Question

From the beginning of 2018 which of these sectors has been allowed for automatic hundred per cent foreign direct investment (FDI) in India?

• A. Multi Brand Retailing
• B. Defence Manufacturing
• C. Banking
• D. Single Brand Retailing

Answer 1

The Correct Option is D

In the context of Foreign Direct Investment (FDI) policies in India, particularly since the beginning of 2018, it is important to understand which sectors have been opened up for automatic 100% FDI. The option that aligns with these criteria is Single Brand Retailing.

To elaborate:

• Multi Brand Retailing: This sector is not allowed for 100% FDI under the automatic route. It is subject to various conditions and governmental approvals.
• Defence Manufacturing: Although FDI is allowed, it's not at the automatic 100% level for this sector. Specific conditions and caps are applied depending on the project and technology transfers.
• Banking: The banking sector in India has its regulations regarding foreign investment, but 100% FDI is not automatically allowed.
• Single Brand Retailing: As per modifications made in the FDI policy, 100% FDI under the automatic route is permitted for single brand retail trading.

Thus, with the policy changes effective since the beginning of 2018, the sector permitted for automatic 100% FDI is Single Brand Retailing.

Answer 2

This can be answered by checking the actual FDI cap and route notified for each sector as of early 2018, rather than by assuming the most "open-sounding" sector is correct.

1. Option A: Multi Brand Retailing continued to require government approval and specific conditions; it was not opened to 100 percent automatic FDI.
2. Option B: Defence Manufacturing was liberalised further in 2018, but automatic approval was capped well below 100 percent, with the higher levels still routed through government approval.
3. Option C: Banking, especially private sector banking, remained subject to sectoral caps and approval requirements, not a blanket 100 percent automatic allowance.
4. Option D: Single Brand Retailing was the sector where the government permitted 100 percent FDI under the automatic route starting in 2018, removing the earlier local sourcing pre-condition for the first few years of operation.

Checking the notified caps shows that only Single Brand Retailing had the full 100 percent automatic route.

the correct answer is Single Brand Retailing.