India Is World’s No.1 FDI Destination; Jumps 16 Places In Global Competitiveness Index

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12:00 pm 30 Sep, 2015

It appears that Prime Minister Narendra Modi’s foreign tours are paying rich dividends.

A report published in the Financial Times, which according to PTI was forwarded to it by the Finance Ministry, says that India has piped both China and the US to take the pole position in investment league.

India attracted $31 billion of foreign capital inflows in the first half of 2015. During the same period, China attracted $28 billion and US got $27 billion in investments.

The FT report said:

“A ranking of the top destinations for greenfield investment (measured by estimated capital expenditure) in the first half of 2015 shows India at number one, having attracted roughly $ 3 billion more than China and $ 4 billion more than the US.”

This noteworthy success in the investment arena can be attributed to the Modi government’s persistent push towards meeting the demand for reforms.

Initiatives such as ‘Make in India’ and ‘Digital India’ are proving themselves to be quite lucrative to investors.


Make in India


The report said that in 2014 India ranked fifth in terms of capital investment, after China, the US, the UK and Mexico.

India has more than doubled its midyear investment levels as compared to the same time last year, attracting $ 30 billion by the end of June 2015 compared with $ 12 billion in the first half of last year.

“In a year when many major FDI destinations posted declines, India experienced one of 2014’s best FDI growth rates, increasing its number of projects by 47%,” the report said.

The TOI cites experts saying that India is expected to benefit from the slowdown in China.

The government is confident of achieving close to 8% growth in the current fiscal year and this could be achievable given the overall sluggishness in global commodity prices including crude oil which will act as a cushion.

There is another good news for India’s economy.

After five years of decline, the country has jumped 16 places to reach the 55th position in this year’s Global Competitiveness Index, released by the World Economic Forum (WEF).

India’s institutions are ranked 60th out of 140 countries, up by 10 places. There has also been a slight improvement in infrastructure which stands at 81, up 6 places.

The areas where it scores rather poorly are quality of roads, where India stands at 61st place, and electricity supply, where it ranks 98th.


Global Competitiveness

The low point in this report is that India still ranks seven ranks lower than it did in 2007.

But Business Standard says that the WEF report is anomalous because India is shown to have improved in health and primary education. On the quality of primary education front, it ranks 52nd, “which is at odds with various surveys such as the Annual Status of Education Report that show how poorly the country fares in this regard”.

The report also presents a rather surprising picture of India’s overall technology readiness of its businesses. The country comes in at a poor 120, up just one position from 2014.

This is at a time when the Prime Minister has been himself spearheading the country’s digitisation drive and holding headline grabbing meetings with tech czars in Silicon Valley.

Experts also say that there are areas where investors want more reforms, which include tax policy, labour laws, cutting red tape and issues linked to land acquisition.

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