The foreign direct investment (FDI) flows received by India in the January-March 2013 period reflects a rebound in inflows, said a World Bank Group arm. This is a result of the new investment policies put in place for select sectors, such as telecoms and insurance.

In its World Investment and Political Risk Report, the Multilateral Investment Guarantee Agency, said India is by far the largest recipient of FDI in South Asia, comprising India, Pakistan, Sri Lanka and Bangladesh, and changes in its flows influence the picture for the entire region.

According to RBI data, India saw higher FDI inflows of $4.5 billion in the January-March 2013 period against $1.4 billion in the year ago period.

The growth of FDI flows into developing economies has been dominated by Brazil, China, and India, according to the Report, which examines the overall trends in political risk perceptions, foreign investment intentions, and longer-term demand for political risk insurance (PRI), especially in emerging economies.

In 2012, China received 10.5 times more FDI than India. While India received $24 billion, China received $253.5 billion.

Together the three countries have accounted for just over half of all FDI flows received by developing economies during 2000-2012.

According to the report, over the past decade a second layer of developing economies has experienced accelerated FDI growth. These include Ghana, Indonesia, Kazakhstan, and Nigeria, where the growth rate of FDI flows has exceeded that for all developing economies.

With outflows of $68 billion in 2012, the report observed that Brazil, China, and India continued to account for the bulk of outbound FDI from developing economies and their firms continued to extend their global reach.

China has emerged as one of the largest investors in Latin America in recent years.

Other developing economies are also emerging as sizeable outward investors, notably Indonesia, Hungary, Malaysia, and Mexico.

ramkumar.k@thehindu.co.in

(This article was published on December 9, 2013)
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