India seems to be on course with economic reforms under the leadership of prime minister Narendra Modi, achieving a significant landmark as it moved ahead of the US and China in the foreign direct investment (FDI) sweepstakes.
From January to June 2015, India attracted $31 billion in investments for new projects, versus China’s $28 billion and the US’s $27 billion. The UK, Mexico and Indonesia came in lower in the pecking order.
The London-based Financial Times’s online database, fDi Markets, says capital investments in India by global companies more than doubled in the first half of 2015, from $12 billion reported in the same period last year. For the current fiscal year ending in March, the firm sees India surpassing the 47% FDI growth it posted last year.
Investments seemed to favor such sectors as services, technology, real estate and telecommunications, and investment came from companies in Mauritius, Singapore, UK and Japan. Finance minister Arun Jaitley said last week, “It’s more than satisfying as the economic policies pursued by the NDA government in the last one and a half years is paying off handsomely.” NDA is the center-right coalition National Democratic Alliance.
It should be noted that the Reserve Bank of India (RBI), the country’s central bank, put the country’s total FDI inflows at a more modest $20.5 billion (and net inflows at $18.3 billion) in the first six months of this year.
An early-October report by DBS Banks Research said, “[The] disconnect between the FT group figure and [central bank] official data appears to lie in the former’s reference to greenfield investments [measured by estimated capital expenses] rather than realized flows.”
Attracting FDI is clearly a top priority for the Indian government. The country’s business competitiveness has moved up 16 places to rank at 55th place among 144 countries, according a report commissioned from the World Economic Forum.
India’s topping the FDI chart recalls the heady days when its economy was projected to grow at 7.4% and 8% respecitvely for fiscal 2015 and 2016.
For now, India seems to be enjoying its exalted status as the world’s top FDI destination.