Millennium Post

Foreign direct investment inflows increase 37% to $39.32 billion in 2015

Foreign direct investment (FDI) into the country increased by 37 per cent to $39.32 billion during 2015. The foreign investment inflows stood at $28.78 billion in 2014, according to data by the Department of Industrial Policy and Promotion (DIPP).

Computer hardware and software sector attracted the highest foreign direct investment, followed by services, trading business, automobile industry and chemicals. Singapore emerged as the biggest Foreign direct investment source, followed by Mauritius, the USA, Netherlands and Japan.

The Government has taken several steps to promote investments through a liberal Foreign direct investment policy. It has relaxed norms in several sectors, including single brand retail, e-commerce and construction. 

“The focus on improving ease of doing business in the country and relaxation of norms would help in attracting more and more Foreign direct investment,” an official said. The Economic Survey 2015-16 had said that a favourable policy regime and sound business environment have facilitated increase in Foreign direct investment flows into the country.

Meanwhile, the Government has decided to consider on April 28 two new proposals for setting up Special Economic Zones (SEZs), including from Infosys. The proposals will be taken up by the Board of Approval (BoA) for SEZ, chaired by Commerce Secretary Rita Teaotia.

Infosys Ltd has proposed to set up an IT/ITeS zone in Bengaluru over an area of over four hectares. Chhindwara Plus Developers Ltd has proposed to set up a multi-product SEZ in Madhya Pradesh over an area of 1,320 hectares.

Further, as many as 19 developers and units have sought more time to complete their projects which are under different stages of completion. Wipro Ltd has requested for further extension of its letter of approval for setting up an IT SEZ in Bengaluru.

“The developer has been granted two extensions, validity period of which is upto May 26. The developer has requested for further extension so as to implement the project,” the agenda of the BoA meeting said.

Similarly, Vedanta Aluminium Ltd has sought extension of the validity period of formal approval, granted for setting up an SEZ for manufacture and export of aluminium in Odisha, beyond May 22. Others who have sought more time include Brooke Bond Real Estate, Avash Logistic Park, Sealand Ports and Indofil Industries.

SEZs are exports hubs which contribute to about 23 per cent to the country’s total outbound shipments. The commerce ministry is taking steps to revive investors’ interest in these zones.

Exports from such zones in 2014-15 stood at Rs 4,63,770 crore as compared to Rs 4,94,077 crore in the previous fiscal.

According to a report from Washington DC, Finance Minister Arun Jaitley has sought reforms in the IMF and World Bank to reflect a larger say for economies like India, saying that the share of developing and transition countries (DTCs) in the multi-lateral lending agencies IBRD and IFC must be raised to 50 per cent.

“I wish to reiterate that we must adhere to the Istanbul principles. We must accept that the time has come for raising partnership of DTCs in the IBRD and IFC to 50 per cent,” he said at World Bank Development Committee meeting here.

This, he said, would require that economic weight captured by GDP must remain the primary factor in the formula, with larger share of PPP based GDP of not less than 60 per cent.

The World Bank through its arm International Bank for Reconstruction and Development (IBRD) and International Development Association (IDA) provides loans to middle income and poorest countries. Also through its arm the International Finance Corporation (IFC), it provides loans, equity as well as advisory services to private sector and governments of developing countries. “IDA has enormously useful role in financing development in low income countries, but recognising IDA contributions in IBRD/IFC share capital has adverse impact on voting share of developing countries. Therefore, it would only be fair if a weight of not more than 10 per cent is given to IDA contributions in the dynamic formula,” he said.

Such a weight should also recognise only recent contributions to act as a rightful incentive for the emerging countries to contribute in IDA and should also recognise multiplier based on burden share and generosity.

The Minister said while shareholding reforms have moved forward, the unfinished task of eliminating extreme poverty, achieving development ambitions enshrined in the Sustainable Development Goals (SDGs) and meeting the enormous challenge of reconstruction posed by conflicts and fragility calls for the Bank Group to expand its annual lending to USD 100 billion.

“For doing so, both IBRD and the IFC, would need General Capital Increase (GCI). These two institutions would also need large Selective Capital Increase (SCI) to reflect the increasing weight of Developing & Transition Countries (DTCs).

These steps have to be taken in timely manner to maintain leadership position of World Bank Group in the development landscape,” he said. Jaitley also said IMF quotas even after recent reforms do not reflect global economic realities. 
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