Foreign Investment into India at All-Time High

According to India’s Department of Industrial Policy and Promotion,  cumulative foreign direct investment (FDI) into India reached $498.9 billion in the 17 years from April 2000 to June 2017. During the last two financial years,  FDI flows into India totaled $114.4 billion says a new KPMG report; this is an incredible forty percent higher than the three years preceding.

“In the financial year 2017, the country received the highest-ever FDI flow worth $43.5 billion,” KPMG said. UAE investors such as the  Abu Dhabi Investment Authority, NRI-Emirati Investor’s Group announced $2.5 billion worth of investments in India last month alone.

 

Magazine with Investment Report written on itReaders of this blog know that companies such as Coca Cola and PepsiCo have committed to investing over $5 billion in India in the next five years. In the last 12 months alone, The India Expert has reported on billion dollar investments by  Dell-EMC , by Juniper Networks and by Canada’s Brookfield, while FoxConn of Taiwan has committed to $5 billion. We have also blogged about  industry reports indicating $8 billion into India’s automotive business and $4.2 billion into India’s real estate.

Tim Worstall of Forbes notes that FDI inflows into a country is a good thing, but this cannot happen unless there is also a current account, or trade, deficit. What needs to be recognized is that they are the same thing: the balance of payments does indeed balance, always and everywhere. This underscores India’s status as an island of economic stability, especially as FDI flows worldwide slumped 13% in 2016 . India’s FDI in the April-December period rose 22% to $35.8 billion from the year earlier.

The Government of India liberalized 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. “India also witnessed an increase in private equity/venture capital investments led by its growing start-up segment. Between January and September 2017, India received $17.6 billion of private equity and venture capital spread across 402 deals,”  the KPMG report added.

fDi Intelligence, a division of The Financial Times Ltd., says that India retained its position as the world’s topmost greenfield destination for Foreign Direct Investment for the second consecutive year, attracting  $62.3 billion in 2016.  In the 2017 A.T. Kearney FDI Confidence Index,  India jumped one spot to rank 8th. According to Kearney, 70 percent of the respondents planned to maintain or increase their FDI in India in the coming years. Reform efforts by the current government have improved the country’s investment environment. India’s vast domestic market is an added attraction for foreign companies

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Posted on by Gunjan Bagla
Gunjan Bagla
California-based management consultant Gunjan Bagla runs Amritt, a consulting firm helping American companies to succeed in India. Amritt is the trusted advisor for India market research, India business development, India market entry, Global Engineering, Global Technology Scouting, India R&D and Open Innovation. Gunjan is author of "Business in 21st Century India: How to Profit Today from Tomorrow’s Most Exciting Market" (Hachette Book Group, 2008), Amazon's top rated title on the subject. He has appeared as the India Expert on BBC Television, Bloomberg TV, Fox Cable Business and has been quoted in the New York Times, the Los Angeles Times, the Hollywood Reporter and Business Week for his expertise on India.

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