India Becomes the Only South Asian Nation to Overtake China in Direct Investment by U.S.


BENGALURU: Although, Indian emerging market is going through major slowdown and suffering with issues like inflation, infamous red tape and unemployment, India has stll managed to surpass China in terms of direct equity allocation by US investors.

The data revealed by US Treasury manifests that direct investment in India by the US investors has risen to $12 billion in December last year from $7 billion in September 2013. During the same period, China’s share has declined from $12.8 billion to $11.1 billion, reports ET. Moreover, India is the only South Asian nation to stand above China. It makes up 1.8% of US foreign equity holdings as on December 2015, as against 1.6% of China.

With India’s overexposure within the emerging market basket gradually receding, this improvement in equity investment is good news for country’s economical infrastructure. From a peak of 5.2% in January 2015, the over-allocation into India by active funds has come down to 3.7% in January 2016.

Kotak Institutional Equities, a division of Kotak Securities and institutional brokers service provider reports that, average US investor’s equity allocation to the world’s emerging markets has declined to nearly 12%. The rate was at its peak of 18%in December 2009.   The top countries preferred by US investors are Cayman Islands, UK and Japan. These three countries have respectively received 13.4, 13.3, and 10.2 percent share of the total US equity.

Meanwhile, after registering continuous annual growth for nearly a quarter century, and despite strong efforts for foreign investment by Indian Prime Minister Narendra Modi, the US-India trades have declined in 2015 from the previous year. The two countries traded in goods and services worth $66.271 billion in 2015, which is $581 million lower than the trade volume in 2014.

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