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FDI

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Foreign Direct Investment (FDI) in India

January, 2013

Introduction

Foreign inflows are considered to be an important fuel for any country’s economic engine. India has taken several initiatives in terms of Government policies, liberal reforms and investor-friendly business environment, to attract foreign direct investment (FDI) into the country. In its recent policy initiatives, the Government has allowed FDI in multi-brand retail, power exchanges and boosted FDI cap in single brand retail and broadcasting.

Foreign investors are looking for viable options across the industries in India. A study titled Indian Retail Market-Opening More Doors, by Deloitte Touche Tohmatsu India, has stated that mass grocery and apparel are the two most favoured segments for FDI in multi-brand retail.

Key Statistics

  • India received FDI worth US$ 1.94 billion in October 2012 while cumulative inflows for April-October 2012-13 stood at US$ 14.78 billion, according to latest data released by the Department of Industrial Policy and Promotion (DIPP).
    The sectors which have received high level of FDI during the first seven months of 2012-13 include services (US$ 3.6 billion), hotel and tourism (US$ 3.11 billion), metallurgy (US$ 1.21 billion), construction (US$ 691 million) and automobile (US$ 743 million).
    Country wise, high levels of FDI came during the period from Mauritius (US$ 6.75 billion), Japan (US$ 1.52 billion), Singapore (US$ 1.24 billion), the Netherlands (US$ 1.05 billion) and the UK (US$ 611 million), showed the DIPP data.
  • Another statement issued by the Reserve Bank of India (RBI) revealed that foreign exchange reserves stood at US$ 294.99 billion for the week ended January 4, 2013 wherein the value of gold reserves was recorded at US$ 27.21 billion and that of foreign currency assets (FCAs) was at US$ 261.06 billion.
    The value of special drawing rights (SDRs) was US$ 4.40 billion and the country’s reserve position with the IMF was at US$ 2.30 billion.
  • Private Equity (PE) companies invested around US$ 8.85 billion in 2012, according to consultancy firm PwC. Information technology (IT) and healthcare seemed to have witness the highest number of deals on the PE canvas wherein there were 162 deals worth US$ 3.25 billion in IT and healthcare witnessed 48 deals worth US$ 1.23 billion.
  • Similarly, the pace intensified on the merger and acquisition (M&A) front. There were as many as 268 deals (involving Indian entities) that amounted to about US$ 36.3 billion in 2012; up 22.6 per cent over the 2011 tally, reported the global deal tracking firm Mergermarket.