Foreign direct investment (FDI) in India has surged by about 35 percent to $13.6 billion during the first half of 2013 with merger and acquisitions (M&A) accounting for the bulk of inflows. The United Nations Conference on Trade and Development (UNCTAD) report said that foreign investment through M&A registered a growth of 65.7 percent during the first half of 2013 to $1.8 billion as against $1.1 billion in January-June 2012. However, FDI in new projects has declined by 48.7 percent to $8.8 billion during the period.
Increasing FDI inflows into the country reflect that the government’s measures to enhance foreign investment has have started yielding. FDI is considered crucial for economic development of a country and to attract maximum FDI into the country, the government has been liberalizing the foreign investment policy. The government has relaxed FDI norms in around 12 sectors which include telecom, tea, pension and petroleum and natural gas. India would require around $1 trillion in the 12th five year plan (2012-2017), to overhaul its infrastructure sector such as ports, airports and highways to boost growth.
Further, the UNCTAD report highlighted that foreign fund inflows into India has pushed the total figures for the South Asian Association for Regional Cooperation (SAARC). In terms of FDI inflows among BRICS (Brazil, Russia, India, China and South Africa) countries, India stood at fourth position, above South Africa. Developing Asian region continues would absorb more than half of the FDI directed to developing economies and one quarter of global FDI flows.
Among the world's largest recipients of FDI during the reported period, UK topped the chart followed by China with $67 billion foreign inflows. The report further said that global foreign direct investment witnessed a 4 percent rise to $745 billion in the first half of 2013. The FDI inflow to the developed countries has declined. Meanwhile the decline was offset by a rise in flows to developing and transition economies, which accounted for more than 60 percent of the global FDI.
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