What is the FDI limit for private security agencies in India?

This question was previously asked in
UP Police SI (दरोगा) Previous Paper 6 (Held On: 19 Dec 2017 Shift 2)
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  1. 51%
  2. 100%
  3. 49%
  4. 74%

Answer (Detailed Solution Below)

Option 4 : 74%
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UP Police SI (दरोगा) Official PYP (Held On: 2 Dec 2021 Shift 1)
160 Qs. 400 Marks 120 Mins

Detailed Solution

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The correct answer is 74%.

Key Points

  • FDI limit for private security agencies hiked from 49% to 74%.
  • 49% is through the Automatic route while beyond this it will be through government approval.
  • The FDI in private security agencies is subject to compliance with the Private Security Agencies (Regulation) Act, 2005. 
  • A foreign direct investment (FDI) is an investment in the form of a controlling ownership in a business in one country by an entity based in another country.
  • It is thus distinguished from a foreign portfolio investment by a notion of direct control.

Additional Information

Types of FDIs -

  • Horizontal FDI - It arises when a firm duplicates its home country-based activities at the same value chain stage in a host country through FDI.
  • Platform FDI - It is from a source country into a destination country for the purpose of exporting to a third country.
  • Vertical FDI - It takes place when a firm through FDI moves upstream or downstream in different value chains i.e. when firms perform value-adding activities stage by stage in a vertical fashion in a host country. 

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