India slips to 14 {+t} {+h} place in FDI inflows: UNCTAD

India slipped to the 14th place from eighth position in the list of countries that attracted the highest foreign direct investment (FDI) in 2010, indicating a serious crisis developing in the foreign investment climate.

According to the ‘World Investment Report 2011', released by the United Nations Conference on Trade and Development (UNCTAD) here, inflows into India declined by about $10 billion to $25 billion in 2010 and in terms of ranking the country dropped to the 14 {+t} {+h} position from the eighth place it held in 2009, way below its competing neighbour China, which saw FDI inflows worth $106 billion. The U.S. saw the maximum FDI of $228 billion. Hong Kong was placed at the third position ($69 billion worth FDI) and Belgium at the fourth place ($62 billion), the report said.

Expressing concern over the continued declining trend in FDI into India, independent economic researcher Premila Nazareth Satyanand, who released the report here on Tuesday, said the country needed to have a good investment climate.

The report said FDI inflows worldwide climbed up by 5 per cent to about $1.24 trillion in 2010. “FDI to South Asia declined to $32 billion, reflecting a 31 per cent slide in inflows to India and a 14 per cent drop in flows to Pakistan. In contrast, inflows to Bangladesh, a rising low-cost production location, increased by nearly 30 per cent to $913 million,'' the report said.

In India, the FDI inflows were $19.42 billion in 2010-11. At present, FDI flows into the country are sluggish due to uncertain global economic conditions. India ranked fourth in the list of top ten recipients and sources of FDI inflows in developing Asia in 2009 and 2010 behind China and Singapore.

India was also the fifth largest source of funds (FDI outflow) in developing Asia, helped by a string of major acquisitions in countries across the globe during 2007-11. Among major buyouts that figured in the UN report were Tata Steel's acquisition of U.K.-based Corus group for $11.8 billion and Hindalco Industries' acquisition of U.S. firm Novelis worth $5.8 billion. Tata Motors also acquired U.K.-based Jaguar Cars for $2.3 billion, Essar Steel Holdings bought Canada's Algoma Steel Inc for $1.6 billion and United Spirits acquired Whyte & Mackay of U.K. for $1.17 billion.

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