India’s FDI doubles and China sees slump

India needs $1 trillion to boost sectors like highways, airports and infrastructure

GN Bureau | March 18, 2015


#fdi   #foreign direct investments   #india   #china   #airports   #infrastructure  

As India eases FDI (foreign direct investment) norms the FDI has more than doubled to $4.48 billion in January, the highest inflow in last 29 months. Compare this to China and India seems to have done reasonably well. February FDI rose just 0.9 percent from a year earlier, in China.

India is estimated to require around $1 trillion over five years to overhaul its infrastructure sector, including ports, airports and highways to boost growth.

Government is taking steps and has relaxed FDI norms in sectors including insurance, railways and medical devices.

In January 2014, India had received $2.18 billion in FDI. It was in September 2012 that India had attracted FDI that was worth $4.67 billion.

During the April-January period of the current fiscal, the foreign inflows have grown by 36 per cent, year-on-year, to USD 25.52 billion, according to data from Department of Industrial Policy and Promotion (DIPP).

Amongst the top 10 sectors, telecom received the maximum FDI of $2.83 billion in the 10-month period, followed by services ($2.64 billion), automobiles ($2.04 billion), computer software and hardware ($1.30 billion) and pharmaceuticals ($1.25 billion).

During the period (April-January), India received the maximum FDI from Mauritius at $7.66 billion, followed by Singapore ($5.26 billion), the Netherlands ($3.13 billion), Japan ($1.61 billion) and the US ($1.58 billion).

Healthy inflow of foreign investments into the country helped India’s balance of payments (BoP) situation and stabilised the value of rupee.

Meanwhile, FDI in China grew at its weakest pace in six months in February, but analysts caution that seasonality may explain the swings even as a weakening economy continues to dent investor confidence.

February FDI rose just 0.9 percent from a year earlier, slowing sharply from a 29.4 percent jump in January, adding to mostly weak February data, which has raised expectations of further policy steps from Beijing to spur growth.

February FDI of $8.6 billion was down 38 percent from $13.9 billion in January.

Analysts, however, caution not to read too much into the weak February FDI numbers as seasonality could cause swings. China's Lunar New Year holiday, which causes strong seasonal distortions, began on Jan. 31 last year but started on Feb. 19 this year.

Investment from the United States fell 31.8 percent from a year earlier, while that from Japan slumped 15.9 percent.

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