Foreign Direct Investment data published by WTO indicates that countries that enjoy strong treaty benefits are the important source of FDIs to India. Of all, Mauritius continues to be the leading origin, weighted by one of the most concessional treaty benefits. But an interesting development is the rise of Singapore as a prominent FDI source.
Singapore based FDI has increased from $ 2.3 bn in 2012-13 to $6.7 bn in 2014-15. In 2013-14, Singapore piped Mauritius to second position. India and Singapore have amended their DTAA in 2005, extending tax benefits and introducing safety measures including limitation of benefit clauses. Since then, Singapore is becoming an important destination for investment-both FDI and FPI.
FDI flows into India during the last three years were mainly from Mauritius and Singapore- two most concessional DTAAs that India has signed.
Another source country that continuously raised its FDI flows is the Netherlands. During the three years, the moderate tax haven type Netherlands bound FDI has gone up to $3.4 bn.
Interestingly, both US and UK share in FDI remains significantly low, though that of Japan is rather steady at notable levels.
In 2013-14, India received FDI of $24.3 bn compared to the previous year’s $22.4 bn.
Initial estimates indicate the during 2014-15, the total FDI flows to the country is expected to be nearly $11 billion. If the estimates are ratified, 2014-15 will register one of the lowest FDI flows.