India is Still the Second Most Preferred Destination for FDI

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Sept. 25 – India has and will retain its position as the second most-preferred global destination for foreign investment until 2010, lagging only behind China, the United Nations Conference on Trade and Development (Unctad) announced in the World Investment Report 2008, released in New York.

Within Asia, India received the fourth largest amount of FDI inflows in 2007 (after China, Hong Kong and Singapore), which stood at US$22.95 billion, translating into a growth of 17 percent over US$ 19.66 billion in 2006. “Significantly, India is bridging the gap with Singapore as a destination for FDI inflows,” Unctad’s policy expert Premila Nazareth Satyanand, who released the report in India, told Business Standard.

“Going by my personal interactions with industry, it could be said that the Indian government’s FDI target of $35 billion for 2008-09 can be achieved. However, we may not see any big inflows into the country. Inflows may be low for sectors like infrastructure, but other sectors are likely to see enough growth,” Satyanand added.

The growth has been attributed to further opening up of telecommunications, single-brand retail, as well as increasing cross-border merger and acquisitions. More than a quarter of 300 international retailers told Unctad that they have either opened their first store in India during 2007 or are planning to do so in the near future.

India was also recognised as the fourth-largest source of FDI in Asia, as Indian companies invested US$13.64 billion abroad in 2007, as against US$ 12.84 billion in the previous year, an increase of 6.23 percent.