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India Received 2 Percent Of Global FDI Inflows In 2016, Still Long Way To Go: Report

FDI inflows to India grew significantly over the years and assumed significant proportions by financial year (FY) 17. India has been ranked among the top 10 attractive destinations for inbound investments

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India has received overall 2 per cent of world foreign direct investment inflows. Since last decade from the financial year 2007 to 2017, it grew at a pace of 18 per cent per annum. It is India’s collective effort which let them manage a massive 518.1 billion USD FDI from 2000 to 2017.

As the effect of the Liberalisation era of 1991, to secure and encourage foreign investors to invest in the nation, the Indian government has made various efforts to strengthen the situation of world’s second most populous nation. FDI inflows to India grew significantly over the years and assumed significant proportions by financial year (FY) 17. India has been ranked among the top 10 attractive destinations for inbound investments.

The Policy Measures

In the past few years, the government has taken proactive measures to attract foreign direct investment in India. Consolidated FDI policy was introduced in June 2016 as per which various sectors were opened for FDI investment in India. Taking into consideration the importance of foreign investment in the country, the government undertook major FDI reforms such as opening up multi-brand retail up to 51 per cent FDI, hiking FDI in single brand to 100 per cent from the then 51 per cent, allowing foreign airlines to pick up 49 per cent stake in domestic airlines, bringing clarity to FDI in power trading exchanges etc. Find a list of government approval route:               

The Global Situation

Looking at the percentage share of major countries in the net FDI inflows in the total net FDI inflows of World in 2016. These countries account for more than 60 per cent of the total net FDI inflows of the World in 2016. United States receives the highest net FDI inflows in the world followed by the United Kingdom and China. The shares of inflows of these countries have increased from 2006 to 2016. Hong Kong had the share of 5 per cent in 2016 while Brazil witnessed inflows of 4 per cent of the World’s net FDI inflows. India received 1 per cent of the total net FDI inflows of the world in 2006. In 2016, however, the share increased to 2 per cent in the total net FDI inflows, indicating investor’s increased preference for India as an investment destination. However, the share is very low compared with the other peers.

India’s Prospect

World Bank’s ease of doing business ranking of India among chosen 189 counties by the World Bank since 2008 has shown the lack of interest in India among investor nations. India slipped to 139th rank which is seven positions in 2010 that indicated doing business was not as attractive as other countries. Immediately in the next year, the ranking again improved and till 2016 the rank of India remained between 130 and 134. In 2017, however, due to various reform measures undertaken by the government such as insolvency and bankruptcy code, GST and Non- Performing Asset (NPA) resolution of banking sector along with recapitalization of banks, India’s rank improved by 30 positions from 130th to 100th for the first time. It may be a better overall performance in the allied agriculture sector that may contribute to improve the situations in the coming year. It is an expectation, the concentration of most of the investors are still very much limited to service sector followed by IT –computer hardware and software, telecommunication and trading.

 



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