
International Balance of Payments 161
the claim represents: portfolio investment, where the investor has no control, or direct investment, where
the investor exerts some explicit degree of control over the assets.
The major sub-categories of India’s capital account balance are direct investment, portfolio invest-
ment, and other long-term and short-term capital.
Direct Investment: This is the net balance of capital flows into and out of a country for the purpose of
exerting control over assets. For example, if an Indian firm either builds a new automotive parts facility
in another country or purchases a company in another country, this would fall ...