Inflows of foreign direct investment (FDI) into India fell 13.5 percent in 2012, but prospects for attracting these funds are higher in the future as the country liberalised its trade, says the United Nations Conference on Trade & Development (UNCTAD).
UNCTAD today came out with a report on global investment trend monitor which showed that for the first time in history, the FDI inflows to developing countries were higher than those into developed countries by $ 130 billion.
The FDI inflows to developed countries fell to the level it was a decade ago. Though the FDI inflows to China declined 3.4 percent, at $120 billion, the country is still the second largest recipient of FDI in the world after US.
UNCTAD said the FDI inflows into India declined from $31.5 billion in 2011 to $27.3 billion in 2012.
The report said India’s prospects in attracting more FDI in the future are higher because of its attempts to open up certain sectors for trade. In September, 2012 India had allowed up to 51 percent FDI in multi-brand retail, subject to states approvals, and hiked the FDI cap on single brand retail to 100 percent. Similarly, it liberalised FDI in aviation and power trading exchanges.
According to UNCTAD, the global FDI inflows fell 18% in 2012 to $1.31 trillion due to weakening macroeconomic environment, slow growth in trade, GDP and employment.
The report said the FDI inflows are likely to moderately grow in 2013 and 2014.
"FDI recovery is on a bumpy road. While FDI in developing countries remained resilient, more investment in sectors that can contribute to job creation and enhance local productive capacity is still badly needed. Therefore promoting FDI for sustainable development remains a challenge" said Secretary-General of UNCTAD, Dr Supachai Panitchpakdi.
The Department of Industrial Policy and Promotion is slated to release its consolidated FDI policy on March 31.