NEW DELHI: India has replaced China as top destination for foreign direct investment by attracting $63 billion worth FDI projects in 2015, says a report.
“India was the highest ranked country by capital investment in 2015, with $63 billion-worth of FDI projects announced,” according to fDi Intelligence, a division of The Financial Times Ltd.
Also there was an 8 per cent increase in project numbers to 697.
Major companies such as Foxconn and SunEdison have agreed to invest in projects valued at $5 billion and $4 billion, respectively, in India in 2015, it said.
“India replaced China as the top destination for FDI by capital investment following a year of high-value project announcements specifically across the coal, oil and natural gas and renewable energy sectors,” the report said.
It said the biggest change in greenfield FDI in 2015 was the near tripling of greenfield FDI into India, with an estimated $63 billion.
“In 2015, India was for the first time the leading country in the world for FDI, overtaking the US (which had $59.6 billion of greenfield FDI) and China ($56.6 billion),” the report noted.
In a tweet, Minister of State for Finance Jayant Sinha said: “India emerges on top in attracting FDI”.
Of the top 10 destination states for FDI in 2015, India claims five places, with the top place going to Gujarat, which attracted $12.4 billion. Maharashtra has been one of the strongest performers across the years attracting $8.3 billion, respectively, in 2015.
According to fDi Markets, the motives cited by companies investing in India and China are quite similar in nature. For both countries, companies identify domestic market growth potential and proximity to markets as the main two reasons for investing.
“The rapid growth of greenfield FDI in India shows that while economic development organisations try to attract FDI for the contribution greenfield FDI can make to employment and GDP, FDI is strongly attracted to high-growth economies.
“Success breeds success and to attract high volumes of FDI, locations need to create the conditions for strong economic growth and development to take place,” the fDi report said.
It said the Make in India campaign and the resultant boost in FDI has resulted in a whopping increase in FDI job creation from 1.16 lakh new jobs in 2013 to 2.25 lakh in 2015 – the highest number in the world.
Investments in sectors that are not under the automatic route require FIPB approval. Currently 98 per cent FDI into India comes through automatic route.
“India is emerging as a key destination for renewable energy projects, helped by a wider government policy of incentives, infrastructure and programmes designed to attract investment,” it said.
India topped the rankings in 2015 with USD 11.8 billion of announced FDI in the sector. This includes Lightsource Renewable Energy’s plans to invest USD 3 billion to design, install and manage more than 3 gigawatts of solar power within the country. Chinese companies Sany Group and Chint Group are also planning to invest a total of USD 5 billion in the India’s renewable energy sector.
China suffered a 23 per cent decline in capital investment and a 16 per cent drop in FDI projects
Among the emerging economies, greenfield FDI inflow in India and China was followed by Indonesia (USD 38.5 billion), Mexico (USD 24.3 billion) and Brazil (USD 17.3 billion).
The report said in 2015, greenfield FDI continued to show signs of recovery, with capital investment increasing by nearly 9 per cent to USD 713 billion, alongside an increase in job creation by 1 per cent to 1.89 million. However, the number of FDI projects declined 7 per cent to 11,930.