WITH NET foreign direct investment during the first ten months of this fiscal already the second highest ever and headed for a new record, Delhi and its adjoining satellite townships seem to have anchored much of this inflow during this period.
According to details of FDI equity inflows based on RBI’s regional office-wise compilations, investments into companies based in the National Capital Region (NCR), including Noida in UP and the Gurgaon-Manesar belt in Haryana, accounted for over a third of the $29.44 billion that came in during April-December — over double the amount that Mumbai-based firms drew.
Last fiscal, the NCR accounted for less than a fourth of total inflows and investments into this region were marginally higher than those reported by Mumbai-based firms. FDI equity inflow data is not maintained on a state-wise basis and hence the RBI regional office-wise compilation provides the best measure of where the funds are potentially headed.
Besides, the investment inflows recorded for a particular regional office of RBI may cover more than one state and there is the possibility that a company may report transactions where its head office is situated, irrespective where the fund was utilised.
The FDI equity inflow data for the current fiscal shows that there has been a sharp drop in the foreign investment flows reported by Hyderabad, Kochi, Kanpur and Jaipur. Bengaluru has been steady while Chennai and Kolkata were up in terms of inflows this fiscal.
Overall, the FDI inflows during the ten months of this fiscal are just a shade lower than the $30.93 billion that came in during the entire 12 months of 2014-15. The strong inflows have been attributed by the Centre to two main factors — an uptick in investment sentiment after the launch of ‘Make in India’ initiative in September 2014, alongside the expansion of the existing Free Trade Agreement (FTA) with ASEAN countries to include “service” and “investment”.
The expanded ASEAN agreement — covering Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam — was signed in November 2014 and came into effect from July 1, 2015. “The Make in India initiative and its outreach to all investors has resulted in a growth of 36 per cent in FDI equity inflow over a time span of 15 months since the initiative was launched,” said an official.
Of the $45.68 billion worth of investments estimated to have come into India between October 2014 and December 2015 from across 106 destinations, three of the five top investment hubs are from countries that are tax havens. During this period, the highest inflows into India have come in from Singapore ($15.29 billion), followed by Mauritius ($10.914 billion), the US ($4.14 billion), the Netherlands ($3.60 billion) and Japan ($2.23 billion).
During April-December this fiscal, over 90 per cent of the total foreign direct investment received came in through the automatic route, with less than 10 per cent coming in through the approval route.
According to the Department of Industrial Policy and Promotion, FDI equity inflow received through automatic route and approval route during the current financial year (up to December 2015) was 90.24 per cent and 9.76 per cent, respectively.