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FDI into India rose 18% to $46.4 bn in 2016: DIPP

18 February 2017

Foreign direct investment (FDI) inflows into India in 2016 calendar year jumped 18 per cent to a record $46.4 billion as foreign funds looking for lucrative investment opportunities flocked to this country.

Data released by the Department of Industrial Policy and Promotion (DIPP) showed FDI inflows in 2016 were strongest in October with $6.2 billion inflows followed by $5.1 billion in September.

Overall global investment flows fell 13 per cent in 2016 to an estimated $1.52 trillion as economic growth remained weak and world trade volumes posted anaemic gains, according to the latest UNCTAD Global Investment Trends Monitor.

''FDI recovery continues along a bumpy road. Particularly of concern is the sharp drop-off in manufacturing investment projects, which play such an important role in generating badly needed productivity improvements in developing economies,'' UNCTAD secretary-general Mukhisa Kituyi said in a statement on 1 February.

UNCTAD said India also emerged the tenth most attractive investment destination for foreign capital in 2016.

In comparison, China and Brazil received $139 billion and $50 billion FDI inflows respectively during 2016.

The US remained the top source of FDI inflows in 2016 at $385 billion.

''Looking ahead, economic fundamentals point to a potential increase in FDI flows by around 10 per cent in 2017,'' Dr. Kituyi said. ''However, significant uncertainties about the shape of future economic policy developments could hamper FDI in the short-term.''

Mauritius remained India's top source of FDI inflows at $12.8 billion followed by Singapore at $7.1 billion during April-December period. Services sector continued to attract highest investment of $7.5 billion followed by telecommunications sector which attracted $5.5 billion inflows during the first nine months of the financial year 2016-17.

''Over 90 per cent of FDI is coming in through the automatic route, which has expanded in its scope over the last two years.'' According to data released by DIPP on Friday, Mauritius, Singapore, Japan, the UK and US were the top five contributors to FDI inflows.

The surge comes even as the government expects growth to slip to 6.5-6.75 per cent in the current fiscal year from 7.9 per cent in FY16 due to global factors and demonetisation.

In the union budget presented in parliament on 1 February, finance minister Arun Jaitley had announced the government's decision to abolish Foreign Investment Promotion Board (FIPB) and promised more reforms to make it easier for overseas investors.

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