India takes pride of place, crosses $300 bn FDI milestone

NEW DELHI: India crossed the USD 300 billion foreign direct investment (FDI) milestone between April 2000 and September 2016, firmly establishing its credentials as a safe investment destination in the world.

Foreign direct investment (FDI) is an investment made by a company or individual in one country in business interests in another country, in the form of either establishing business operations or acquiring business assets in the other country, such as ownership or controlling interest in a foreign company.

Thirty three per cent of the FDI came through the Mauritius route, apparently because the investors wanted to take advantage of India’s double taxation avoidance treaty with the island nation.

India received USD 101.76 billion from Mauritius between April 2000 and September 2016. The cumulative FDI inflows during the period amounted to USD 310.26 billion.

The inflows in the first half of the current financial year was USD 21.62 billion, according to data compiled by the Department of Industrial Policy and Promotion.

The other big investors have been from Singapore, the US, UK and the Netherlands.

Commenting on the USD 300 billion mark, industry bodies Ficci and CII have said that India is perceived as a safe and dynamic destination by global investors.

Ficci said that the liberalisation of the FDI policy framework, major national development programmes such as Make in India, Digital India and Skill India, besides increasing competitiveness, have made India the preferred choice for investors globally.

“We see this trend of increasing inflows further strengthening in the coming years,” Ficci president Harshavardhan Neotia said.

CII said that FDI flows have increased significantly and consistently in the last two years and the country would continue to remain as one of the most attractive destinations in the foreseeable future.

“Global investor sentiment is positive about India being a safe investment haven, despite the global economic climate remaining uncertain,” it said.

India’s services sector topped the table, receiving 18 per cent of the cumulative equity foreign direct investment inflows followed by construction development, computer software & hardware, telecommunication and automobile.

India crossed the USD 300 billion mark at a time when the global economic slowdown has had a dampening impact on FDI flows which are expected to fall this year. According to the World Investment Report 2016, global FDI flows rose by 38 per cent to USD 1.76 trillion, the highest level since the global economic and financial crisis began in 2008.

However, they still remain some 10 per cent short of the 2007 peak.

“Looking ahead, FDI flows are expected to decline by 10 15 per cent in 2016, reflecting the fragility of the global economy, persistent weakness of aggregate demand, effective policy measures to curb tax inversion deals,” it said.

The report added that elevated geopolitical risks and regional tensions could further amplify the expected downturn.