India’s capability as a top foreign investment destination hit a new high as it emerged as the leader in FDI for Greenfield investment. Two high-profile deals were also signed to stamp India’s prominence in this space.
India Top Global FDI Destination For Greenfield Investments.
India is in pole position to pass both China and the US in the FDI league tables this year, according to data from fDi Markets, an FT data service. In a year when many other major FDI destinations posted declines, India experienced one of 2014’s best FDI growth rates, increasing its number of projects by 47 per cent. This could shape up to be an even better year for investment into India.
A ranking of the top destinations for greenfield investment (measured by estimated capital expenditure) in the first half of 2015 shows India at number one, having attracted roughly $3bn more than China and $4bn more than the US (see Table below). India is tracking well ahead of where it was at this time last year: it has more than doubled its midyear investment levels, attracting $30bn by the end of June 2015 compared with $12bn in the first half of last year.
|Top 10 destinations — H1 2015|
|Source: fDi Markets. *includes estimates; all figures rounded up from decimals|
Largest FDI Deal Inked.
One of the several instances which can help India maintain its top position in global FDI is large deals in this space. It got a fillip recently with Foxconn Technology Group, the global electronics manufacturing giant which makes iPhones for Apple, agreeing to invest $5 billion over five years in a new manufacturing facility in the western state of Maharashtra. This makes it one of the biggest Foreign Direct Investment projects in the country in recent years.
The Taiwan-based group, which has a roster of clients including Apple, BlackBerry, Motorola, Amazon Cisco and Xiaomi has signed a Memorandum of Understanding (MoU) with the state government, which has allotted 1,500 acres of land for the new facility at Taloja in Pune district. More encouragingly, Foxconn chief Terry Gou also envisaged a future where the company would set up factories in 12 Indian states and create a million jobs.
Make In India Gets A Major Boost.
The Indian Prime Minister’s signature campaign, ‘Make In India’ got a major boost recently with China’s Xiaomi Inc joining forces with Foxconn to start assembling phones in India, seeking to cut costs and grab a bigger slice of the world’s third-largest smartphone market. The factory, in the southern state of Andhra Pradesh, is a fillip for Prime Minister Narendra Modi, who has championed a campaign to turn India into a manufacturing powerhouse. To boost economic growth and create much-needed employment.
India is the world’s fastest-growing smartphone market, but so far a lack of good suppliers and infrastructure has hampered efforts to manufacture phones in the country, forcing most of India’s more than 100 different phone companies to import from China and Taiwan. This also pushes up the cost in the hands of Indian consumers. Who often reach out to overseas friends or visitors to procure handsets at cheaper prices outside India.
Industrial License for Defence Sector.
As per Press Note No. 10 (2015 series) issued by the Department of Industrial Policy & Promotion, the initial validity of the industrial license for defence has been revised to 15 years (up from 7 years presently). And further extendable up to 18 years (up from 10 years presently) for existing as well as future licenses. This is being done as a measure to promote ease of doing business, in view of the long gestation period of defence contracts.
FDI Opened for ATM Operations.
The Government has now allowed foreign investment upto 100% in White Label ATM (WLA) operations under the automatic route. The Consolidated FDI Policy of India was recently amended vide Press Note No. 11 (2015 series) to add a new sub-para 126.96.36.199.3 (under NBFCs) to give effect to the above.
The other conditions applicable for this are (i) any non-bank entity intending to set up WLAs should have a minimum net worth of INR 100 crore (1 billion) as per latest financial year’s balance sheet. (ii) If the entity is engaged in other NBFC activities, then it would require to comply with minimum capitalization norms for foreign investment in NBFCs. (iii) FDI would be subject to specified RBI guidelines on WLAs issued vide circular no. DPSS.CO.PD. No. 2298/02.10.002/2011-2012.