India has broken into the top 10 recipients of foreign direct investment in 2014, the UNCTAD informed in its World Investment Report, 2015. Weighing on the 15th position for the last two years, India moved to the 9th rank with a 22 per cent rise in FDI inflows to $ 34 billion. It is, however, the only BRIC country that hasn't yet crossed the $ 50 billion a year FDI mark.
“Till the time an MP is afraid to appear to encourage FDI or business in India, the high favourability ratings will not convert into high inflows and they will remain low,” UNCTAD’s Premila Nazareth Satyanand said, releasing the report.
China became the largest recipient of FDI in 2014 with $129 billion inflows as, at 39 per cent, Hong Kong saw the biggest surge in inflows during the year. Russia took a hit as foreign investors exited its oil sector and other projects after Western countries slapped economic sanctions on it.
India, however, dropped out of the top 20 countries in the outward FDI flows.
The report also found, developing countries lost $100 billion in tax revenues owing to investors routing FDI through tax havens such as Mauritius, and has asked for multilateral action to address the issue. It also records a big surge in investments from China into every region of the world, especially in India’s neighbourhood. FDI inflows to Pakistan increased by 31 per cent to $1.7 billion as a result of rising Chinese FDI flows in services.
In Sri Lanka, where China has become the largest source of FDI in recent years, FDI flows from it rose. For example, a joint venture between two local companies and China Merchants Holdings (International) Company has invested $500 million in Colombo International Container Terminals, the largest foreign investment project in Sri Lanka. After two years of construction, the port started operation in August 2014.
A China-Sri Lanka FTAwill be signed in June 2015. Moreover, if the implementation of the China-led 21st Century Maritime Silk Route Economic Belt gains ground, an increasing amount of Chinese investment will flow to Sri Lanka, particularly in large infrastructure projects.
