Fdi Survey by Unctad. India Forum

7/31/2019 Fdi Survey by Unctad. India Forum

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FDI INFLOWS INTO INDIA:

Chart : FDI Inflows for the financial year 2010-11

Source: www.dipp.gov.in.

Percentage Growth over last year (+) 04 %. Amount of FDI Inflows during 2010-11(from April 2010 to January

2011)

Rs. 109925 crore

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

Amount of FDI Inflows(Rs.Crore) 2010-11

Amount of FDI Inflows(Rs.Crore)

2009-10


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Chart : FDI Inflows for the year 2011

Source: www.dipp.gov.in.

Percentage Growth over last year (+) 02 %. Amount of FDI Inflows during 2011 (from January 2011 to December

2011) Rs. 131237 crore.

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

Jan-11

Feb-11

Mar-11

Apr-11

May-11

Jun-11

Jul-11

Aug-11

Sep-11

Oct-11

Nov-11

Dec-11

Amount of FDI Inflows (Rs. Crore) 2011

Amount of FDI Inflows (Rs.

Crore) 2009


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Chart : From April 2003 to January 2012

0

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10000

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25000

30000

35000

FDI Inflows(Amount US $ Million)

FDI Inflows(Amount US $ Million)


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Chart : YOY Growth from April 2004 to 2012

2004-

05

2005-

06

2006-

07

2007-

08

2008-

09

2009-

10

2010-

11

2011-

12

YOY Growth In FDI Inflows 52% 18% 14% 40% 48% 146% 53% 42%

0%

20%

40%

60%

80%

100%

120%

140%

160%

Ax

isTitle

YOY Growth In FDI Inflows


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Interpretation:If we analyze the FDI investment pattern in 2012, they invested heavily into

the Indian equities in the first four months (till April). But as soon as it

became clear that the reform oriented NDA government has been voted

out, they beat a hasty retreat in May 2004. To the current government's

credit, they managed to infuse confidence in India as an investment

destination by continuing on the path to reform.

02,0004,0006,0008,000

10,00012,00014,00016,00018,00020,000

1,8471,5053.5 377

10,918

8,686 9,926

19,280

16,582

14,611

Investment by FII's (US $ million)


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Chart : Share of top Investing countries FDI equity inflows

% age to total inflows (April11 to Jan. 12) (in terms of rupees)

Note: Total FDI Inflows Rs 503,051 crores

Interpretation:

As from the chart it can be seen that among countries, Mauritius has been

the largest direct investor in India. Firms based in Mauritius invested over

53% out of total FDI inflows of Rs. 503,051. Mauritius has low rates of

taxation and an agreement with India on double tax avoidance regime.

To take advantage of that situation, many companies have set up dummy

companies in Mauritius before investing to India. Also, a major part of the

investments from Mauritius to India are actually round-tripping by Indian

MAURITIUS

SINGAPORE

U.S.A.

U.K.

NETHERLANDS

CYPRUS

JAPAN

GERMANY

U.A.E.

FRANCE


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firms, not unlike that between Mainland China and Hong Kong. India

continues to attract investors in the high value added services industry

sectors, particularly financial services & information technology.

Multinationals seek economies of scale & productivity gains in their IT &

business process outsourcing (BPO) functions in established cities such as

Bangalore, Mumbai & Delhi. They are also diversifying to lower-cost cities

such as Pune & Kolkata amid attrition & wage inflation pressures in the

first-tier cities. In addition, companies are locating more sophisticated

functions such as equity research & high-end analytics in India, tapping into

its vast pool of educated & increasingly experienced talent.

The United States (US) is the third largest investor in India. The total capital

flows from the US was around 10% of the FDI inflows between April 00 to

Jan.10. Most of the US investments were directed to the fuels, telecom,

electrical equipment, food processing, and services sectors. The United

Kingdom (UK) and the Netherlands are Indias fourth & fifth largest FDI

inflows. The investments from these countries to India are primarily

concentrated in the power/energy, telecom, and transportation sectors.

Japan was the seventh largest source of cumulative FDI inflows in Indiabetween April00 to Jan.10, but inflows from Japan to India have decreased

during this time period. It is hard to explain the recent decline of Japanese

FDI to India and it might as well be a temporary anomaly. India, however,

continues to be one of the biggest recipients of Japanese Official

Development Assistance (ODA). Most of the assistance was in building

infrastructure, including electricity generation, transportation, and water

supply. It is plausible that Japanese government assistance has crowded out

some private sector investment from Japan.


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TOP 10 SECTORS ATTRACTING FDI

Interpretation

Services sector have attracted the highest FDI of around US $ 23,125.14

million in recent years. This is mainly because of the high rate of return and

liberal policies. Telecom sector stands at the third position in attracting FDI

with a total of US $ 8,838.07 millions. This can be basically credited to the

hike in the FDI cap and also recent changes in various policies.

0.00

5,000.00

10,000.00

15,000.00

20,000.00

25,000.00

FDI Inflow( US $ million)

FDI Inflow( US $ million)


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Chart: Percentage of the Cumulative Inflows

(April 11 Jan. 12)

Interpretation:

As it is evident from the chart, service sector contributes around 21.52% of

total FDI inflows to India, which makes it the top sector attracting FDI.

Computer software & hardware has a share of 8.92% in total FDI inflow

with Telecom getting around 8.41% of foreign investments. In

Telecommunications & Utilities sector India surpasses China for being the

preferred destination of investment.

0.00

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20.00

25.00

AxisTitle

%age to Total FDI Inflows

%age to Total FDI Inflows


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Chart : FDI INFLOW IN TELECOM US $

Interpretation:

The increase in foreign direct investment limit to 74% up from the

previous cap of 49% in the sector coupled with the simplification of the

long distance license condition resulted in the significant increase in

foreign investments wherein the share of telecom in Indias FDI rose from

3-4% to 8.41% in the year 2010. In the field of telecommunications various

investment opportunities can be in terms of setting up of manufacturing

facilities, supply of handsets &equipments, telecom & value added service.

0

500

1000

1500

2000

2500

3000

3500FDI Inflow In Telecom(US $ in million)

FDI Inflow In Telecom(US $ in

million)


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Chart : FDI Inflows from April 2003 to May 2012 Telecom

sector

Total FDI Inflow from April 2003 to May 2012 is US

$ 7,369 million

Interpretation

The increased FDI in telecom sector is the result of the recent changes inthe policies that is investor friendly, credible and has predictable

regulations that would facilitate greater foreign capital inflows and send a

positive signal in the present economic scenario. It is also due to the

modifications in the guidelines for calculation of foreign investment and the

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FDI ( US $ in millions)

FDI ( US $ in millions)


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transfer of ownership or control of Indian companies to non-resident

entities.

The fiscal ended March 31, 2012 has been the high revenue growth

period for the telecom sector. The telecom services industry registered a

growth of 20.7 percent clocking revenues of Rs.1,57,542 crore in 2011-12

compared to Rs.1,30,561 crore in the previous year.

During the year 2009-10, government had raised the FDI limit in

telecom sector from 49 percent to 74 percent, which has contributed to

the robust growth of FDI in the sector.

The telecom sector registered a growth of 103 percent during fiscal

2010-11 as compared to previous fiscal according to the latest Annual

FDI Report by ASSOCH AM. The greater chunk of foreign investments has

flown into states that are doing well industrially and commercially and

which have an investor-friendly business environment.

Listed telecom operators like Bharti Airtel, Reliance Communication, Idea

Cellular and Tata Communication which have emerged as favorites among

foreign institutional investors on Dalal Street.

In a similar move last year, Japanese mobile operator NTT Docomo

acquired a 26 percent stake in Tata Teleservices (TTL). Other strides in

the sector during the year included policy initiatives pertaining to the

allocation of spectrum for the 3G and broadband wireless access (BWA)

services and mobile number portability. This has led several players to

take advantage and get ahead of their pack


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Chart : Sector wise FDI inflows:

From April 2000 to June 2009

Total FDI Inflows in US $ Millions =7050.88

Fdi Survey by Unctad. India Forum

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