Foreign direct investment to India rises by 3% to $61.96 billion in FY18
New Delhi: Foreign direct investment (FDI) in India increased by about 3 per cent to $61.96 billion in 2017-18 on account of steps taken by the government to improve business climate and liberalised policy norms. Major sources of foreign inflows include Mauritius, Singapore, Japan, the Netherlands, the US, Germany, France and the UAE.
Foreign direct investment inflows stood at $60 billion in the previous fiscal. The figure includes equity inflows, reinvested earnings and other capital.
Department of Industrial Policy and Promotion (DIPP) Secretary Ramesh Abhishek said that during the four years of the Modi government, foreign inflows jumped to $222.75 billion from $152 billion in the previous four-year period.
In the last four years, the government has liberalised foreign direct investment norms in sectors such as defence, medical devices, construction development, retail and civil aviation. The main sectors that received maximum foreign inflows include services, computer software and hardware, telecommunications, construction, trading and automobile.
However, according to an UNCTAD report , foreign direct investment to India decreased to $40 billion in 2017 from $44 billion in 2016, while outflows from India, the main source of investment in South Asia, more than doubled. Foreign inflows are crucial for India, which needs huge investments to overhaul its infrastructure such as ports, airports and highways to push growth.
It helps improve the country's balance of payments situation and strengthen the rupee value against other global currencies, especially the US dollar. Speaking on foreign direct investment issues, Commerce and Industry Minister Suresh Prabhu said that the government abolished foreign investment promotion board to facilitate overseas investments.
Most of the sectors are under automatic approval route for FDI purposes, he said. Asked about the issue of iPhone maker Apple and US-based electric car major Tesla, he said India would welcome investments from all companies, including these two.
"We are awaiting a formal proposal from them and then we will look into it," he said. The Cupertino-based iPhone and iPad manufacturer Apple has asked for certain concessions for setting up manufacturing unit in the country.
"We will be very happy to receive a proposal" from Tesla also, he added. US-based electric vehicle maker Tesla recently cited a challenging environment for not making it to the Indian market.
Prabhu said that complaints related to violation of FDI norms by e-commerce players are forwarded to the Enforcement Directorate (ED) and RBI as they are the right agencies to look into them. "Suppose I receive a complaint...we forward it to the right agencies because they are the ones who are supposed to take cognisance. We are not making any value judgement on it. Violations are looked into by agencies mandated for them," he told reporters.
Prabhu was replying to a query on the ministry's action on allegation of violation of foreign direct investment norms in the e-commerce sector. RSS-affiliated Swadeshi Jagran Manch (SJM) had alleged that US retail giant Walmart was circumventing rules for a back-door entry into India with its majority stake acquisition of Flipkart.
Traders body CAIT too has filed complaints with the ministry on the issue and violation of FDI in e-commerce rules by certain online retail firms. Department of Industrial Policy and Promotion (DIPP) Secretary Ramesh Abhishek said that after the policy is made by the department, it is notified under the FEMA (Foreign Exchange Management Act) by Reserve Bank of India with Department of Economic Affairs.
Any infringement of the law or allegation is investigated by the ED, Abhishek said. On the Walmart-Flipkart deal, he said: "Under the e-commerce FDI policy, only the marketplace model is allowed. So the investment that they have is being made, what we have heard, in Flipkart is a marketplace model. Their (Walmart's) operations of business-to-business and cash and carry is separate".
Walmart Inc last month announced acquisition of 77 per cent stake in Flipkart for about USD 16 billion (Rs 1.05 lakh crore) in the largest e-commerce deal which will give the US retailer access to the Indian online market that is estimated to grow to USD 200 billion within a decade. Domestic traders alleged that the deal is nothing but a clear attempt to control and dominate the retail trade in India by Walmart through e-commerce in the long run.
Replying to a question about US demand of cutting customs duties on Harley-Davidson motorcycle, Prabhu said that every country wants more and more market access for their products.