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Mint
an hour ago
- Business
- Mint
India's FDI inflows offset by outflows: Blip or worry?
At first glance, India's latest foreign direct investment (FDI) data is impressive. The overseas money invested in our economy for long-horizon returns, always preferable to 'hot money' going into liquid assets, climbed 14% to $81 billion in 2024-25. This, however, was on a gross basis; it counts all FDI inflows last year. But after accounting for money repatriated out of India and all outward FDI, the numbers present a sobering picture. Net FDI stood at a measly $350 million, a 96% drop from 2023-24. In other words, our inflows of long-term capital were almost fully offset by outflows. Is this a blip or a sign of trouble? An answer demands patience, as any trend needs the figures of at least three years to plot. But even if 2024-25 turns out to be aberrative and net FDI rises again, policymakers would do well to keep the lost gap under watch. But first, let us look at inward investments. Also Read: Rework India's investment treaty framework to attract FDI flows Manufacturing attracted about $19 billion last year, a large chunk of the total, rising 18%. In the context of India's policy emphasis on this sector, this growth seems moderate; FDI in services grew faster. By FDI source, Singapore was the biggest, with 30% of India's inflows coming from there, followed by Mauritius with 17% and the US with 11%. On the whole, large sums have been received over the past decade or so. Our cumulative FDI intake since the Narendra Modi government took over in 2014-15 stood at $748.8 billion, 143% more than the sum drawn in the previous 11 years. Rules on FDI were eased in several sectors by the Modi administration, with limits raised in some sectors, such as insurance, and a few opened up to foreign players, like space. Entry norms were relaxed as well. Although a 2020 skirmish with China led to restrictions on flows from countries that share land borders with India, by and large, FDI has been welcomed, even as efforts were made to ease the doing of business. Also Read: How best to attract FDI: Four pointers for an 'investment-friendly charter' Yet, global appetite for re-investing in the country seems to have weakened. As much as $51.5 billion was repatriated in 2024-25. This was capital that global investors judged wiser to withdraw than plough back into the Indian economy. That globalization has been losing favour could be a broad explanation. While this adverse trend may get hardened by an inward policy turn taken by the US under President Donald Trump, we would risk complacency if we attribute such outflows entirely to global factors. Even in a shaken-up world, after all, our ambition is to emerge as a net winner of investment. That requires us to consistently attract far more capital than the sum that leaves. Apart from repatriation, India's outflows included outbound FDI, which scaled $29.2 billion in 2024-25. This represents Indian capital being invested abroad, a reflection of domestic players going global. For businesses to maximize value for their investors, they must grab opportunities across the globe; letting capital move in and out of India is valuable for that reason. Meanwhile, private investment at home has lagged both expectations and desired levels. Also Read: India's FDI restrictions need a rethink for a competitive economy In recent years, uneven consumption growth has been a notable cause, with several markets that cater to large numbers proving hard to expand. Without adequate demand buoyancy, capacity creation has been subdued in several fields. This may explain the appeal of investing abroad. Yet, the economy needs all the capital it can get for its expansion. While we hope last year's data was just a blip, the appeal of India's emergence mustn't lose lustre in any way.
Hindustan Times
12 hours ago
- Business
- Hindustan Times
The northeast region's place in India's Indo-Pacific vision
India's northeast region (NER) features prominently in its Indo-Pacific vision and strategic calculations. The vast natural resources of NER and its geographical proximity to neighbouring countries in the Indo-Pacific region make it attractive for increased involvement of industry and the development of trade linkages. Socio-cultural affinities found across the borders of the region also carry potential for synergy in cooperation endeavours. This brief assesses the factors that can lend traction to the potential of the region. It explores the role which NER can play in furthering India's flagship policies such as 'Act East' and 'Neighbourhood First'. The brief argues for a nuanced foreign policy strategy that takes cognisance of the dynamics unique to the region. India's NER occupies a prominent place in its vision of diplomacy in the Indo-Pacific. The region has vast natural resources, and thereby great potential for increased industry and trade with the Indo-Pacific, since it is physically closer to the latter and has greater socio-cultural links with it than the rest of the country. This brief looks at how the potential can be realised, and the role the northeast plays in furthering India's flagship policies such as 'Act East' and 'Neighbourhood First'. It will examine the extent to which the northeast can attract foreign direct investment (FDI), boosting internal development and making it a growth hub. However, the brief also notes, achieving the northeast's potential is contingent upon the region—which has a troubled history—maintaining peace and stability, as well as on a more nuanced Indian foreign policy strategy. It cannot be assumed that the northeast can be pivotal to India's Indo-Pacific policy simply based on its potential. Foreign-policymakers must take cognisance of local resistance to development projects, as well as suspicions of the Centre's mainstreaming designs. India must reorient its approach to link domestic-focused bureaucratic structures with those involved with foreign policy, so that they jointly approach the northeast in a more sensitive manner. The northeast is India's domestic responsibility as well as its foreign policy asset. Both regional sentiment and industrial potential should get equal attention. This paper can be accessed here. This paper is authored by Sreya Maitra, ORF, New Delhi.
Hindustan Times
13 hours ago
- Business
- Hindustan Times
Benefits of economic integration between India and Sri Lanka
This brief examines the importance of economic integration between India and Sri Lanka in fostering both nations' growth as well as regional stability. Their deep cultural, historical, and geographic ties support an evolving economic relationship driven by trade, investment, and connectivity. As Sri Lanka's largest trading partner and investor, India plays a pivotal role in its economic recovery, particularly following Sri Lanka's recent economic crisis. The brief highlights the mutual benefits of integration: Sri Lanka can access India's large and expanding market, attract Foreign Direct Investment (FDI), and leverage India's cost-effective energy solutions. India, for its part, can enhance its regional security, counter rival influences, and strengthen its strategic presence in the Indian Ocean region. Key opportunities include expanding trade agreements, investing in infrastructure and renewable energy ventures, and enhancing maritime connectivity. India and Sri Lanka, neighbouring countries in South Asia, share a unique economic relationship rooted in culture, geography, and history, and which has evolved over the decades. Their economic integration is crucial for both mutual growth and fostering regional cooperation within frameworks like the South Asian Association for Regional Cooperation (SAARC) and Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC). This paper can be accessed here. This paper is authored by Talal Rafi, ORF, New Delhi.
IOL News
15 hours ago
- Business
- IOL News
BRICS+ Series: Unlocking Thailand's Potential in Trade
Thailand, one of the BRICS+ new partner countries, is a monumental development success story rooted in agriculture with predominant exports being rice, tapioca products and rubber- to mention a few. Today Thailand is the second top exporter of rice, following India and preceding Vietnam, all of which are associated within the BRICS+ bloc. From Agriculture to Industrial Powerhouse Since the mid 20th century, Thailand has made tremendous progress by transitioning from an agrarian Thai economy to one driven by export-orientated industrialisation, producing goods that are widely utilised across international markets. Furthermore, the state has been very successful in attracting substantial foreign direct investment (FDI), with the top sources being Singapore, China, Hong Kong, Taiwan and the USA. Some focal point industries that investments have been directed to include automotive and parts, electronics and chemicals the industries in which the investments are most dominant are automotive and parts, electronics, chemicals, digital, and food processing. Strategic Advantages and FDI Attraction Elements that have contributed to the nation's economic stature is their strategic location and infrastructure, centrally located in Southeast Asia which is a highly attractive point for companies expanding or trading internationally; as well as the fact the nation has a very well educated and skilled workforce which is favourable for a growing manufacturing base. Warning Signs of Economic Decline However, in recent years, the glorious makeup that makes Thailand successful is steadily declining. Since 2021, Thailand has witnessed 100 factories closed on a monthly basis. The nation that once had an annual growth rate of 7.5% between 1960-96, and between 1999-2005 had a 5% annual growth rate. Bangkok now faces a new reality where China's redirection of goods into Southeast Asian markets, as a result of trading tensions in the West, has catalysed a wave of already processed and assembled goods into the Thai market, a benefit for China regarding market penetration because of their cheap exports. For Thailand, however, this has dire consequences for the nation's economic environment with rising debt, a collapsing consumption, closing of factories and ultimately, an increase in unemployment. The Pressure from Chinese Dominance Furthermore, the strength of Chinese goods and FDI poses an additional issue most notably, their dominance in the electric vehicle (EV) market in Thailand. BYD, a Chinese company, is aggressively expanding its presence by establishing manufacturing plants in regions such as Thailand, where it aims to produce 15,000 units annually. This expansion is significantly impacting and overwhelming the local automotive market in a manner that they cannot compete with, another significant Chinese company having similar ripple effects worldwide is Shein. The closing of Thai factories is not a unique situation, there have been 80 000 jobs lost in Indonesia as a result of similar circumstances. Factory Closures and Regional Tensions Bangkok's economy is at a critical intersection where traditional manufacturing, consumption and industrial models are now at a new unknown level threatening to halt economic growth. Many of the closed factories are small and medium sized enterprises (SMEs) mainly in garments, electronics, steel and furniture. A solution to protect local industries by the Association of Southeast Asian Nations (ASEAN) governments is to implement protectionist policies to avoid becoming transit hubs for Chinese goods. However, doing so may hinder ASEAN's trade integration goals. A seasoned former official from the Prime Minister's Office is calling on the government to re-evaluate the nation's industrial procedures. This appeal comes with a warning that failure to adequately address current conditions will only worsen the declining impact of manufacturing on the country's GDP. BRICS+ membership as a Strategic Lifeline Despite these challenges, Thailand's inclusion in the BRICS+ grouping offers a strategic opportunity to recalibrate its economic path. As a partner country of this expanding bloc, Thailand can leverage new South-South trade and investment partnerships that reduce dependence on traditional markets and utilise the influx for local benefit. The BRICS+ platform also provides an avenue for collective action on industrial policy, digital innovation, and trade diversification. Enhanced cooperation within the bloc could support Thailand in rebalancing its manufacturing base, increasing regional value chain integration, and negotiating fairer terms in global trade. If harnessed effectively, BRICS+ membership could help Thailand avoid economic stagnation and instead emerge as a resilient regional production and logistics hub. Written By: *Dr Iqbal Survé Past chairman of the BRICS Business Council and co-chairman of the BRICS Media Forum and the BRNN *Banthati Sekwala: Associate at BRICS+ Consulting Group Egyptian and South African Specialist **The Views expressed do not necessarily reflect the views of Independent Media or IOL. ** MORE ARTICLES ON OUR WEBSITE ** Follow on X/Twitter for daily BRICS+ updates
New Straits Times
16 hours ago
- Business
- New Straits Times
Sarawak recorded RM17.6 billion in approved investment last year
KUCHING: Sarawak recorded RM17.6 billion in approved investments across the services, manufacturing, and primary sectors last year, Deputy Premier Datuk Awang Tengah Ali Hasan said today. He said RM13.5 billion, or 76.6 per cent of the total, came from domestic direct investment (DDI), while foreign direct investment (FDI) contributed RM4.1 billion, or 23.4 per cent. "The investments, both from DDI and FDI, involved 376 projects and are expected to create over 7,800 jobs," said Awang Tengah, who is also the state International Trade, Industry and Investment Minister, in his winding-up speech in the State Legislative Assembly here today. He said investments in the services sector accounted for RM7.6 billion, or 43 per cent, closely followed by manufacturing at RM7.5 billion (42.9 per cent), while the primary sector received RM2.5 billion (14.1 per cent). Despite similar investment values, the manufacturing sector was the largest contributor to employment, generating 6,430 jobs or 81.8 per cent of total jobs created. "The manufacturing sector recorded key investments in chemical products (urea, melamine, polycrystalline silicon, and biodiesel) worth RM2.9 billion; electrical and electronic (E&E) products at RM1.2 billion; and non-metallic products (clinker, concrete, and cement) at RM800 million," he said. In the first quarter of this year, the manufacturing sector attracted RM681 million in investments across 24 projects, expected to create more than 900 jobs. Awang Tengah said 115 manufacturing and related services projects were approved last year, with over 65 per cent already successfully implemented, reflecting strong investment facilitation. He added that ongoing investments in industrial infrastructure, including industrial parks, logistics, and digital connectivity, would reinforce Sarawak's long-term growth and competitiveness, positioning it as a prime destination for investors seeking stability and strategic market access. Investor confidence, he noted, remains robust, as reflected in reinvestments totalling RM6.8 billion within the manufacturing sector, primarily in chemical and basic metal industries. "This underscores strong investor confidence in Sarawak's current business environment and affirms our growing reputation as a competitive and reliable investment destination," he said. Awang Tengah also said Sarawak's push for renewable energy, especially solar power, has garnered strong investor interest, with leading potential investors from Abu Dhabi, China, and Singapore currently conducting feasibility assessments. He added that the International Trade, Industry and Investment Ministry is actively streamlining regulatory processes, reducing bureaucracy, and improving policy transparency to enhance business efficiency. "We are adopting a whole-of-government approach to ensure a unified and strategic advancement of Sarawak's development priorities. "Concurrently, we are addressing critical gaps in the investment ecosystem, including upgrading key infrastructure and investing in talent development to better align with industry needs. "These efforts reaffirm our commitment to position Sarawak as a preferred destination for high-quality investments, now and in the years to come," he said. He added that Sarawak continues to attract investors due to its political stability, rich natural resources, strategic location, and investor-friendly policies.
