of India?
4. 2014 · GS2 · 12.5 marks Though 100 percent FDI is already allowed in non-news media like a trade publication and general entertainment channel, the government is mulling over the proposal for increased FDI in news media…