ET reports:

Larry Fink , the chairman and CEO of worlds largest fund manager BlackRock, said that India will be a better investment destination over China for global investors for at least coming two years before the latter moves to the next phase of growth. If I could only invest in one out of the two at this moment, then it would be India for at least next two years. But once China connects the hinterland and establishes connectivity between factories, then it may reach a level that is substantially faster than their current GDP, said Fink. Indias GDP grew 8.9% vis-a-vis Chinas 10.3 in the second quarter of the current financial year.

Fink, who heads BlackRock that has more than $3.45 trillion assets under management, was in Mumbai recently after a whirlwind tour of San Francisco, Melbourne and Sydney. Commenting on the pullback by foreign institutional investors ( FIIs )) in the preceding few weeks, Fink said it was a temporary move and Indian equities still remain an attractive bet. I really dont pay attention to these short term moves. The Indian market was up quite a bit so its a reset. I think that the northern Africa situation, food price inflation and some governance issues have eroded confidence. he said.

Fink said investments in US equities will definitely grow as the economy recovers, but the emerging markets investments will not suffer. I think systematically investors are underweight on the US. And I think that US investors are systematically underweight on global equities. But I believe that emerging markets are compelling places to be in. I think that dynamics of India are as strong today as they were earlier. It might be a good time to get back into the market place, he said.

Asked whether the political uncertainty, governance issues, and coalition friction make global investors like him nervous, Fink said investors come with eyes open. Its part of India. If things were perfect, we make no returns, because everything will be easy to invest in. People focus on these data point and dont see the long term macro trends. To my perspective India would be an even better place to invest if we had a dialogue between business and government.

Fink is also not too worried about the developments in Egypt that were giving jitters to the markets globally. In all probability, it might go to the other extreme. Once things happen everyone focuses on the negatives. I am not saying that it may not happen; I believe that the markets are more volatile because that could be an option. But the fact is Egypt has tasted democracy, and it is a much more open society than many other North African and Middle Eastern societies. People are looking for faster, more robust change. People are looking for more openness. They are not having this revolution to say we want to move more backwards, he said.

On the topic of US recovery, Fink, considered one of the most influential men in the Wall Street in the post-bailout scenario, said recovery will be strong. On the back of positive numbers coming from manufacturing data, job and hardening bond rates, US economy seems to be turning around. We think the US economy will continue to grow because of its exports. I dont believe a 4-5 % economy but confident about 3%. US economy did more constructive destruction than any other economy. We restructured our banking system. Around November and December CEOs started investing and then we began to see changes in the behaviour of executives. They started spending more money, hiring more people, setting new offices, setting more factories, buying inventories. This started building momentum. Quantitative easing (QE2) by the Fed gave economy a push further that accelerated the stock market which accelerated the behaviour of CEO, says Fink.

However, Europe remains a cause for worry for the fund manager. I am very worried about euro zone. Thats the area of my greatest concern. They cant adjust the economy by currency so they have a structural problem that is very severe. The other problem is negative demographics. So, they cant grow themselves out. So, I dont see many happy outcomes in Europe. I see it to be a continual problem for several years. But for the man considered by many to be the best brains on risk in the Wall Street sees India a safe bet. I dont see anything disrupting the long term trend in India, he says.

29 Jan, 2011, 11.17PM IST,PTI

India attractive FDI destination despite some slowdown: Montek

DAVOS: India remains an attractive investment destination despite some slowdown in Foreign Direct Investment (FDI) last year, Planning Commission Deputy Chairman Montek Singh Ahluwalia said here today. "There is some weakening in the last few months in the FDI... Due to the financial crisis in 2008 and 2009, many investors' decisions were postponed...," Ahluwalia told the global CEOs who have gathered at the Alpine resort for the 41st World Economic Forum ( WEF )) meeting. India remains an attractive destination for investment, he said, adding, "We welcome long-term investments". During January-November 2010, India's FDI inflows declined 26 per cent to USD 18.9 billion, compared to USD 25.5 billion in the same period last year. Ahluwalia said India needed FDI to bridge the rising current account deficit. "We have current account deficit (CAD). We need to finance our deficit." The country's CAD, representing the difference of inflows and outflows of foreign exchange, barring capital movements, surged 72 per cent to USD 15.8 billion in the July-September quarter over USD 9.2 billion in the same period last year due to higher imports. India's central bank RBI said in a recent report, "...the external sector needs to be monitored closely. The economy is very well poised to absorb a higher current account deficit for a couple of years but this cannot remain a persisting trend." It said the widening of CAD is a result of factors like lower growth in services receipts, reflecting uneven pace of global recovery. Besides, there has been a significant rise in imports relative to exports -- reflecting steep rise in international crude oil prices -- and moderation in FDI inflows reportedly because of environment sensitive policies, land acquisition issues and lack of quality infrastructure. It added that although larger net capital inflows were absorbed in financing higher CAD, the composition of capital flows poses sustainability risks. Higher capital inflows were due to big investments in capital markets by foreign funds, external commercial borrowings by India Inc and external assistance.

India 2nd preferred FDI destination

Bs Reporter / New Delhi September 25, 2008, 0:24 IST

India has retained its position as the second most-preferred global location for foreign investment in 2008 and will continue to do so till 2010, lagging only behind China, the United Nations Conference on Trade and Development (Unctad) has said in World Investment Report 2008. Foreign direct investment (FDI) inflows into the country will continue to show the robustness seen in the past couple of years despite the global financial crisis that many feel will impact economies across the world.

The report also mentions a survey by the Japan Bank for International Cooperation (JBIC), in which Japanese transnational manufacturing companies have rated India higher than China for establishing business operations. Going by my personal interactions with industry, it could be said that the Indian governments FDI target of $35 billion for 2008-09 can be achieved. However, we may not see any big inflows into the country. Inflows may be low for sectors like infrastructure, but other sectors are likely to see enough growth, said Unctads policy expert Premila Nazareth Satyanand, who released the report in India today. However, other experts believe that the global liquidity crunch may impact FDI inflows into the country. It is possible that the projected FDI inflows may not happen in 2009-09 and get deferred to the next fiscal, said Partha Mukhopadhyay of the Centre for Policy Research. The report also points that India has improved its ranking in the inward FDI performance index (which measures the flow of foreign investment into a country relative to its GDP) from 110 in 2006 to 106 in 2007, which is below that of Hong Kong, Indonesia and even Guatemala, but above Germany and Taiwan. Within Asia, India received the fourth largest amount of FDI inflows in 2007 (after China, Hong Kong and Singapore), which stood at $22.95 billion, translating into a growth of 16.73 per cent over $ 19.66 billion in 2006. Significantly, India is bridging the gap with Singapore as a destination for FDI inflows, added Satyanand. The growth has been attributed to further opening up of telecommunications, single-brand retail, as well as increasing cross-border merger and acquisitions. More than a quarter of 300 international retailers told Unctad that they have either opened their first store in India during 2007 or are planning to do so in the near future. India was also recognised as the fourth-largest source of FDI in Asia, as Indian companies invested $13.64 billion abroad in 2007, as against $ 12.84 billion in the previous year, an increase of 6.23 per cent.

China remains top FDI destination

By Zhou Siyu (China Daily) Updated: 2010-09-09 11:10
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XIAMEN, Fujian - China remains the most popular destination for foreign direct investment (FDI) in the world, a report by the United Nations Conference on Trade and Development (UNCTAD) said on Tuesday. The report, 2010-2012 World Investment Prospects Survey, was released at the 2010 UNCTAD World Investment Forum (WIF) in Xiamen, Fujian province.

According to the survey, for the next two years China will likely remain the largest destination of FDI worldwide and will likely emerge as the second largest country for outbound direct investment (ODI), next only to the United States. Of the top 15 most popular FDI destinations, nine are developing countries. Brazil, Russia and India all made the top 5. The survey also predicts worldwide FDI will pick up as the world economy gradually recovers from the financial crisis, and the next two years are likely to see a stable increase in FDI volume. Earlier this year, China's investment environment was criticized as deteriorating, and the acute criticism gave rise to doubts that China may lose its attractiveness as an FDI destination. "Chinese domestic businesses became more and more competitive over these years. That is the fundamental reason why the foreign businesses felt the investment environment is deteriorating," said Chen Deming, Chinese minister of commerce, on the sidelines of 2010 UNCTAD World Investment Forum. Ironically, given the widespread vocal concern about China's investment environment, more and more FDI is flowing into China. According to official statistics, China's FDI increased by more than 20 percent year-on-year, for the first seven months of this year, to $58.3 billion. During the same seven-month period, the number of foreign companies increased by more than 14,400, up 17.9 percent compared with last year. Worldwide, as the world economy is still shaky from the financial crisis, FDI volume dropped 39 percent last year, according to figures released by UNCTAD, "but China's FDI only decreased by 2.6 percent," said Chen. In his opinion, the large inflow of FDI indicates China's investment environment is only getting better and better.

Rel ate d rea din gs:

The year 2009 is the 18th In Sp consecutive year that China ves eci tor has been the largest FDI al s Co recipient, and with more and pro ver FDI flowing in there is more mis room for improvement, ag still ed e: Chen said. Cifi mo t re and op the opening ceremony of the UNCTAD 2010 World Investment Forum (WIF) on Tuesday, ViceAt Wif en, in President Xi Jinping said China is dedicated to creating a "more open and optimized" investment tra Xia ns environment for foreign businesses. me par n ent Over ma the next two or three years, China will take measures to increase FDI in sectors that produce rke high-value added commodities, like high-tech, as well as service sectors, said Chen. more t
S In the ministerial round table meeting on Tuesday afternoon, part of WIF, Chen welcomed FDI from pei all cal over the world, and emphasized China intends to continue attracting FDI while enlarging its own Co volume. ODI ver ag FDI will bring not only technologies and products into China, but advanced management expertise e: Chi more talent, Chen said. and na' s At the round table meeting, Chen also proposed to leaders and officials from 200 countries that inv est investment policy should be made in such a way that FDI could be better channeled into me developing countries. nt en "China's ODI will mainly focus on developing countries and regions, with the rest going to the vir on developed countries. The world economy will have little room to improve if FDI steers clear of the me developing and less developed countries." Chen said at the round table meeting. nt is im Meanwhile, trade protectionism is one of the problems Chinese businesses frequently encountered pro in vintheir ODI. g

Trade protectionism could be implemented on the pretext of national security, but such conduct will C hin harm the world's economic recovery and push the jobless rate higher, he added. only a to "China's FDI this year is expected to reach $100 billion, an 11-percent growth year-on-year. And pu sh China's ODI is expected to increase to more than $50 billion," Chen said. for wa rd WT O talk

By Nagesh Narayana | January 6, 2011 9:08 AM EST

In an annual survey conducted by the Japan Bank for International Cooperation, India for the first time topped the list as the most attractive destination, overtaking China.

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Indian Prime Minister Manmohan Singh (L) talks with Japanese Prime Minister Naoto Kan in Tokyo October 25, 2010

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The survey, which is in vogue since 1992, elicits the views of Japanese companies which have invariably preferred China over India and gave the fillip to Shanghai that rose to prominence since the mid-90s. The new ranking was made in the 22nd survey carried out by JBIC in 2010, said a release on Thursday. The reason for China lagging behind was attributed to increasing labor cost and recent anti-Japan protests in China in the wake of the boat incident in the Senkaku islands in September, and China's move to delay exports of rare earth minerals.
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Japanese foreign investment and companies "are increasingly turning their attention to such (emerging) markets as India and Vietnam," JBIC economist Toshiharu Mimura told Kyodo News agency. The survey conducted in the summer of 2010 shows that 74.9 percent of the 605 Japanese companies selected India as their investment destination over the next 10 years, while 71.7 percent chose China. Last year, China was in the first position followed by India. But in short term say over next three years, China still tops the list with 77.3 percent of the respondents being positive with India at 60.5 percent, Vietnam at 32.2 per cent, Thailand at 26.2 per cent, and Brazil at 24.6 per cent. The survey reflects increasing aversion among the Japanese manufacturers to invest in China due to some frequent strikes last year in Chinese auto manufacturing units followed by bitter diplomatic row between the two nations over the disputed Senkaku islands in the East China Sea which both claim

Read more: http://www.ibtimes.com/articles/98235/20110106/india-tops-japan-s-fdi-destinationsurvey.htm#ixzz1EDF5p8Lk

Foreign direct investment

From Wikipedia, the free encyclopedia Jump to: navigation, search

Foreign direct investment (FDI) or foreign investment refers to long term participation by country A into country B. It usually involves participation in management, joint-venture, transfer of technology and expertise. There are two types of FDI: inward foreign direct investment and outward foreign direct investment, resulting in a net FDI inflow (positive or negative) and "stock of foreign direct investment", which is the cumulative number for a given period. Direct investment excludes investment through purchase of shares.[1]

Contents
[hide]

1 History 2 Types 3 Methods 4 Global Foreign Direct Investment 5 Foreign direct investment in the United States 6 Foreign direct investment in China 7 Foreign direct investment in India 8 Foreign direct investment and the developing world 9 See also 10 References 11 External links

[edit] History
FDI is a measure of foreign ownership of productive assets, such as factories, mines and land. Increasing foreign investment can be used as one measure of growing economic globalization. The figure below shows net inflows of foreign direct investment in the United States. The largest flows of foreign investment occur between the industrialized countries (North America, Western Europe and Japan). But flows to non-industrialized countries are increasing sharply. US International Direct Investment Flows:[2]
Perio d FDI Outflow FDI Inflows Net + $ 37.04 bn + $ 81.93 bn - $ 122.96 bn + $ 43.13 bn

1960$ 42.18 bn $ 5.13 bn 69 1970- $ 122.72 79 bn 1980- $ 206.27 89 bn 1990- $ 950.47 99 bn $ 40.79 bn $ 329.23 bn $ 907.34 bn

2000- $ 1,629.05 $ 1,421.31 + $ 207.74 07 bn bn bn Total $ 2,950.69 $ 2,703.81 + $ 246.88

bn

bn

bn

[edit] Types
A foreign direct investor may be classified in any sector of the economy and could be any one of the following:[citation needed]
an individual; a group of related individuals; an incorporated or unincorporated entity; a public company or private company; a group of related enterprises; a government body; an estate (law), trust or other social institution; or any combination of the above.

[edit] Methods
The foreign direct investor may acquire voting power of an enterprise in an economy through any of the following methods:
by incorporating a wholly owned subsidiary or company by acquiring shares in an associated enterprise through a merger or an acquisition of an unrelated enterprise participating in an equity joint venture with another investor or enterprise

Foreign direct investment incentives may take the following forms:[citation needed]
low corporate tax and income tax rates tax holidays other types of tax concessions preferential tariffs special economic zones EPZ - Export Processing Zones Bonded Warehouses Maquiladoras investment financial subsidies soft loan or loan guarantees free land or land subsidies relocation & expatriation subsidies job training & employment subsidies

infrastructure subsidies R&D support derogation from regulations (usually for very large projects)

[edit] Global Foreign Direct Investment

UNCTAD said that no significant growth of Global FDI. In 2010 was $1,122 billion and in 2009 was $1.114 billion. The figures was 25 percent below the pre-crisis average between 2005 to 2007.[3]

[edit] Foreign direct investment in the United States

"Invest in America" is an initiative of the US Department of Commerce and aimed to promote the arrival of foreign investors to the country.[4] The Invest in America policy is focused on:
Facilitating investor queries. Carrying out maneuvers to aid foreign investors. Provide support both at local and state levels. Address concerns related to the business environment by helping as an ombudsman in Washington DC for the international venture community. Offering policy guidelines and helping getting access to the legal system.

The United States is the worlds largest recipient of FDI. More than $325.3 billion in FDI flowed into the United States in 2008, which is a 37 percent increase from 2007. The $2.1 trillion stock of FDI in the United States at the end of 2008 is the equivalent of approximately 16 percent of U.S. gross domestic product (GDP).55 Benefits of FDI in America: In the last 6 years, over 4000 new projects and 630,000 new jobs have been created by foreign companies, resulting in close to $314 billion in investment.[citation
needed]

Unarguably, US affiliates of foreign companies have a history of paying higher wages than

US corporations.[citation needed] Foreign companies have in the past supported an annual US payroll of $364 billion with an average annual compensation of $68,000 per employee.[citation needed] Increased US exports through the use of multinational distribution networks. FDI has resulted in 30% of jobs for Americans in the manufacturing sector, which accounts for 12% of all manufacturing jobs in the US.[5] Affiliates of foreign corporations spent more than $34 billion on research and development in 2006 and continue to support many national projects. Inward FDI has led to higher productivity through increased capital, which in turn has led to high living standards.[6]

[edit] Foreign direct investment in China

Starting from a baseline of less than $19 billion just 20 years ago, FDI in China has grown to over $300 billion in the first 10 years. China has continued its massive growth and is the leader among all developing nations in terms of FDI.[citation needed] Even though there was a slight dip in FDI in 2009 as a result of the global slowdown, 2010 has again seen investments increase.

[edit] Foreign direct investment in India

A recent UNCTAD survey projected India as the second most important FDI destination (after China) for transnational corporations during 2010-2012. As per the data, the sectors which attracted higher inflows were services, telecommunication, construction activities and computer software and hardware. Mauritius, Singapore, the US and the UK were among the leading sources of FDI. FDI for 2009-10 at USD 25.88 billion was lower by five per cent from USD 27.33 billion in the previous fiscal. Foreign direct investment in August dipped by about 60 per cent to USD 1.33 billion, the lowest in 2010 fiscal, industry department data released showed. [7]

[edit] Foreign direct investment and the developing world

Foreign investment can be a significant driver of development in poor nations. It provides an inflow of foreign capital and funds, in addition to an increase in the transfer of skills, technology, and job opportunities. Many of the East Asian tigers such as China, South Korea, Malaysia, and Singapore benefited from investment abroad. The Commitment to Development Index ranks the "development-friendliness" of rich country investment policies.

China and India are Worlds Top Two FDI Destinations: UN Survey
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Sept. 7 A recent survey of transnational corporations found that companies see China and India as the worlds first and second most important destinations for foreign direct investment over the 2010 to 2012 period, respectively. The World Prospectus Survey 2010-2012 was released yesterday by the United Nations Conference on Trade and Development (UNCTAD), showing that China has once again retained title of the worlds most important FDI destination. India, meanwhile, overtook the United States to claim the surveys second spot as the U.S. economy continues to struggle.

The figure below shows the top priority host economies for FDI for the 2010 to 2012 period (the number of times that the country is mentioned as a top priority for FDI by transnational corporations). The number in parenthesis is the countrys rank in last years UNCTAD survey.

The figure below shows prospects for respondent companies FDI expenditures in 2010 to 2012 as compared to 2009 by home region (average of responses from the transnational corporations surveyed) with 0 indicating no change, 1 indicating an increase of less than 10 percent, 2 indicating an increase between 10 percent and 30 percent, 3 indicating an increase between 30 percent and 50 percent, and 4 indicating an increase of more than 50 percent.

India among favourite destinations for FDI

India Infoline News Service / 09:48 , Dec 09, 2010

The projection made in the report is based on the survey conducted among Trans National Corporations (TNCs)

India is projected to become the second most attractive destination for FDI in 2010-12, as per UNCTADs World Investment Report, 2010. The projection made in the report is based on the survey conducted among Trans National Corporations (TNCs). Country-wise FDI projection is not available.

Government has put in place an investor-friendly policy on FDI, under which FDI, up to 100%, is permitted on the automatic route, in most sectors/activities. This policy is reviewed, on an ongoing basis, through a consultative process and significant changes have been made in the policy regime, in recent times, to ensure that India remains increasingly attractive and investor-friendly.

The FDI policy is now available in the form of a consolidated document, as Circular 2 of 2010, effective 1 October, 2010, issued by Department of Industrial Policy and Promotion. The circular is available in the public domain and can be accessed at the website of the Department of Industrial Policy & Promotion (http://dipp.nic.in).

The Government plays an active role in investment promotion, through dissemination of information on the investment climate and opportunities in India and by advising prospective investors about investment policies and procedures and opportunities. A number of joint commissions and joint working groups have been set up to promote industrial, technical and scientific cooperation with select countries.

The Government has also set up CEOs /Business Leaders Fora with some countries for active business-to-business cooperation and for developing a road map for partnership and industrial cooperation. It also coordinates with apex industry associations in their activities relating to promotion of industrial cooperation, intended to stimulate flow of foreign direct investment into India.

This information was given by Shri Jyotiraditya M Scindia, Minister of State for Commerce and Industry, in a written reply in the Rajya Sabha.

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