UNCTAD Current Affairs

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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India ranks 10th in FDI inflows: UNCTAD report

As per the recently released 2016 World Investment Report, India ranks 10th in FDI (Foreign Direct Investment) inflows.

As per the report, India’s FDI inflows have increased to 44 billion dollars in 2015 as compared to 35 billion dollars in 2014.

Key highlights of the report

  • Top 10 Countries are: United States, Hong Kong, China, Ireland, Netherlands, Switzerland, Singapore, Brazil, Canada and India.
  • United States with 380 billion dollars FDI inflows has topped the list.
  • China with FDI inflows at 136 billion dollars (more than three times India’s FDI) in 2015 was ranked third.
  • Globally, the FDI activity has increased by 38%,signalling revival in investment sentiments is on the cards.
  • In terms of FDI outflows, there has been a decline in most developing and transition regions. However, in this case China is one of the exceptions.
  • Striking the right balance between regulation and liberalization to promote investment for sustainable development is also highlighted.
  • Liberalization measures have been applied by eliminating or relaxing entry requirements in financial services, aviation, mining and real estate.
  • Restrictions, on the other hand, have been imposed on the national security and related reasons.

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