Module: | MODULE A: INTERNATIONAL BANKING
Q155: Consider the following statements regarding sectors where foreign investment is restricted:
Statement 1. Foreign investment is strictly banned in entities conducting lottery businesses, including both state-run lotteries and private lotteries.
Statement 2. Foreign investors are legally permitted to invest up to 100 percent in entities primarily engaged in the construction of farmhouses.
Statement 3. The manufacturing of cigars, cheroots, and cigarettes from tobacco is explicitly classified as a prohibited sector for foreign capital infusion.
Which of the above statements is/are correct?
Statement 2. Foreign investors are legally permitted to invest up to 100 percent in entities primarily engaged in the construction of farmhouses.
Statement 3. The manufacturing of cigars, cheroots, and cigarettes from tobacco is explicitly classified as a prohibited sector for foreign capital infusion.
Which of the above statements is/are correct?
✅ Correct Answer: C
The correct combination is Statement 1 and 3. The prohibited sectors list defines specific areas of the national economy where any form of foreign capital investment is absolutely forbidden by the central government.
Structurally, this list targets sectors associated with public health risks, speculative activities, and specific domestic sensitivities.
The lottery business, gambling and betting, chit funds, and the manufacturing of tobacco products like cigars and cigarettes are strictly prohibited.
Furthermore, investment in the real estate business and the construction of farmhouses is also strictly prohibited, making Statement 2 incorrect.
It is important to note that the legal term real estate business does not include the development of townships, commercial premises, or real estate investment trusts; those specific development activities are permitted.
Historically, the ban on tobacco manufacturing was implemented to align with national health directives to reduce tobacco consumption, while bans on lotteries and farmhouses aim to prevent foreign capital from fueling speculative asset bubbles and illicit financial networks.
The causal reasoning is to intentionally channel foreign capital exclusively toward productive, job-creating industries rather than speculative or socially undesirable activities.
Structurally, this list targets sectors associated with public health risks, speculative activities, and specific domestic sensitivities.
The lottery business, gambling and betting, chit funds, and the manufacturing of tobacco products like cigars and cigarettes are strictly prohibited.
Furthermore, investment in the real estate business and the construction of farmhouses is also strictly prohibited, making Statement 2 incorrect.
It is important to note that the legal term real estate business does not include the development of townships, commercial premises, or real estate investment trusts; those specific development activities are permitted.
Historically, the ban on tobacco manufacturing was implemented to align with national health directives to reduce tobacco consumption, while bans on lotteries and farmhouses aim to prevent foreign capital from fueling speculative asset bubbles and illicit financial networks.
The causal reasoning is to intentionally channel foreign capital exclusively toward productive, job-creating industries rather than speculative or socially undesirable activities.