In a major boost to the Narendra Modi-led government, a recent UBS report has found that FDI inflows have increased by 34% to an average of $10.2 billion quarterly since the NDA-government assumed power in 2014.
In a major boost to the Narendra Modi-led government, a recent UBS report has found that FDI inflows have increased by 34% to an average of $10.2 billion quarterly since the NDA-government assumed power in 2014. “Looking at the quarterly trend, FDI inflows to India have increased to an average of $10.2 billion (up 34%) since the BJP came to power in mid-2014,” UBS said in the report adding that the comparable figure in the previous 5 years was $7.6 billion. The report notes that FDI inflows in India have nearly doubled to $42 billion in FY17.
“Our estimates indicate that the trend in FDI inflows was likely similar at around $41 billion in FY18. While some moderation was seen in FDI flows in the December 2017 quarter, this will likely normalise over the coming quarters,” the report said. According to UBS, FDI inflows nearly doubled over the past decade to over $42 billion. As per the global firm’s estimates, annual FDI inflows will rise further to around $75 billion over the next 5 years.
The report said that India remains a preferred destination for global investors. Documenting the results of a survey of over 500 corporates, UBS found that over a quarter of larger companies expressed an intention to invest in India, twice as many as ASEAN. “But the preference was much weaker among smaller companies.” the report noted. “We think the incremental interest in India and potential for capital flows is notable given the relative size of its economy and the low share of US FDI stock,” the report added.
Taking stock of the various reforms undertaken by the government, UBS said FDI inflows to the industrial (including manufacturing) sector more than doubled to $17 billion in FY17 compared to the low of $8 billion registered five years back, thanks to structural changes in policy. “This bodes well for creating a productive spill-over impact on other sectors of the economy, for instance, boosting exports, creating jobs, etc, said the report.
This report comes just a day after Asian Development Bank estimated that India’s economic growth will rebound to 7.3% in the current fiscal year and grow at 7.6% further in FY20 on the back of structural reforms such as GST and clean banking.