Jul. 9 – According to the 2012 World Investment Report released by the United Nation’s Conference on Trade and Development (UNCTAD), of 179 major global companies surveyed, India is considered to be the third most-preferred investment destination after China and the United States.
Foreign direct investment flows into India, after slowing down for two years in a row, grew by approximately 30 percent in 2011 to nearly US$32 billion. Furthermore, FDI flows could increase by more than 20 percent both this year and the next.
“The FDI inflows into India can go up by 20 percent-25 percent this year and by about 20 percent next year, if the present trend continues,” according to Nagesh Kumar, the chief economist at the United Nations Economic and Social Commission for Asia and the Pacific.
Kumar further emphasized that FDI growth during 2012 has continued to rise, referring to the recent announcements by large cooperation’s such as IKEA and Coca Cola to inject nearly a combined US$5 billion into the country. India has also emerged as one of the countries with a significantly high outflow of investment, with at least eight large Indian companies making large international investments that reached approximately US$15 billion.
There is thus an optimistic outlook for Indian FDI flows. However, it is important to note that India’s economic growth slowed to 5.3 percent during the March quarter, with there still being concerns over India’s sliding rupee. While India’s FDI inflows have increased significantly to nearly US$32 billion, it still does not rank very high in absolute terms compared to other nations. For example, China drew in US$124 billion last year, Brazil nearly US$67 billion and Russia US$53 billion.
Nonetheless, the investment projections for India are very positive. Nagesh Kumar stated that “compared to many other places, India is doing better in terms of growth,” and highlighted that investors were focusing on the long-term prospects in India, and simply waiting for the Eurozone situation to stabilize before investing their hefty cash reserves.
Dezan Shira & Associates is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in emerging Asia. Since its establishment in 1992, the firm has grown into one of Asia’s most versatile full-service consultancies with operational offices across China, Hong Kong, India, Singapore and Vietnam as well as liaison offices in Italy and the United States.
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