UPSC Prelims 2003·GS1·economy·open economy

With reference to Government of India’s I decisions regarding Foreign Direct Investment (FDI) during the year 2001-02, consider the following statements: 1. Out of the 100% FDI allowed by India in tea sector, the foreign firm would have to disinvest 33% of the equity in favour of an Indian partner within four years. 2. Regarding the FDI in print media in India, the single largest Indian shareholder should have a holding higher than 26% Which of these statements is/are correct?

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  1. AOnly 1
  2. BOnly 2Correct
  3. CBoth 1 and 2
  4. DNeither 1 nor 2

Explanation

The correct answer is B because of the specific regulatory requirements introduced during that period. Statement 1 is incorrect because the actual condition for 100 percent FDI in the tea plantation sector required the foreign company to divest 26 percent of its equity in favor of an Indian partner or the Indian public within five years, not 33 percent within four years. Statement 2 is correct because the government permitted 26 percent FDI in the print media sector specifically for news and current affairs. A key condition was that the single largest Indian shareholder must hold a stake higher than the 26 percent foreign equity to ensure that editorial and management control remained effectively in Indian hands.
economy: With reference to Government of India’s I decisions regarding Foreign Direct Investment (FDI) during the year 2001-02, c
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