Write a note on Foreign Investment policy?

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Q. Write a note on Foreign Investment policy?

Tamil Nadu DgeTamil Nadu HSC First Year (DGE) Commerce Board 2026Subjective· 3mImportance★★★★★

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India's foreign investment policy governs the inflow of FDI and FII; since the 1991 reforms it has been progressively liberalised to bring in capital, technology, jobs and foreign exchange.

Foreign investment is investment made in a country by non-residents / foreign entities. It takes two main forms:

Foreign Direct Investment (FDI) — investment in productive assets (factories, companies) that gives lasting control or management interest.
Foreign Institutional / Portfolio Investment (FII) — investment in shares, bonds and other financial assets, without management control.

Since the New Economic Policy of 1991 (LPG reforms), India's foreign investment policy has been steadily liberalised:

FDI allowed through the automatic route in most sectors, with high sectoral caps (up to 100% in many industries).
FERA replaced by FEMA (Foreign Exchange Management Act) to ease foreign transactions.
Encouragement of NRI investment and initiatives such as "Make in India." …

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Same / Similar Concept — real previous-year questions on the same or a closely similar concept, not this exact question.

CBSE 2026Set MARCH1 markMCQ
$Q. The first ever SEZ in India was set up at$
(a) Mumbai
(b) Chennai
(c) Kandla
(d) Cochin
›Reveal solutionSolution

The first ever SEZ in India was set up at Kandla — option (c).

Special Economic Zones (SEZs) are specially delimited, duty-free enclaves treated as foreign territory for trade and tariff purposes, created to boost exports and attract investment. India's first zone was established at Kandla in Gujarat (as the Kandla Export Processing Zone) — it was Asia's first and India's first such zone, later brought under the SEZ framework as part of the country's liberalisation and export-promotion reforms. …

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CBSE 2025Set MARCH1 markMCQ
$Q. In India GST system came into effect in ______.$
(a) 2018
(b) 2016
(c) 2019
(d) 2017
›Reveal solutionSolution

GST was introduced in India on 1 July 2017, so the answer is option (d).

The Goods and Services Tax (GST) is a comprehensive, destination-based indirect tax that replaced a range of central and state taxes (such as excise duty, service tax and VAT) with a single unified tax under the slogan 'One Nation, One Tax'. It came into effect across India from …

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CBSE 2022Set MARCH1 markMCQ
$Q. The Special Economic Zones Policy was announced in ________.$
(a) April - 2001
(b) April - 2000
(c) July - 2001
(d) July - 2000
›Reveal solutionSolution

The Special Economic Zones (SEZ) policy was announced in April 2000.

As part of the post-1991 liberalisation, privatisation and globalisation reforms, the Government of India introduced the Special Economic Zones (SEZ) policy in April 2000 to promote exports, attract foreign investment and create employment by providing duty-free, well-infrastructured e …

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CBSE 2020Set MARCH1 markMCQ
$Q. The Arguments against LPG is ______.$
(a) Modernization
(b) Economic growth
(c) More investment
(d) Disparities among people and regions
›Reveal solutionSolution

The argument against LPG is (d) disparities among people and regions.

The Liberalisation, Privatisation and Globalisation (LPG) reforms of 1991 opened up the Indian economy. While they raised growth and investment, critics point out that the gains were not shared equally. The reforms widened income inequality between the rich and the poor and deepened regional imbalances, as developed states and urban areas benefited far more than backward states and rural areas. This rise in disparities is therefore an argument against LPG.

Why the others are wrong: …

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CBSE 2020Set MARCH1 markMCQ
$Q. The triple pillars of New Economic Policy are :$
(a) GST
(b) LPG
(c) PSU
(d) SEZ
›Reveal solutionSolution
The triple pillars of the New Economic Policy are (b) LPG.

The New Economic Policy introduced in 1991 was built on three broad measures, together known by the abbreviation LPG:

Liberalisation - reducing government controls and licensing so that markets can operate freely.

Privatisation - transferring ownership and management of public sector units to the private sector.

Globalisation - integrating the Indian economy with the world economy through trade and investment.

Why the others are wrong:

(a) GST is a tax reform introduced much later.

(c) PSU means Public Sector Undertaking. …
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Q.Write a note on Foreign Investment policy?

Concept understanding — Liberalisation, Privatisation and Globalisation (LPG) Reforms

Q.Write a note on Foreign Investment policy?

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