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Foreign Direct Investment

May, 2011

India has been ranked at the second place in global foreign direct investments in 2010 and will continue to remain among the top five attractive destinations for international investors during 2010-12 , according to United Nations Conference on Trade and Development (UNCTAD) in a report on world investment prospects titled, 'World Investment Prospects Survey 2009-2012'.

The 2010 survey of the Japan Bank for International Cooperation released in December 2010, conducted among Japanese investors, continues to rank India as the second most promising country for overseas business operations.

A report released in February 2010 by Leeds University Business School, commissioned by UK Trade & Investment (UKTI), ranks India among the top three countries where British companies can do better business during 2012-14.

India is ranked as the 4th most attractive foreign direct investment (FDI) destination in 2010, according to Ernst and Young's 2010 European Attractiveness Survey. However, it is ranked the 2nd most attractive destination following China in the next three years.

Moreover, according to the Asian Investment Intentions survey released by the Asia Pacific Foundation in Canada, more and more Canadian firms are now focusing on India as an investment destination. From 8 per cent in 2005, the percentage of Canadian companies showing interest in India has gone up to 13.4 per cent in 2010.

India attracted FDI equity inflows of US$ 1,274 million in February 2011. The cumulative amount of FDI equity inflows from April 2000 to February 2011 stood at US$ 128.642 billion, according to the data released by the Department of Industrial Policy and Promotion (DIPP).

The services sector comprising financial and non-financial services attracted 21 per cent of the total FDI equity inflow into India, with FDI worth US$ 3,274 million during April-February 2010-11, while telecommunications including radio paging, cellular mobile and basic telephone services attracted second largest amount of FDI worth US$ 1,410 million during the same period. Housing and Real Estate industry was the third highest sector attracting FDI worth US$ 1,109 million followed by power sector which garnered US$ 1,237 million during April-December 2010-11. The Automobile sector received FDI worth US$ 1,320 million.

During April-February 2010-11, Mauritius has led investors into India with US$ 6,637 million worth of FDI comprising 42 per cent of the total FDI equity inflows into the country. The FDI equity inflows from Mauritius is followed by Singapore at US$ 1,641 million and the US with US$ 1,120 million, according to data released by DIPP.

Investment Scenario

The Government has approved 14 FDI proposals amounting to US$ 288.05 million, based on the recommendations of Foreign Investment Promotion Board (FIPB) in its meeting held on March 11, 2011. These include:

  • Kolkata based Dhunseri Investments got approval for FDI worth US$ 159.62 million
  • Mauritius based Ghir Investments got the approval of the Board for induction of foreign equity in an investing company. The company had proposed to get FDI worth US$ 118.36 million.
  • Unihorn India Pvt Ltd got approval for issue and allotment of partly paid up Rights Equity shares to carry out the business of technical and engineering consultants, advisors, planners, engineering for construction of roads, airports and bridges.
  • PCRD Services Pte Limited, Singapore, got approval to increase the foreign equity percentage in an investing company
  • G+J International Magazines GmbH, Germany, got clearance for induction of foreign equity to carry out the business of publication and sale of speciality and life style magazines in India.
  • Kyuden International Corporation, Japan got approval for setting up a joint venture (JV) company that will make downstream investments in the business of developing and establishing renewable power projects.

The total merger and acquisitions (M&A) and private equity (PE) (including qualified institutional placement (QIP)) deals in the month of February 2011were valued at US$ 8.27 billion (76 Deals) as compared to US$ 1.95 billion (84 Deals) in the corresponding month of 2010, according to the monthly deals data released by Grant Thornton India.