FDI growth hits 5-year low

FDI growth hits 5-year low

News:

1. FDI growth hits 5 year low in India

Important facts:

1. 2. According to the latest data of the Department of Industrial Policy and Promotion(DIPP), FDI in 2017-18 grow by only 3% to $ 44.8 billion.
2. 3. Foreign inflows in the country grew by 8.67% in 2016-17, 29% in 2015-16, 27$ in 2014-15, and 8% in 2013-14.
3. 4. An UNCTAD report, too, recently stated that the high FDI in India decreased to $ 40 billion in 2017 from $ 44 billion in 2016 fiscal.
4. 5. According to UNCTAD report, outflows from India, the main source of the FDI in South Asia, more than doubled to $ 11 billon.
5. 6. Downward pressure on the FDI and slowdown in global value chains are a major concern for policy makers worldwide.
6. 7. Sector specific FDI:

• The main sectors that received maximum foreign inflows in the last fiscal include services ($6.7 billion), computer software and hardware ($6.15 billion), telecommunications ($6.21 billion), trading ($4.34 billion), construction ($2.73 billion) automobile ($2 billion) and power ($1.62 billion).

8. Mauritius has emerged as the largest source of FDI in India with $15.94 billion in 2017-18 followed by Singapore ($12.18 billion), Netherlands ($2.8 billion), the US ($2.1 billion) and Japan ($1.61 billion).

9.Further, the data showed that the FDI equity inflow of $44.8 billion in 2017-18 is the highest ever for any financial year.

10. FDI is critical to because:

• It helps in improving ease of business in the country.
• Critical to revive domestic investment.
• For attracting more foreign investors.
• Decline in foreign inflows could put pressure on the country’s balance of payments.
• May also impact the value of the rupee.

11.Although India has done considerably well in terms of improving ease of doing business ranking, it needs to take step for reviving domestic investment to attract FDI.