India pips US, China as No. 1 foreign direct investment destination
India has emerged on top of the foreign direct investment league table, overtaking China and the United States, according to the FT data service.
A ranking of the top destinations for greenfield investment (measured by estimated capital expenditure) in the first half of 2015 shows India at number one, having attracted roughly $3 billion more than China and $4 billion more than the US, according to the Financial Times newspaper.
"With midyear data on greenfield FDI now in, 2015 looks to be a milestone year for India following its impressive performance in 2014," the article in FT said quoting fDi Markets, a data service of the FT.
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The news comes as a shot in the arm for the Narendra Modi government which has taken several steps to attract foreign investment and has helped revive mood of investors since it came to power in May 2014.
While there has been a demand for accelerating the reforms drive, the government has unveiled several initiatives such as 'Make in India' and 'Digital India' to lure investors. It has moved to ensure that the country moves up the ranking on the World Bank's Ease of Doing Business and states have started their clean-up act on this parameter.
But experts say there are several areas where the government needs to step up reforms. The areas where investors want more reforms include tax policy, labour laws, cutting red tape and issues linked to land acquisition.
Investors have started taking interest in the India growth story and the recent visit of Modi to Silicon Valley triggered enormous interest from software and technology czars. Growth is expected to be one of the fastest in the world and several multilateral agencies have said that India remains the bright spot among emerging economies.
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Experts say India is expected to benefit from the slowdown in China and the overall sluggishness in global commodity prices including crude oil is expected to provide a cushion to the growth fortunes of Asia's third largest economy. The government is confident of achieving close to 8% growth in the current fiscal year.
India has also moved up on Global Competitiveness Index by 16 places to 55th position.
The FT said that for the past several years, China and the US have vied for FDI supremacy and fought each other nearly to a draw last year, with the US ranking as the number one greenfield destination by number of projects and China coming in first by capital expenditure.
It said India ranked fifth last year for capital investment, after China, the US, the UK and Mexico. In a year when many other major FDI destinations posted declines, India experienced one of 2014's best FDI growth rates, increasing its number of projects by 47%, the article said.
"India is tracking well ahead of where it was at this time last year: it has more than doubled its midyear investment levels, attracting $30 billion by the end of June 2015 compared with $12 billion in the first half of last year," the newspaper said, adding that the news comes at a time at a time when FDI into emerging markets as a group is falling off a cliff.
"Research from fDi Markets found 97 of 154 countries typically classed as emerging markets experiencing declines in capital expenditure on greenfield investment projects in the first six months of this year compared with the same time period last year," it said.