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FDI Flows to India Doubles in 2015
Feb 03, 2016

According to UNCTAD's latest report on global investment flows, FDI flows to India nearly doubled to 59 billion dollar in 2015, largely boosted by steps taken by the government to improve investment climate. Globally, FDI flows surged 36% to an estimated $1.7 trillion, their highest level since the financial crisis of 2008-09. This sharp rise was on account of a higher cross-border M&A (Merger & Acquisition) value and not because of rise in Greenfield projects.

Key Points

  • The US bounced back as the top host country for FDI in 2015 with FDI worth 384 billion dollar.

  • Global FDI flows unexpectedly increased significantly by 36 per cent.

  • Global FDI increased significantly to 1.7 trillion dollar and this is closer to the pre-crisis level and it is the highest since the global financial and economic crisis.

  • But this global FDI are not really in the productive sector and is due for either inversion or corporate reconfiguration.

  • Developing economies, as a whole, saw their FDI reaching a new high of $741 billion—5 per cent higher than 2014.

  • Asia remained the largest FDI recipient region in the world, surpassing half a trillion US dollars and accounting for one-third of the global FDI flows.

  • The US is followed by Hong Kong ($163 billion), China ($136 billion), the Netherlands ($90 billion), the UK ($68 billion), Singapore ($65 billion), India ($59 billion), Brazil ($56 billion), Canada ($45 billion) and France ($44 billion) as the top 10 FDI host economies of the world.

  • FDI flows to the developed countries bounced back sharply reaching their second highest level ever at $936 billion.

  • In Africa, Latin America as well as transition economies there was a decline in FDI last year partly because of stumbling commodity prices and regional instability.

  • About $200-$250 billion of the $1.7 trillion global FDI was in the form of reconfiguration of business when companies restructure themselves by changing their headquarters from one region to another due to change in family ownership, avoiding tax or for political reasons. The assets of that company is then counted as FDI in the original country.

  • If this part of the FDI is discounted which reflects corporate reconfigurations then global FDI still increased between 15-17 per cent in 2015 and the main reason for this increase was the sharp growth of cross border M&As which increased by 61 per cent.

  • FDI flows are not sufficient in productive sector. 

  • India's FDI investment increased from $33.9 billion to $59.4 billion which marks a 75 per cent increase while Greenfield investments have increased from $25.4 billion to $64 billion recording an increase of 152 per cent.

  • Globally cross-border M&As were largely responsible for the increase in FDI while Greenfield investments registered little change in value terms—0.9 per cent—from 2014.

  • Greenfield investments still remain larger than cross border M&As—this is because of the low level of M&A in 2014.

FDI flows are expected to decline in 2016. This reflects the fragility of the global economy, volatility of global financial markets, weak aggregate demand and significant deceleration in large emerging economies. Elevated geo-political risks and regional tensions could further amplify these economic challenges.


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