RAS question
100% FDI is NOT allowed in which of the following sectors?
Correct answer: (C) Multi-brand retail trading.
India does not allow 100% FDI in multi-brand retail trading; the sector is capped at 51% under the government route.
Explanation
Multi-brand retail trading is the exception because its FDI limit is not 100%. The Press Information Bureau release, referring to the Consolidated FDI Policy Circular 2020, lists single brand product retail trading at a 100% FDI cap under the automatic route, but lists multi-brand retail trading separately at a 51% FDI cap under the government route. That difference is the crux of the MCQ: the question is not asking whether FDI is permitted at all, but whether full foreign ownership is allowed. Since multi-brand retail trading stops at 51% and also requires the government route, it cannot be grouped with sectors where 100% FDI is allowed.
Why the other options are wrong
- (A) E-commerce under the marketplace model is a wrong choice because 100% FDI is allowed under the automatic route.
- (B) IT and BPO is a wrong choice because it is among sectors where 100% FDI is allowed under the automatic route.
- (D) Single Brand Retail is a wrong choice because single brand product retail trading has a 100% FDI cap under the automatic route.
Concept
This tests FDI policy, especially sectoral caps and the difference between the automatic and government routes. It recurs in RAS because economy questions often turn on precise policy ceilings rather than broad slogans about liberalisation.