FDI falls in India

Fdi in India during the first seven months of the current financial year (April-October 2010-11) stood at $12.40 billion against $19.95 billion in the corresponding period of the previous year - a 37.8 per cent year-on-year decline.FDI equity flows into the country during January-October 2010 stood at $17.37 billion, official data showed.FDI in India stood at $25.89 billion for the whole of the previous financial year (April-March 2009-10). The government has set an FDI target of $33 billion in the current fiscal.The government is now looking at opening the retail and insurance sectors in order to attract continued flows of foreign equity investment.The Department of Industrial Policy and Promotion has issued five discussion papers relating to FDI in defence sector, FDI in multi-brand retail trading, approval of foreign/technical collaborations in case of existing ventures/tie-ups in India, issue of shares for considerations other than cash and FDI in limited liability partnerships.

Trade imbalances, dip in FDI challenge to growth

Finance Minister Pranab Mukherjee said india's economy was getting back to higher growth, but faced many headwinds. He was addressing the parliamentary consultative committee for his ministry.

The minister listed trade imbalances, volatility in portfolio investments, current account deficit, drop in foreign direct investments to almost half of last year’s levels and the crisis in the Euro zone as the biggest concerns, a release from the ministry said on Thursday.

India’s current account deficit is expected to touch 3% of GDP in the current fiscal. Goldman Sachs has said in a recent report it could widen to 4% of the GDP by the end of the next fiscal.

The jump in the current account deficit is largely because of the high trade deficit — $81 billion in the first eight months of the current fiscal. Much of this current account deficit is funded by the $39 billion of investment by foreign institutional investors, but these flows are beginning to become volatile.

The sharp drop in FDI has also caused concern, because it has increased the reliance on short-term overseas funds to meet the deficit. FDI in the first six months of the current fiscal was $11 billion, down from $15.3 billion in the same period last year.

The finance minister said there was a need to improve the public distribution system to ensure the people below poverty line get foodgrain at nominal price of wheat at Rs 2 a kg and rice at Rs 3 a kilo. The finance minister also urged various stakeholders to be responsible in their assessment of the requirement of foodgrain if the government is to ensure that every needy person is provided for.

India is becoming a major destination for FDI

Investment from abroad before economic reforms began in 1991 used to just trickle as foreign investors were wary of opportunity in India. But situation changed rapidly and more and more investment started pouring in with new policy in place. As various sectors were opened up gradually the FDI flow started steadily increasing and it cumulatively stood at 130 billion dollars by 2009.

India is far behind China, which attracts around 60 billion dollars annually. But today things have changed and India is becoming a major destination for FDI inflow. India received around 35 billion dollars in 2008-09 including reinvestments by foreign investors. In 2009-10 too FDI inflow is expected to be around 35 billion dollars, same as previous year despite global slowdown in the face of financial crisis.

fdi in 2010

India has been ranked at the third place in global foreign direct investments in 2009 and will continue to remain among the top five attractive destinations for international investors during 2010-11, according to United Nations Conference on Trade and Development (UNCTAD) in a report on world investment prospects titled, 'World Investment Prospects Survey 2009-2011' released in July 2009.

The 2009 survey of the Japan Bank for International Cooperation released in November 2009, conducted among Japanese investors continues to rank India as the second most promising country for overseas business operations, after China.

A report released in February 2010 by Leeds University Business School, commissioned by UK Trade & Investment (UKTI), ranks India among the top three countries where British companies can do better business during 2012-14.

According to Ernst and Young's 2010 European Attractiveness Survey, India is ranked as the 4th most attractive foreign direct investment (FDI) destination in 2010. However, it is ranked the 2nd most attractive destination following China in the next three years.

India attracted FDI equity inflows of US$ 2,214 million in April 2010. The cumulative amount of FDI equity inflows from August 1991 to April 2010 stood at US$ 134,642 million, according to the data released by the Department of Industrial Policy and Promotion (DIPP).

The services sector comprising financial and non-financial services attracted 21 per cent of the total FDI equity inflow into India, with FDI worth US$ 4.4 billion during April-March 2009-10, while construction activities including roadways and highways attracted second largest amount of FDI worth US$ 2.9 billion during the same period. Housing and real estate was the third highest sector attracting FDI worth US$ 2.8 billion followed by telecommunications, which garnered US$ 2.5 billion during the financial year 2009-10. The automobile industry received FDI worth US$ 1.2 billion while power attracted FDI worth US$ 1.4 billion. during April-March 2009-10, according to data released by DIPP.