India beats China as top investment destination for first time

Date:   Monday , November 03, 2008

Eighteen years after it started opening up its economy, India, for the first time, has replaced China as the most promising destination for foreign direct investment in the medium-to-long term, says a UN agency. The World Investment Report (WIR) prepared by the United Nations Conference on Trade and Development (UNCTAD) states that in the short term, however, China again ranked at the top, followed by India.

The report quoted a survey by the Japan Bank of International Cooperation (JBIC) for its remarks. The JBIC survey of Japanese manufacturing TNCs (transnational corporations) found that China again ranked at the top although the number of firms planning to expand production in the country continued to decline.
“As for long-term prospects, the survey showed for the first time India replacing China as the most promising country for business operations of Japanese TNCs,” the UNCTAD report added.

“The figures clearly show that India is fast emerging as a major player in both inward and outward FDI,” said Premila Nazareth Satyanand, independent consultant and research contributor to the UNCTAD report.

China is the most preferred investment location, according to the survey, followed by India, the U.S., the Russian Federation and Brazil. FDI stocks in India as a percentage of gross domestic products had also gone up from 0.5 percent in 1990 to 3.7 percent in 2000, 5.7 percent in 2006 and 6.7 percent in 2007.

Outward flow of FDI from India had also increased from a measly $121 billion annual average for 1990-2000 to $2,179 billion in 2004, $2,978 billion in 2005, to as much as $12,842 billion in 2006 and $13,649 in 2007.