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Business Standard
20 hours ago
- Business
- Business Standard
India reaches 15th spot in top FDI destinations in 2024: UNCTAD report
Foreign Direct Investment (FDI) into India remained at $28 billion in 2024 amid a 11 per cent decline in global flows, a report by the United Nations Conference on Trade and Development (UNCTAD) said on Thursday. According to the report, India climbed up a place to reach the 15th spot while retaining its position in the top five for both kinds of FDI: greenfield projects and international project finance deals. In 2023, FDI inflows into India plummeted 43 per cent in 2023 to $28 billion. China also slipped to fourth spot in 2024 from being the second-largest FDI destination last year with flows dropping to $116 billion from $163 billion. 'Too many economies are being left behind not for the lack of potential but because the system still sends capital where it's easiest, not where it is needed,' said Rebeca Grynspan , UN trade and development secretary-general. According to the Department for Promotion of Industry and Internal Trade (DPIIT) data, FDI equity inflows stood at $50 billion during the 2024-25 (FY25), up 13 per cent year-on-year (Y-o-Y). 'The net FDI flows into India, excluding repatriation, was around $29 billion in FY25, according to RBI data. UNCTAD is using the same methodology used by the RBI, while referring to net FDI inflows to India, but it does on a calendar year basis,' said Biswajit Dhar, distinguished professor, Council for Social Development. UNCTAD reports international investment trends based on FDI statistics– stocks and flows, inward and outward as well as cross-border mergers and acquisitions, greenfield projects, and International project-finance deals. The data on the three types of projects are treated separately. Noting the expansion of operations by major technology firms -- in both developed and emerging markets-- the report highlighted Microsoft's $3 billion investment to enhance its Cloud and AI infrastructure in India. UNCTAD also said that while project numbers increased in most regions, only a few countries saw a significant rise in the value of new project announcements. 'India stood out with projected capital expenditures up by more than a quarter to $110 billion, almost a third of the total in Asia,' the report said. Developed economies received 53 per cent of the total international private equity investment. In comparison, Asia attracted 46 per cent, with India emerging as the main recipient, followed by China. According to the report, India was also the main destination for Sovereign Wealth Funds in terms of value (24 per cent), which contribute 5 per cent of the total investment in data centres across developing economies. India, along with Brazil and Chile, hosts more than 30 per cent of international projects in developing economies, doubling their pre-2018 share, driven by strong renewable energy programmes. The report also highlighted Walt Disney's partial exit from India operations through a $3 billion merger of Star India with Viacom 18 Media, creating a joint venture majority owned by Indian firms. Several pharmaceutical operations in India owned by international investors were also sold to local firms, the report said, stressing the sharp decline in cross border mergers and acquisition activity in developing Asia.
Mint
17-05-2025
- Business
- Mint
India needs to assert itself strongly with the US at the bilateral trade talks: Biswajit Dhar
A top Indian trade policy expert says he has never seen the country buckle down to US demands the way it is doing now. "We must respond strongly. We cannot accept whatever the US is thrusting upon us,' Biswajit Dhar, a well-known trade policy expert from the Delhi-based think tank, Council for Social Development, told this reporter. India's recent decision to invoke its right under World Trade Organization (WTO) norms to impose retaliatory tariffs on certain American goods will be among the key issues discussed during trade talks with the US starting May 17, the PTI said, quoting unnamed officials. Describing the move as a 'pragmatic' one, the official clarified that India has not implemented the retaliatory measures yet but has merely reserved the right to do so in accordance with WTO provisions. "My point is that the WTO is hardly the organization it once was. The more important negotiations are going to be at the bilateral trade talks between the two sides scheduled for May 17,' Dhar, a former Professor at the Centre for Economic Studies and Planning, JNU and Director General of Research and Information System for Developing Countries, a think-tank under the Ministry of External Affairs, said. "I don't see why India is under pressure. It is our market we are dealing with,'' he asserted. Raising New Delhi's hackles, President Donald Trump said on Thursday that India has offered to eliminate tariffs on the United States as part of a potential trade deal. 'India is the highest — one of the highest tariff nations in the world. It's very hard to sell into India, and they've offered us a deal where, basically, they're willing to literally charge us no tariff,' Trump said during a roundtable with business leaders in Doha, Qatar. India reacted swiftly, saying the talks were not complete. Foreign minister S. Jaishankar said talks were ongoing, calling negotiations between New Delhi and Washington 'complicated' and 'intricate.' 'These are very complicated negotiations. They are very intricate. Nothing is decided till… everything is,' he told reporters in Delhi, within hours of the US President's claims. Just days earlier, the US and China announced a dramatic descalation after a battle of attrition in the tariff war between the world's two biggest economies. After Beijing hit back with retaliatory tariffs and disrupted US access to rare earth metals, the US blinked first. US tariffs on Chinese goods were slashed from 145% to 30%. "We need to borrow from the Chinese playbook,' Dhar said. Asked how the US could react to retaliatory tariffs by India, he said it is imperative that New Delhi put forward its points forcefully. In the past, India has taken similar steps, including notifications submitted to the WTO in 2019 and 2021 regarding the European Union's steel safeguard measures, although those retaliatory actions have not been enforced. India and the US are working towards a comprehensive trade agreement aimed at significantly increasing bilateral trade, which currently stands at $191 billion. The goal is to push this figure to $500 billion by 2030. This crucial round of trade talks will take place in Washington, with a high-level Indian delegation led by Commerce and Industry Minister Piyush Goyal. The four-day negotiations, starting May 17, will involve meetings with US Trade Representative Jamieson Greer and US Commerce Secretary Howard Lutnick.
Mint
29-04-2025
- Business
- Mint
Faster FDI approvals on the horizon as India empowers trade missions
India is looking to strategically leverage its trade missions to position itself as a more attractive destination for foreign investment, according to two people familiar with the matter. Indian missions abroad would be given the authority to grant in-principle approvals to foreign direct investment (FDI) proposals from different countries in a move that could cut through bureaucratic hurdles, the persons cited above said on the condition of anonymity. The Centre's thinking–discussed in a recent high-level meeting involving key government ministries–comes in the backdrop of a global realignment of supply chains and keen interest from international businesses seeking manufacturing alternatives to China, which is facing unprecedented tariffs of up to 245% for exports to the US. The initiative would also look to break FDI inflows' sliding trajectory over the past three years and shift the momentum to an upward curve. 'Proposals will be submitted to the trade missions, and it will be their responsibility to coordinate with the concerned stakeholders back home and facilitate the approval," said the first person cited above. 'It will allow investors to plan their India strategy more efficiently, without getting stuck in an endless loop of clearances." Also read | Insurance laws bill set for monsoon session, proposes 100% FDI, composite licenses and sweeping reforms 'The plan is under consideration and is expected to be approved soon," said the second person. 'The in-principle approvals will allow companies to begin planning, such as selecting sites and engaging with partners, while the final approvals will follow in a more streamlined process. The approvals will be granted within a specified time frame." The proposed shift, discussed at a recent meeting convened by the ministry of commerce along with the Department for Promotion of Industry and Internal Trade or DPIIT, ministry of external affairs (MEA), and ministry of finance, marks a significant departure from the traditional bureaucratic process, wherein such proposals take months to clear at the ministry level. The sectors identified by the government for the initiative include defence, pension, other financial services, asset reconstruction companies, broadcasting, pharmaceuticals, single-brand retail trading, construction and development, civil aviation, power exchanges, e-commerce activities, coal mining, contract manufacturing, digital media, petroleum and natural gas, and telecom, among others. Queries emailed to the ministries of finance, commerce, and external affairs remained unanswered till press time. Biswajit Dhar, economist and distinguished professor at the Council for Social Development, pointed out that this is just one part of the process, and state governments also play a crucial role. 'Other approvals are needed at the state level, so the process must be streamlined across both levels of government," said Dhar. 'The goal should be to have both levels of government in sync to truly reduce the time taken, because real ease of doing business comes when multiple agencies involved in the investment process cooperate." Currently, an FDI proposal is first submitted to the DPIIT (which functions under the ministry of commerce), to assess for compliance with relevant laws and sector policies. Read this | Insurance reforms: Govt to further relax foreign investment rules while raising FDI limit to 100% Depending on the nature of the investment, the proposal is sent to other ministries such as finance or home affairs for additional clearance. The process can take several months, depending on the complexity of the proposal and the need for inter-ministerial coordination. In India, 100% FDI under the automatic route is allowed in most sectors, except a few strategically important ones such as defence and atomic energy. FDI inflows into India peaked at $84.83 billion in the fiscal year 2021-22, as per data shared by minister of state for finance Pankaj Chaudhary in the Lok Sabha on 10 March. Thereafter, the numbers declined to $71.35 billion in FY23 and $71.27 billion in FY24, following uncertainty about a potential global recession, economic crises triggered by geopolitical conflicts, and rising global protectionist measures. During the fiscal, the share of insurance, telecommunications, and defence industries in FDI equity inflows stood at 4.13%, 0.63%, and 0.009%, respectively, according to Chaudhary's statement. However, during the first half of the current financial year 2024-25, FDI inflows have increased by 26% compared to the first half of the previous financial year 2023-24 — rising from $33.51 billion to $42.10 billion, as stated by minister of state for commerce Jitin Prasada in the Lok Sabha on 11 February 2025. Also read | India eyes inclusion of 25% steel, aluminium tariffs in BTA talks with US In FY24, the services sector (including finance, banking, and insurance) received $6.64 billion in FDI, followed by trading ($3.86 billion), non-conventional energy ($3.76 billion), hospitals and diagnostic centres ($1.53 billion), and electrical equipment ($1.05 billion). FDI in the defence sector is allowed up to 74% through the automatic route (increased in September 2020 from the previous limit of 49%) for companies seeking new industrial licences. Additionally, 100% FDI is allowed in the telecom sector under the automatic route. The sectoral cap for FDI in the insurance sector has been revised from 49% to 74% under the automatic route. The Union Budget 2025 also announced plans to further increase the FDI sectoral cap for the insurance sector from 74% to 100%. This enhanced limit will apply to companies that invest the entire premium in India. And read | Tariff-proof Nifty Bank may stretch rally by up to 2% to fresh high this week
