India 9th largest recipient of foreign investment in 2019: UN report

Source: Business Standard, Jun 17, 2020

India received $51 billion in foreign investment in 2019 and was the world’s 9th largest recipient of foreign direct investments (FDI) in 2019, according to a report by the UN’s trade body.

The UN Conference on Trade and Development (UNCTAD) said in a report on Monday that a lower but positive economic growth in India in the post-Covid-19 pandemic period and India’s large market will continue to attract market-seeking investments to the country. The World Investment Report 2020 by the UNCTAD said that India was the 9th largest recipient of FDI in 2019, with $51 billion of inflows during the year, an increase from the $42 billion of FDI received in 2018, when India ranked 12 among the top 20 host economies in the world. In the “developing Asia” region, India was among the top five host economies for FDI.

Indian companies pump $22 billion in US as FDI: CII Survey

Source: The Economic Times, Jun 16, 2020

Indian companies pumped in over $22 billion worth of foreign direct investment (FDI) into the United States (US) and created 125,000 jobs covering all 50 states, Washington DC and Puerto Rico, according to a Confederation of Indian Industry (CII) survey released on Tuesday.

According to the report titled ‘Indian Roots, American Soil’ which surveyed 155 Indian companies in the US, Texas came out as the top investment destination for Indian FDI, receiving $9.5 billion, followed by New Jersey’s $2.4 billion and $1.8 billion in New York.

The survey covered companies operating across a range of industries from pharmaceuticals and life sciences to telecommunications and manufacturing.

In terms of jobs, it found that Indian firms created 17,578 jobs in Texas. This was followed by 8,271 jobs in California and 8,057 jobs in New Jersey.

While 20 US states had received over $100 million in investments from these 155 Indian firms, the survey found 77% of them reported plans to increase investments with 83% stating they would hire more employees locally over the next five years.

“The survey results show that the US is a preferred investment destination for Indian companies which are contributing significantly to supporting local jobs. The results in the survey capture a snapshot in time, documenting tangible investments and direct jobs only, so I believe that the actual economic impact of Indian FDI in the US is much larger,” said Chandrajit Banerjee, director general, CII.

The survey also found that Indian companies contributed $175 million towards corporate social responsibility (CSR) and about $900 million on research and development.

“The sixth edition of CII report, Indian Roots, American Soil highlights the significant investments made by Indian industry in the US, including in the area of research and development. The report draws attention to the contribution made by Indian companies to local communities through their CSR initiatives like supporting students, organizing special skill and training programmes,” said Taranjit Sandhu, ambassador of India to the US, who attended the virtual launch of the survey.

The launch was also attended by US government officials like Diane Farrell, acting deputy under secretary for international administration, US department of commerce and Peter Haas, principal deputy assistant secretary, US department of state.

Executives of some of the surveyed Indian firms including Inderpreet Sawhney, chief compliance officer at Infosys, Sofia Mumtaz, president of Lupin North America, and Laksh Vaaman Sehgal, vice chairman, Motherson Group.

Foreign investment in food processing up 44% to $904 mn in 2019-20

Source: Business Standard, Jun 11, 2020

New Delhi: Foreign direct investment (FDI) in the food processing sector rose 44 per cent to $904.7 million in the financial year 2019-20, according to government data.

The sector had received FDI worth $628.24 million in 2018-19 and $904.90 million in the financial year 2017-18.

“With 100 per cent FDI allowed by GOI (Government of India) & ease of doing business, India’s food processing sector attracted global investors as it received FDI inflows worth $904.70 mn in the 2019-20 (up by 44 per cent over 2018-19),” the food processing ministry said in a tweet.

Currently, 100 per cent FDI in the food processing sector is allowed through the automatic route. In 2016, the Centre allowed 100 per cent FDI through the approval route for retail trading, including through e-commerce, in respect of food products manufactured and produced in India.

FDI from Cayman Islands to India jumps three-fold to $3.7 bn in 2019-20

Source: The Economic Times, Jun 09, 2020

Cayman Islands has emerged as the fifth largest investor in India, with foreign direct investment from the nation increasing over three-fold to USD 3.7 billion in 2019-20, according to the Department for Promotion of Industry and Internal Trade (DPIIT). India had received FDI worth USD one billion in 2018-19 and USD 1.23 billion in 2017-18 from Cayman Islands, which is UK Overseas Territory.

Similarly, FDI from Cyprus too increased by about three-times to USD 879 million in the last financial year from USD 296 million in 2018-19. It was USD 417 million in 2017-18, the DPIIT data showed.

Experts have stated that over time, Cayman Islands has become one of the most preferred jurisdictions for routing investments due to the absence of direct taxes costs and is one of most significant reasons why developed economies like UK, France, and Germany are now falling behind.

“In fact, three times year-on-year leap in FDI inflows from Cayman Islands must be viewed as an indicator of how this small offshore tax haven has emerged as a favourite intermediate investment holding jurisdiction by investors across the world rather than India gaining higher popularity as an Investment destination,” Nischal Arora, Partner- Regulatory, Nangia & Co LLP said.

However, such rapid pace of investments is also bound to worry the Indian regulators due to lack of substance requirements and perceived lack of transparency obligations by the investment holding jurisdiction, he said.

“Additionally, investments from tax havens do carry a comparatively higher perceived risk of laundered money, round tripping issues etc, again, which is bound to make the regulators wary of this new trend…In light of (certain) gaps in ascertaining complete beneficiary details, one may expect the government to come out with measures relating to carrying out additional scrutiny or monitoring of investments from such tax neutral jurisdictions,” Arora added.

Further, he said that high FDI inflow from Cyprus is possibly due to the jurisdiction emerging as the lowest tax rate country in Europe. Singapore is the top investor in India in the last financial year. It was followed by Mauritius, Netherlands, and the US. FDI in India increased by 13 per cent to USD 50 billion in 2019-20.

Industry calls for 100% automatic FDI in satellites

Source: The Economic Times, Jun 08, 2020

Kolkata: Global satellite builders and communications service providers have called on finance minister Nirmala Sitharaman to allow 100% foreign direct investment (FDI) through the automatic route to attract billions of dollars into the space/satellite broadband sectors from the likes of Amazon, Elon Musk’s rocket engine maker SpaceX, Hughes and Telesat, among others.

All FDI proposals in the satellites space are currently screened by the Department of Space (DoS) and its internal panel, the Committee for Authorisation of Indian Satellite Systems, a scenario that has held up big-ticket FDI proposals for years, say experts.

“The commercial satellite broadband segment is attracting billions of dollars across the globe from companies like SpaceX, Amazon, Hughes, Inmarsat, Telesat and Viasat, and to attract this investment into India, we recommend 100% FDI be allowed under the automatic route,” said TV Ramachandran, president, Broadband India Forum (BIF), in a May 28 letter to Sitharaman.

This, he said, would enable these top global players to set up Indian private companies for participation in space activities. BIF counts Amazon, Hughes, Viasat, Inmarsat, Intelsat, Google, Facebook, AT&T and Apple among its key global members.

The letter comes barely a fortnight after Sitharaman said a level-playing field would be created — for private satellite builders, launchers and space-based service providers to invest aggressively in India — with a new policy and regulatory regime.

Ramchandran said, “Though (India’s) existing policy allows 100% FDI in satellites, for both establishment and operation, subject to government approval, no one has been permitted so far.” ET has seen a copy of the letter.

For instance, US-based Hughes’ $500 million (Rs 3,800 crore) FDI proposal to build a satellite communications system in India has not been cleared by the DoS for nearly four years, even after Hughes sought intervention of the Prime Minister’s Office two years ago.

“This issue can ideally be addressed if FDI is allowed through automatic route,” a top industry executive told ET.

Singapore top source of FDI in FY20 with investments worth USD 14.67 bn

Source: The Economic Times, May 29, 2020

NEW DELHI: Singapore was the top source of foreign direct investment into India for the second consecutive financial year, accounting for about 30 per cent of FDI inflows in 2019-20.

In the past two financial years, FDI from Singapore has surpassed that from Mauritius.

In the last financial year, India attracted USD 14.67 billion in FDI from Singapore, whereas it was USD 8.24 billion from Mauritius, according to the data of the Department for Promotion of Industry and Internal Trade (DPIIT).

In 2018-19, Singapore’s FDI aggregated at USD 16.22 billion, while that from Mauritius it was USD 8.08 billion.

According to experts, Singapore has been able to outpace Mauritius with its ease of doing business policies, simplified tax regime and a large number of private investors.

“Mauritius was once seen as a tax haven making it the most favoured nation for nation for routing investments in India. April 2017 brought key amendments to the bilateral treaties with Mauritius and Singapore which neutralized the tax benefits available in Mauritius.

“Singapore with its ease of business policies, simplified tax regime and large number of private investors has been able to outrun Mauritius,” Sandeep Jhunjhunwala, Partner, Nangia Andersen LLP said.

He said attractive corporate tax rates, swift response in combating the COVID-19 pandemic, impressive mobile and internet penetration, and technology uptake are making India a primary destination to invest.

“While countries are battling the COVID-19 pandemic and the world economy is headed into recession, India received a mammoth investment from stake sale of Jio Platforms. Economists and investors are now closely watching India as it is headed towards becoming a digital giant,” Jhunjhunwala added.

Biswajit Dhar, a professor of economics at Jawaharlal Nehru University, said significant FDI is coming from Singapore because of “round tripping” .

“Inflows from Mauritius have been affected after the agreement on double taxation avoidance,” Dhar said adding future FDI inflows into India would also depend on the state of global FDI flows.

In 2017-18, FDI inflows from Mauritius stood at USD 15.94 billion and from Singapore, it was USD 12.18 billion.

FDI in India rose by 13 per cent – the sharpest pace in the last four fiscals – to a record USD 49.97 billion in 2019-20, according to the data.

Total FDI into India including re-invested earnings and other capital in the last fiscal grew by 18 per cent to USD 73.45 billion as against USD 62 billion in 2018-19.

When asked whether high FDI growth trend will continue in India, Rajat Wahi, Partner, Deloitte India, said: “Yes, but probably not as much as in the last three years due to three months getting wiped out (due to COVID-19 pandemic) . But given the funds available globally and our strength in tech-enabled businesses, FDI will flow again post lockdown”.

This growth in FDI in 2019-20, he said, was in line with the growth of e-commerce, fintech and startups, that was continuing for the last five years, especially last year.

“Given the amount of money that is being pumped in by various governments to revive their respective economies, the expectation is that we will again see a major increase in investments into startups and new tech-enabled businesses post the lockdown,” Wahi added.

Foreign investments are considered crucial for India as it needs huge investments for overhauling the infrastructure sector such as ports, airports and highways to boost growth.

FDI helps in improving the country’s balance of payments and strengthen the rupee value against other global currencies, especially the US dollar.

FDI in India jumps 13% to record $49.98 billion in 2019-20

Source: The Economic Times, May 29, 2020

NEW DELHI: Foreign direct investment into India rose 13% to a record $49.97 billion in FY20 from $44.36 billion a year earlier, official data released on Thursday showed. FDI inflows were $13.2 billion in the quarter ended March.

Singapore remained the top source of FDI, accounting for $14.67 billion, followed by Mauritius at $8.24 billion, according to the data released by the Department for Promotion of Industry and Internal Trade. India’s FDI inflows had dipped 1% in FY19. Services, computer software and hardware, trading, telecommunications, and hotel & tourism were the top five sectors for FDI.

Services garnered FDI worth $7.85 billion while investments in computer software and hardware were $7.67 billion, and in trading were $4.57 billion. Telecommunications drew FDI worth $4.44 billion in FY20, and hotel & tourism attracted $2.93 billion of foreign inflows.

January saw the highest inflow of $5.57 billion and February the least at $3.36 billion.

Among states, Maharashtra garnered the highest share of FDI at 30% with investments clocking $7.26 billion. Karnataka and Delhi followed with 18% and 17% share, respectively. While FDI through FIPB route/RBI’s Automatic Route/Acquisition Route rose 13% on year, total FDI that also includes equity capital of unincorporated bodies, reinvested earnings and other capital was up 18% on year to $73.45 billion, more than double from $36.04 billion in 2013-14.

Booster shot for maritime sector: Govt plans to de-risk ports, enhance FDI

Source: Business Standard, May 19, 2020

New Delhi: The Centre has planned a slew of measures to give a fillip to the shipping industry and encourage private participation.

As part of the process, it plans to dismantle inefficient and burdensome monopolies, encourage the start-up culture, and call for innovation to de-risk projects as well as lead to higher foreign direct investment in ports.

The vision includes building new ports to cater to trade requirements, develop India as a trans-shipment hub, and lift at least two ports to the world’s top 10 list.

Setting up a ‘National Port Authority of India’ for major ports in lieu of the Indian Ports Association — on the lines of NHAI (National Highways Authority of India) and AAI (Airports Authority of India) — for planning, project development, recruitment policies, and procurement, is on the cards.

This is to enable local port administrations to focus solely on operation and maintenance. According to the draft Maritime Vision 2030, the Ministry of Shipping has set up 14 working groups for each thrust area in the sector. Sagarmala was centred on four pillars — port modernisation, port-led industrialisation, port connectivity enhancement, and coastal community development.

Experts say this goes beyond port gates, and focuses on efficiency, ease of doing business, enabling and integrating technology, and giving a thrust to allied activities.

Significant emphasis is also being given to areas beyond port gates, such as integrating technology into functioning of the port ecosystem, simplification of various processes, mainstreaming inland water transport, and laying emphasis on allied revenue-generating activities like cruise tourism, said Jagannarayan Padmanabhan, director at Crisil Infrastructure Advisory.

This will help industry and various stakeholders come together and project their vision for the maritime sector. These are early days — the exercise is quite exhaustive. The final implementation framework, as prepared by the 14 working groups, will give us an idea, he said.

Each working group will prepare a detailed roadmap, milestones with timelines, and accordingly identify institutions responsible for achieving those milestones.

The government also intends to make maritime logistics cost-competitive by promoting port-led industrialisation and coastal cargo development, and also make Indian ports affordable and competitive for EXIM and coastal trade.

Given that many areas fall in the domain of state governments, due thought will be given to their concerns, and policy prescription may be aligned to state policies to the extent possible.

The vision also includes operationalisation of minor ports — underused or unused small ports — to make them function as domestic cargo terminals.

The Union government intends to develop cruise destinations at tourist locations, and increase the number of Indian cruises from 150 to 1,000 in five years, with effective use of coast and inland water for cruise tourism.

Promotion of river cruise tourism and water transportation, provision of smooth transportation network to local fishing communities, and the use of PPP model to develop various facilities like terminals, jetties, ferry services are in the radar. The final Maritime India — Vision 2030 document should be submitted in three months and address resource/talent constraints, capacity building, and human resource issues.

Finance Minister announces hike in FDI in defence production

Source: Business Standard, May 16, 2020

New Delhi: To boost Make in India in defence production, Finance Minister Nirmala Sitharaman on Saturday said FDI limit in defence manufacturing will be hiked to 74 per cent from 49 per cent while some weapons and platforms will be banned for imports.

Items banned for imports can only be purchased from within the country, she said presenting the fourth tranche of the economic stimulus package.

Also, there will be indigenisation of some imported spares, she said adding separate budget provisioning for domestic capital procurement will be done.

This, she said, will reduce the huge defence import bill.

Ordnance Factory Boards will be corporatised for better management and eventually get listed on the stock market, she said adding corporatisation is not privatisation.

For the time-bound defence procurement process and faster decision-making, project management unit (PMU) to support contract management will be set up. The FDI limit in the defence manufacturing under automatic route will be raised from 49 per cent to 74 per cent, she said.

Maharashtra woos industry with ‘maha permits’, names ‘sherpa’ to facilitate FDI

Source: The Economic Times, May 14, 2020

Mumbai: Maharashtra is seeking to attract investment from companies by enhancing ease of doing business in the state while deciding against relaxing labour laws, unlike Uttar Pradesh and Madhya Pradesh, in the wake of the restrictions forced by Covid-19. State industry minister Subhash Desai said on Wednesday that companies investing in Maharashtra will not have to run around to get permissions but will get a single ‘mega permission’ to invest in the state, adding that the government is also looking to unveil a financial package for industries in the state. The move means industries would no longer have to seek separate clearances for power, water and other requirements.

A state government official said that once given the nod industries can start work while the rest of the clearances would be done in due course. He said this scheme was only for non-polluting industries. Desai said the state would also create a labour bureau which woould compile a list of workers and grade them as per their skills. The graded list would have skilled, semi-skilled and unskilled workers. Maharashtra has decided to appoint senior IAS officer Bhushan Gagrani as a ‘sherpa’, as private banks do, to interact with companies and help facilitate their investment and address their issues.

Gagrani’s task would be to prepare a blue print for government in order to attract more FDI from Japan, US, Korea and Germany. However, unlike Uttar Pradesh and Madhya Pradesh, which have relaxed labour laws, Maharashtra is not considering this option. “We need to have a balance between industrial growth and labour reforms,” said an official on condition of anonymity.