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FDI

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Foreign Direct Investment

July, 2012

Introduction

India is fast gaining importance world-wide as the country has become an investment hub over the last decade. Global investors have retained their faith in the resilient Indian economy even during the toughest of the times. As a result, India enjoyed high foreign inflows and investments when rest of the world was struggling to even survive.

India is projected to scale higher growth in the years to come. According to Mr Brad Wall, Premier of Saskatchewan, Canada, 'India is one of world's fastest growing significant economies'.

According to a UN report, India is the third most favoured destination for investment after China and the US for major global companies. The report further expects that foreign investments in India could increase by more than 20 per cent in 2012-13.

Key Statistics

  • According to the latest data released by the Department of Industrial Policy and Promotion (DIPP), India received foreign direct investment (FDI) worth US$ 1.33 billion in May 2012 while cumulative inflows for April-May 2012-13 stood at US$ 3.18 billion.

    The sectors which attracted huge FDI inflows during the 2-month period of 2012-13 are: services (US$ 754 million), pharmaceuticals (US$ 401 million), metallurgical industries (US$ 314 million), construction (US$ 181 million), housing and real estate (US$ 132 million) and power (US$ 100 million).

    Mauritius infused highest inflows worth US$ 1.13 billion, followed by Netherlands (US$ 409 million), the UK (US$ 378 million), Singapore (US$ 231 million), Japan (US$ 132 million) and Cyprus (US$ 177 million).
  • According to the Reserve Bank of India (RBI)'s weekly statistical supplement, India's foreign exchange reserves or forex reserves stood at US$ 287.62 billion for the week ended July 6, 2012. Foreign currency assets (FCAs), the biggest component of the forex reserves, aggregated to US$ 254.63 billion and the value of gold reserves stood at US$ 25.76 billion for the week. The value of special drawing rights (SDRs) was calculated at US$ 4.35 billion, and India's reserves with the International Monetary Fund (IMF) came out to be US$ 2.87 billion.
  • According to a study by Venture Intelligence, a firm that keeps a record of private equity (PE) investments and mergers and acquisitions (M&A) activities in India, PE companies invested around US$ 1,848 million across 102 deals during April-June 2012 quarter. Among the sectors, IT & ITeS attracted highest PE investments worth US$ 379 million.
  • Another report by Grant Thornton India has revealed that the total value of M&A transactions in the first half of 2012 stood at US$ 24.6 billion wherein internal mergers and restructuring accounted for deals worth US$ 15 billion. Key M&A deals during January-June 2012 include the HSBC-RBS deal, Piramal's Group acquisition of Decision Resources Group, US and Mitsui Sumitomo Insurance's investment into Max New York Life Insurance.