India among top 10 countries to attract highest FDI in 2014: Unctad

New Delhi: India regained its position in the list of top 10 destinations for foreign direct investments (FDI) in 2014, after failing to make it to the list a year ago, according to the World Investment Report 2015 released by the United Nations Conference on Trade and Development (Unctad).

India is ranked ninth in the latest report; it was 15th last year.

During 2014, FDI inflows into India jumped 22% to $34 billion at a time when global FDI fell by 16% to $1.23 trillion. Unctad projected global FDI flows to rise 11% to $1.4 trillion in 2015.

India’s rank as a top prospective host country for FDI also rose to third place from fourth place in an Unctad survey for the period 2015-17.
However, India fell to the seventh rank from sixth last year in the survey as a source country for FDI for 2014-2016 period.

FDI inflows to India are likely to maintain an upward trend in 2015 as economic recovery gains ground, the report said. “In terms of the sectoral composition of FDI inflows, manufacturing is likely to gain strength, as policy efforts to revitalize the industrial sector are sustained including, for example, the Make In India initiative launched in mid-2014,” it added.

Premila Nazareth Satyanand, an economist and consultant with Unctad, said this year’s report shows positive trends about India, which is expected to be sustained. “There seems to be slight improvement in foreign investor sentiment about India. India is also now back in the top 10 investor destinations. However, India remains the only BRIC country not to have received more than $50 billion FDI inflows within a year,” she added.

The report identified the automotive industry as one of the sectors in which India has the potential of becoming a world leader. Cumulative FDI inflows to the automotive industry from April 2000 to November 2014 amounted to $11.4 billion, according to data from the Indian government.

The country accounted for the majority of so-called greenfield investment projects announced by global auto makers and first-tier parts suppliers in South Asia during 2013-14, including 12 projects above $100 million.

Inward FDI has led to the emergence of a number of industrial clusters in India, including those in the national capital region (Delhi-Gurgaon-Faridabad) in the north, Maharashtra state (Mumbai-Nasik-Aurangabad) in the west, and Tamil Nadu (Chennai-Hosur) in the south, according to the report. “Though considerable differences exist in the patterns of the formation of these clusters, FDI can play an important catalytic role. For example, the early entry of Suzuki (Japan) has contributed to the development of an industrial cluster in the NCR,” it added.

The report revealed that China became the largest recipient of FDI in 2014, followed by Hong Kong and the US. Developing economies, as a group, attracted $681 billion worth of FDI and remain the leading region by share of global investment inflows.

In 2014, nine of the 20 largest investor countries were developing or transition economies with firms from developing Asia now investing abroad more than any other region. Developing economies accounted for a record 35% of global FDI outflows, the report said, up from 13% in 2007.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.