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8
June 2017
Foreign
Direct Investments (FDI) in India remained almost flat in 2016, but the nation
is expected to emerge as one of the top FDI destinations, according to the UN
Conference on Trade and Development (UNCTAD). The Total Investment & Insurance Solutions
The
World Investment Report released by the UN agency in Geneva on Wednesday said
that FDI rose by a paltry one per cent in 2016 to $44.486 billion from the
$44.064 billion in 2015.
At the
same time FDI by India elsewhere declined by about third from $7.572 billion in
2015 to $5.12 billion in 2016, the report said. The Total Investment & Insurance Solutions
The
signing of a tax treaty by the Indian and Mauritian governments in 2016 may be
the reason for the fall in FDI outflows from India as it "might have
contributed to reduced round-tripping FDI," it added.
Looking
at the future, UNCTAD said that India would be the third top prospective
destinations for FDI, after the US and China.
It said
that in India "renewed policy efforts to attract FDI could contribute to
an increase of inflows in 2017". The
Total Investment & Insurance Solutions
Twenty
per cent of top executives of multinational enterprises (MNE) surveyed listed
India as their top prospective host economy for 2017-19, it added.
UNCTAD,
however added a note of caution: "Although new liberalization efforts
continue to improve the investment climate in India, tax-related concerns
remain a deterrent for some foreign investors."
The
report did not give a specific figure for the brighter picture projected for
India, but said that globally FDI was expected to rise moderately from $1.75
trillion in 2016 to 1.8 trillion in 2017 and $1.85 million in 2018. The Total Investment & Insurance
Solutions
After
the two per cent slide in 2016, "the new, more optimistic projections for
2017 are attributed to higher economic growth expectations across major
regions, a resumption of growth in trade and a recovery in corporate
profits," it said. The Total
Investment & Insurance Solutions
However,
according to UNCTAD Secretary-General Mukhisa Kituyi, "Although this
report projects a modest increase for 2017, other factors such as the elevation
of geopolitical risks and policy uncertainty may impact the scale of the
upturn." The Total Investment
& Insurance Solutions
Analysing
FDI into India, the report said: "Foreign MNEs are increasingly relying on
cross-border M&As (mergers and acquisitions) to penetrate the rapidly
growing Indian market."
It
cited the $13 billion acquisition of Essar Oil by Russia's Rosneft and a
consortium led by Singapore-based Trafigura as "the largest deal ever in
the country".
Indian
companies also made a big deal in the energy sector. Vankor India - a joint
venture of Oil India Ltd, Bharat Petroleum Corp and Indian Oil Corp Ltd,
headquartered in Singapore paid $2 billion to acquire 24 per cent of Vankorneft
that is ultimately owned by Russian government's , Rosneftegaz. ONGC Videsh Ltd
(India) paid $1.3 billion to get an additional 15 per cent of Vankorneft.
China
is also an important source of FDIs in India going for "some large-scale
investments in dynamic industries, such as smartphone production", it
said.
OPPO,
which set up a manufacturing facility in Noida in 2014, announced an investment
of $216 million in Andhra Pradesh in 2016, according to the report. The Total Investment & Insurance
Solutions
Huawei
and Xiaomi "have also started to invest massively in India," it
added.
Chinese
investment in other areas are also growing apace, the report said, citing
heavy-equipment manufacturer Sany Group's plans to invest $5 billion in India.The Total Investment & Insurance
Solutions
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