With $36 b in Nine Months, FDI May De­liver a Record

Overseas in­vest­ment in April-Dec rises 22%, ex­pected to cross FY16 mark of $40 b in full year

The Economic Times - - Front Page - Our Bu­reau

New Delhi: Overseas in­vest­ment in In­dia is likely to surge to a record in the year end­ing March de­spite tem­po­rary growth hic­cups as­cribed to the cur­rency swap pro­gramme. This un­der­scores In­dia’s sta­tus as an is­land of eco­nomic sta­bil­ity, es­pe­cially as for­eign di­rect in­vest­ment (FDI) flows world­wide slumped 13% last year amid un­cer­tainty thanks in part to a back­lash against glob­al­i­sa­tion.

In­dia’s FDI in the April-De­cem­ber pe­riod rose 22% to $35.8 bil­lion from the year ear­lier. With three months to go for the fis­cal year end, the gov­ern­ment ex­pects fresh in­flows into eq­uity to top the $40 bil­lion In­dia got in FY16.

To­tal FDI — which in­cludes in­flows into un­in­cor­po­rated bod­ies, rein­vested earn­ings and other cap­i­tal — in the nine months to De­cem­ber is pegged at $48 bil­lion against $55.5 bil­lion for the whole of the last fis­cal year. Ser­vices topped the list, ac­count­ing for18% of to­tal FDI in the nine-month pe­riod, fol­lowed by con­struc­tion de­velop- FDI re­ceived in Apr-Dec 2016

22%

more than cor­re­spond­ing pe­riod last year Just short of

$40 bil­lion

re­ceived last year

ment, telecom­mu­ni­ca­tions, com­puter hard­ware and au­to­mo­biles.

The gov­ern­ment has lib­er­alised the coun­try’s FDI pol­icy in the last two years to bring sev­eral sec­tors un­der the au­to­matic ap­proval route as part of ef­forts to en­cour­age overseas in­vest­ment. “For­eign in­vestor in­ter­est is con­tin­u­ing to grow in In­dia. We have a lot more queries from them than ever be­fore,” said Ramesh Ab­hishek, sec­re­tary, De­part­ment of In­dus­trial Pol­icy and Pro­mo­tion (DIPP).

In­vest In­dia, the gov­ern­ment’s of- fi­cial in­vest­ment pro­mo­tion and fa­cil­i­ta­tion agency, is shep­herd­ing pro­pos­als worth $62 bil­lion span­ning 295 deals, of which $3 bil­lion has al­ready come in.

“The in­vestor has shown con­fi­dence in the In­dian econ­omy,” said Devraj Singh, ex­ec­u­tive di­rec­tor, tax and reg­u­la­tory ser­vices, EY. “Over 90% of FDI is com­ing in through the au­to­matic route, which has ex­panded in its scope over the last two years.” Ac­cord­ing to data re­leased by DIPP on Fri­day, Mau­ri­tius, Sin­ga­pore, Ja- pan, the UK and US were the top five con­trib­u­tors to FDI in­flows.

The surge comes even as the gov­ern­ment ex­pects growth to slip to 6.5-6.75% in the cur­rent fis­cal year from 7.9% in FY16 due to global fac­tors and de­mon­eti­sa­tion.

In the Fe­bru­ary 1 Bud­get, the Cen­tre an­nounced its de­ci­sion to abol­ish For­eign In­vest­ment Pro­mo­tion Board (FIPB) and promised more re­forms to make things eas­ier for overseas in­vestors.

“In­creased FDI in­flows to In­dia is also a func­tion of the eco­nomic sit­u­a­tion and spare ca­pac­ity avail­able in other coun­tries,” said Madan Sab­navis, chief economist, Credit Anal­y­sis and Re­search Ltd. “There are more op­por­tu­ni­ties in In­dia and now a lot more ef­fort to ease pro­cesses here.”

Ex­perts said that in­vestors are wait­ing for a turn­around in the for­tunes of sec­tors such as in­fra­struc­ture and phar­ma­ceu­ti­cals, which could en­cour­age a fur­ther surge in overseas in­ter­est.

The gov­ern­ment is yet to an­nounce the modal­i­ties of the new sys­tem of pro­cess­ing ap­pli­ca­tions that fall un­der the ap­proval route.

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