Foreign Direct Investment (FDI) Current Affairs

India becomes Fourth Largest Foreign Investor into UK

As per the official figures published by the UK’s Department for International Trade, India has become the fourth largest foreign investor into the UK in 2016-17. India has lost its position as the third largest investor to France.

Salient Facts

In 2016-17, India had set up 127 new projects and safeguarded 7,645 existing jobs and created 3,999 new jobs in the UK. India is sharing the fourth spot with Australia and New Zeland, which had also set up 127 projects collectively.

The US remains the top most investor in the UK by setting up of 577 projects in 2016-17. China (including Hong Kong) with 160 projects and France with 131 projects have been placed in the second and third positions respectively.

Background

The UK continues to be a great inward investment destination and remains extremely attractive to foreign investors even after its decision to exit the EU. The UK attributes open, liberal economy, world-class talent and business-friendly taxation as a reason for remaining extremely attractive to foreign investors. The UK had managed to attract more Foreign Direct Investment (FDI) projects than ever before for 2016-17. In a sum, UK claims itself as the number one destination for inward investment in Europe with the sectors such as technology, renewable energy, life sciences and creative industries all witnessing an increase in the number of projects and investments.

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UNCTAD: India among Top FDI Destinations

According to UNCTAD’s World Investment Report 2017, India continues to remain as a favourite destination for FDI even though tax related concerns remain as a deterrent for the foreign investors.

Salient Highlights of the Report

According to the report, the favourite destinations for FDI are the US, China and India. 

As per the report FDI inflows into a developing Asia has reduced by 15% to USD 443 billion in 2016. This decline is the first since 2012. Other than South Asia, the decline has affected the three sub regions of Asia. However, the report has observed that an improved economic outlook in major economies like ASEAN, China and India is expected to boost investor’s confidence thereby increasing the region’s prospects for 2017. In Asian region, major recipients like China, India and Indonesia have renewed their policies to attract FDI. This is expected to increase the FDI inflows in 2017.

In South Asia, FDI inflows increased by 6% to USD 54 billion and outflows declined by 29% to USD 6 billion.

FDI inflows into India remained stagnant at USD 44 billion. India’s outward foreign flows declined by about one third. Cross-border merger and acquisition deals have become important tools in the hands of the foreign multinational enterprises to foray into the rapidly-growing Indian market. The report has also noted that signing of tax treaty with Mauritius would have contributed to decline in instances of round tripping of FDI.

for the first time, China has emerged as the world’s second largest investor of FDI.

BRICS grouping (Brazil, the Russian Federation, India, China and South Asia), which accounts for 22% of the global GDP has received only 11% of the global FDI inflows.

The World Investment Report has been published by the United Nations Conference on Trade and Development (UNCTAD) annually since 1991. The report focuses on trends in foreign direct investment (FDI) worldwide, at the regional and country levels. United Nations Conference on Trade and Development (UNCTAD) was established in 1964.

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