FDI inflows in India seen rising 15 per cent in 2013: UN economist

New Delhi: Foreign direct investment (FDI) in India is expected to rise by 15 per cent in 2013 on account of policy initiatives being undertaken by the government to boost investment and growth, said a UN economist.

"India's prospects are very encouraging and positive. Investor confidence approach is very robust in India. It is expected to see 15 per cent increase in FDI in 2013," said Nagesh Kumar, chief economist at UN-ESCAP, while releasing UNCTAD's World Investment Report 2013.

However, FDI inflows to India dropped by 29 per cent to $26 billion in 2012, the report subtitled as 'Global value chains: Investment and trade for development' said.

"Finding of the UNCTAD is that India today is one of the most attractions of FDI investment. India today has one of the largest markets. Though growth slowed down but it is still growing at 5 per cent.

"It has a pool of talented manpower, favorable demographics. Services FDI is likely to grow with new sectors opening like aviation, retail FDI," Mr Kumar said.

India experienced its slowest growth in a decade in 2012 and also struggled with risks related to high inflation. As a result, investor confidence was affected, and FDI inflows to India declined significantly, the report said.

"But ... the country's FDI prospects are improving. Inflows to the services sector are likely to grow...and flows to manufacturing are expected to increase as a number of countries, including Japan and Korea establish country and industry specific industrial zones in the Delhi-Mumbai industrial corridor," the report said.

FDI inflows to South Asia declined by 24 per cent to $34 billion in 2012 mainly because of decrease recorded by India and other major countries in the region, it said.
Inflows to Pakistan fell by 36 per cent to $847 million, Sri Lanka down by 21 per cent to $776 million and Bangladesh by 13 per cent to $1 billion.

The report further said that FDI outflows from South Asia dropped by 29 per cent in 2012 to $9.2 billion.

Outflows from India, the region's dominant FDI source, decreased to $8.6 billion, due to a shrinking in the value of cross border M&A's by Indian companies, it said.

Total value of cross-border M&As undertaken by Indian companies in 2012 dropped by nearly three-fifths to about $2.65 billion.

The report also said that countries such as Bangladesh, India, Pakistan and Sri Lanka in the region have emerged as important players in manufacturing and export of ready-made garments.

It said Bangladesh, India, Pakistan and Sri Lanka have become important players in global apparel exports and the first two rank fourth and fifth globally, after China, the EU and Turkey. Their significance has been further enhanced recently.

"Overall, prospects for FDI inflows to South Asia are improving, mostly owing to an expected rise in investments in India," it added.

Source: http://to.ly/m1gV