News / Economy

Foreign Investment in India Slows

Indian laborers work at a construction site in Mumbai, India, June 4, 2012Indian laborers work at a construction site in Mumbai, India, June 4, 2012
x
Indian laborers work at a construction site in Mumbai, India, June 4, 2012
Indian laborers work at a construction site in Mumbai, India, June 4, 2012
Anjana Pasricha
NEW DELHI — Foreign investment in India has slowed down in recent months, but a recent United Nations survey says Asia's third largest economy continues to be an attractive investment destination for global companies.

Official data show that in April and May, foreign direct investment in India slumped by nearly 40 percent, falling from more than $5 billion during the same period last year to $3.2 billion.

Economists say a weakening global and domestic economy is only partly to blame.

N.R. Bhanumurthy with New Delhi's National Institute for Public Finance and Policy, says the slow pace of reforms and policy reversals in recent months have frustrated many foreign investors. He points out that the government has many times promised to push ahead with liberalizing sectors like retail, aviation and insurance, but failed to deliver.

"You do have the intention, but you are not able to do and you are taking one step forward and you are coming two step backwards," noted Bhanumurthy .  "There is so much confusion which is affecting the overall foreign investment."

Foreign investors have also been deterred by controversial tax proposals that have left them facing the prospect of paying billions of dollars in taxes they had not anticipated.

However, a recent report by the United Nations Conference on Trade and Development has brought some cheer to Indian policymakers. It says India is the third most attractive destination for global corporations after China and the United States.

Proof that India remains firmly on investors radar came recently when two big foreign companies announced major investments in the country.

Furniture maker IKEA said last month it will invest nearly $2 billion in India to open 25 outlets. Coca Cola, which is already present in India, plans to invest another $3 billion over the coming years.

Devangshu Dutta is head of the consulting firm, Third Eyesight, in New Delhi. Dutta says despite the recent slowdown, India remains attractive because it is a huge market.

"India is, continues to remain, in fact, one of the few large economies which is growing, and that is not something to sneeze at in the current economic scenario around the world," noted Dutta.  "Sometimes that fact tends to get swept under the carpet amidst all the gloom and doom. The most important factor which is in India's favor is that it has a young population.  That means they are generating income when they become earning members of society and that money has got to get spent somewhere."

The recent U.N. report estimates that foreign direct investment in India can rise by about 20 to 25 percent during the next two years.

Observers say that could happen if India addresses some of the concerns of foreign investors, who are looking for stable policies and more reforms.

You May Like

China Investigates Former Powerful Security Chief

Former security chief and member of Politburo Standing Committee, Zhou Yongkang, under investigation for suspected 'serious disciplinary violation' More

India, US Look to Reset Ties During Kerry Visit

This week's talks will be first high level interaction between two countries since Prime Minister Narendra Modi took charge More

Video Young African Leadership Program Renamed to Honor Mandela

YALI program, launched by President Obama in 2010, aims to build skills in business, entrepreneurship, public management and civic leadership More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Vietnamese Staging Chinese Product Boycott After Oil Rig Spati
X
Reasey Poch
July 28, 2014 7:18 PM
China recently pulled an oil rig from an area of the disputed South China Sea that Vietnam also claims. Despite the action, the incident has had a lingering effect on consumers in Vietnam. VOA's Reasey Poch reports from Hanoi on an effort to boycott Chinese products.
Video

Video Vietnamese Staging Chinese Product Boycott After Oil Rig Spat

China recently pulled an oil rig from an area of the disputed South China Sea that Vietnam also claims. Despite the action, the incident has had a lingering effect on consumers in Vietnam. VOA's Reasey Poch reports from Hanoi on an effort to boycott Chinese products.
Video

Video ESA Spacecraft to Land on a Comet

After a long flight through deep space, a European Space Agency probe is finally approaching its target -- a comet millions of kilometers away from earth. Scientists say the mission may lead to some startling discoveries about the origins of the water on earth. VOA’s George Putic has more.
Video

Video Young Africans Arrive in US for Leadership Program

President Barack Obama's Young African Leadership Initiative has brought hundreds of young Africans to the United States for a six-week program aimed at building their knowledge and skills in fields such as public administration and business. Out of the 50,000 young Africans who applied for the program, just one percent was accepted. VOA's Laurel Bowman caught up with some of those who made the cut and has this report.
Video

Video In Honduras, Amnesty Rumors Fuel US Migration Surges

False rumors in Central America are fueling the current surge of undocumented young people being apprehended at the U.S. border. The inaccurate claims suggest the U.S. will give amnesty to young migrants from the region. As VOA's Brian Padden reports from Honduras, these rumors trace back to President Obama's 2012 executive order to halt deportations for some young undocumented immigrants already living in the United States.
Video

Video Students in Business for Themselves

They're only high school students, but they are making accessories for shoes, fabricating backpacks and doing product photography - all through their own businesses. It's the result of a partnership between a non-profit organization that teaches entrepreneurship and their schools. VOA's Mike O'Sullivan and Deyane Moses met the budding entrepreneurs near Los Angeles.
Video

Video Astronauts Train in Underwater Lab

In the world’s only underwater laboratory, four U.S. astronauts train for a planned visit to an asteroid. The lab - called Aquarius- is located five kilometers off Key Largo, in southern Florida. Living in close quarters and making excursions only into the surrounding ocean, they try to simulate the daily routine of a crew that will someday travel to collect samples of a rock orbiting far away from earth. VOA’s George Putic has more.

AppleAndroid

World Currencies

EUR
USD
0.7305
JPY
USD
101.53
GBP
USD
0.5830
CAD
USD
1.0656
INR
USD
60.075

Rates may not be current.