India trails China in foreign investments

Tuesday, 29 June 2004, 07:00 Hrs
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WASHINGTON: India received a meagre $4 billion in foreign direct investment (FDI) from Organization for Economic Cooperation and Development (OECD) countries in 2003 against China's $53 billion, according to a report.

The report on worldwide FDI figures by the OECD also said that China, for the first time, overtook the US, which was able to attract only $40 billion.

The report titled "Trends and Recent Developments in Foreign Direct Investment", in fact pointed out that the US registered the largest fall of FDI inflows among OECD countries with the 2003 level 44 percent below the 2002 level and 76 percent below that in 2001.

Overall, net FDI from OECD countries to the rest of the world rose six-fold in 2003, marking the largest net flow to developing and emerging economies on record, the report said.

It said that the magnitude of the economy tends to be the decisive factor in OECD companies' investment decisions with large emerging economies such as China and India attracting the most FDI.

This contrasts with investment decisions based primarily on production and labour costs in earlier decades, it noted.

The report said the weak global economic recovery, concerns about international security, and a preference on the part of many firms to consolidate acquisitions rather than make new ones all contributed to the decline in FDI.

These cover activities like mergers and acquisitions, the construction of new production plants and capital transfers to foreign-owned enterprises, according to the report.

The report will be included as a chapter in the upcoming annual OECD publication "International Investment Perspectives", scheduled for release in September.

Source: IANS
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