FDI Current Affairs
According to Reserve Bank of India (RBI) data, Mauritius was top source of foreign direct investment (FDI) into India in 2017-18 followed by Singapore. The total FDI in FY 18 stood at $37.36 billion in financial year which was marginal rise over $36.31 billion recorded in the previous fiscal 2016-17.
FDI from Mauritius was $13.41 billion in 2017-18 as against $13.38 billion in previous year. FDI inflows from Singapore rose to $9.27 billion from $6.52 billion. FDI from Netherlands has declined marginally to $2.67 billion as against $3.23 billion.
FDI into manufacturing sector had witnessed substantial decline to $7.06 billion, as against $11.97 billion a year earlier. FDI into communication services had rose to $8.8 billion in 2017-18 from $5.8 billion. The inflows into retail and wholesale trade increased to $4.47 billion as against $2.77 billion.
FDI in financial services too saw rise to $4.07 billion from $3.73 billion in the previous year. These sectors accounted for more than 50% of total FDI of $37.36 billion in 2017-18 reflects global interest in new areas, including online marketplaces and financial technologies.
India has fallen out of top 10 destinations for Foreign Direct Investments (FDI) in terms of its attractiveness according to 2018 Kearney FDI Confidence Index, in which it was ranked 11th, down from 8th in 2017 and 9th in 2016. The index was released by report published by global consultancy firm A T Kearney.
Key Highlights of Report
Fall in India’s rankings may be due to teething troubles in implementation of goods and services tax (GST) and Government’s demonetisation decision in 2016. These policies may have deterred investors in the short term as they have disrupted business activity and weighed on economic growth
Several of India’s reforms such as removing Foreign Investment Promotion Board (FIPB) and liberalising FDI limits in key sectors such as retail, aviation, and biomedical industries have maintained India’s high rankings in terms of FDI attractiveness.
In future, potential investors are likely to be cautious as they are monitoring political risks such as China abolishing presidential term limits and upcoming general election in India. But sheer size of Chinese and Indian markets, will continue to be draw for investors and they will remain highest-ranking emerging markets on the index.
FDI Confidence Index
The index is annual analysis of how political, economic, and regulatory changes will likely affect FDI inflows into countries in coming years. It is constructed using primary data from proprietary survey administered to senior executives of world’s leading corporations. Companies participating in survey have annual revenues of $500 million or more.