The Hindu Business Line : India attracted $5-b FDI in 2004, says Unctad

The report foresees Chinese, Indian and Korean firms accounting for an increasing proportion of an expected continued growth in FDI outflows from the Asia and Oceania region during 2005.

New Delhi , Sept. 30

INDIA was at the forefront of FDI recipients in South Asia as it received a record level of $5 billion in 2004, encouraged by an improving economic situation and a more open FDI climate, the UN Conference on Trade & Development (Unctad) said on Thursday.

In its 2005 World Investment Report, the UN body said FDI in South Asia increased by 32 per cent to $7 billion in 2004, because of higher flows to India, Pakistan and Bangladesh. It said some countries have become important destinations for FDI in R&D, especially China and India with more than 100 transnational corporations having established R&D facilities in India.

The report foresees Chinese, Indian and Korean firms accounting for an increasing proportion of an expected continued growth in FDI outflows from the Asia and Oceania region during 2005, including through large-scale overseas mergers and acquisitions.

FDI profile: Giving a profile of India's record in FDI over the years, the report said that as against an annual average of $452 million during the period 1985-95, India's inward FDI flows amounted to $3,403 million in 2001, $3,449 million in 2002, $4,269 million in 2003 and $5,335 million in 2004. As a percentage of gross fixed capital formation this has been from 1.9 per cent annual average during 1985-95 to 3.2 per cent in 2001, 3 per cent in 2002, 3.2 per cent in 2003 and to 3.4 per cent last year.

Similarly, India's outward FDI flows averaged from a mere $25 million during 1985-95 to $1,397 million in 2001, $1,107 million in 2002, $913 million in 2003 to $2,222 million last year. The report said India's inward FDI stocks went up from $452 million in 1980 to $1,657 million in 1990 to $17,517 million in 2000 and further to $30,827 million in 2003. In 2004, such inward FDI flows amounted to $38,676 million, rising from a level of 0.5 percentage of gross domestic product in 1990 to 3.7 per cent in 2000, 5.2 per cent in 2003 and to 5.9 per cent last year.

Improved ranking: In the outward FDI performance index rankings covering 132 economies, India closed its rank from 80 in 1990 to 54 in 2004, while its inward FDI potential index rankings revealed that out of 140 economies and based on 12 economic and policy variables, India has gone from 76 in 1990 to 85 last year even as it occupied an unenviable slot of 91 in 2000. Again, in the inward FDI performance index rankings covering 140 economies, India's position deteriorated from 98 in 1990 to 112 in 2004 even as it also occupied 120th slot in 2000.

The report foresees flows to India continuing to increase, especially in steel, telecommunications, infrastructure and finance.

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