Emerging on top of the foreign direct investment (FDI) league , India has overtaken China and the United States , the Financial Times (FT) data service reported. A ranking of the top destinations for greenfield investment (measured by estimated capital expenditure) in the first half of 2015 shows India at number one, having attracted roughly $3 billion more han China and $4 billion more than the United States. The report also said te country is in the pole position to pass both China and United States in FDI flows this year as it has outperformed others in economic growth, bucking the apparent slowdown in emerging markets. The Modi government which has taken several steps to attract FDI since assuming power in 2014.
WHAT IS FDI?
It refers to an investment made by a foreign individual or company in the productive capacity of another country. It can be considered as the movement of capital across national frontiers in a manner that allows the investor to have control over the investment. Firms that provide FDI are referred to as MNCs.
WHY IS FDI NEEDED?
FDI pays a major role in developing countries like India. They act as a long term source of capital as well as advanced and developed technologies. The investors also bring along best global practices of management. As a large amount of capital comes in through these investments, more and moe industries are set up. This helps in increasing employment. FDI also promotes international trade.
MAJOR SECTORS THAT ATTRACT FDI
Some of the sectors that attract high FDI inflows in India are the hotel and tourism industry, insurance sector, telecommunication, real estate , retail, power , drugs, financial services, infrastructure, pollution control etc.
WHAT IS A GREENFIELD PROJECT?
A type of venture where finances are employed to create a new physical facility for a business in a location where no existing facilities are currently present.
GOVERNMENT MEASURES PAY OFF
● According to experts, several ‘Make in India’ and ‘Digital India’ like initiatives which were launched to lure investors have paid off. The government is trying to ensure that the country moves up the ranking on the World Bank’s Ease of Doing Business parameter. The clean up act has been started by the other states.
● Investors have started taking interest in the India growth story and the recent visit of Modi to the Silicon Valley triggered enormous interest from software and technology czars.
● Growth is expected to be one of the fastest in the world and several multilateral agencies have said that India remains the bright spot among emerging economies.
ECONOMY ON THE RIGHT TRACK
●India is tracked well ahead of where it was placed at this time last year: it has more than doubled its mid year investment levels, attracting $30 billion by the end of June 2015 compared with $12 billion in the first half of the last year.
● India’s achievement this year is particularly significant, considering that 97 of the 154 countries that are counted as emerging markets are seeing a decline in capital spend year on year in the greenfield projects.
● Significantly , in 2014, India ranked fifth after China in terms of capital investment, the United States and United Kingdom and Mexico.
● Experts say India is expected to benefit from the slowdown in China and the overall sluggishness in the global commodity prices including crude oil is expected to provide a cushion to the growth fortunes of India.
ANGELA MERKEL IN INDIA
German chancellor Angela Markel, who came on an official visit to India and held bilateral talks with PM Narendra Modi in New Delhi. The discussions between the two leade covered a lot of issues including security and defence, with special focus on boosting trade ties. The talks between the two leaders aimed at deepening bilateral engagement in education, renewable energy, science and technology, skill development,, railways, waste management,water and , urban development and agriculture.
German’s investments in India stand at 9.7 billion euros with about 1600 companies in the country. Modi officially visited Germany last April when he sought to attract more industries to set up shop in Asia’s third largest economy for ‘Make in India’ campaign and boost the manufacturing sector. This agreement that India and Germany signed to fast track business approvals, an agreement to make it easier for German companies to operate in Asia’s third largest economy. This agreement is the first of its kind and comes as Prime Minister Narendra Modi seeks to attract FDI in support of his make in India drive to boost industrial investment and create skilled jobs.