FDI flows grows by 18%; treaty partners dominate as FDI source for India during 2016

Foreign Direct Investment has registered a smart growth of 18% to reach $46 billion during calendar year 2016. According to the data published by Directorate of Industrial Policy and Promotion (DIPP), Foreign Direct Investment was $39.32 billion during 2015.

Smart growth in FDI is a good sign for the economy when global FDI flows are declining. According to UNCTAD, FDI flows to India were $42 bn in 2016 whereas that to China was $139 bn.

Sectors including services, telecom, trading, computer hardware and software attracted most of the FDI flows.

Main sources of FDI were Singapore, Mauritius, the Netherlands and Japan. The first three are known tax concession countries who enjoys tax concessions under Double Taxation Avoidance Agreements with India.

FDI flows are slowing down globally in the context of adverse economic conditions. According to UNCTAD, global FDI flows have registered a decline of 13% in 2016.

FDI reforms are on completion mode in recent months with the government phasing out FIPB. Bulk of the FDI is on automatic mode in sectors where FDI is allowed. 

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