FDI into India declines 13.5% in 2012: Unctad

The United Nations Conference on Trade & Development (Unctad) on Thursday stated that inflows of Foreign Direct Investment (FDI) into India fell 13.5 per cent in 2012.

FDI inflows into India declined from $31.5 billion in 2011 to $27.3 billion in 2012, Unctad said in a report on global investment trends, which it released on Thursday.

The report, however, added that India’s prospects in attracting more FDI were higher because of its attempts to open certain sectors for trade.

In September 2012, India had allowed up to 51 percent FDI in multi-brand retailing subject to states’ approvals, and raised the FDI cap on single- brand retail to 100 percent. Similarly, it liberalised FDI in aviation and power trading exchanges, the report noted.

The report also showed that for the first time in history, FDI inflows to developing countries were higher than those into developed countries by $ 130 billion.

FDI inflows to developed countries fell to the level it was a decade ago. Though FDI inflows to China declined 3.4 percent, at $120 billion, the country is still the second largest recipient of FDI in the world after the US.

According to Unctad, the global FDI inflows fell 18 per cent in 2012 to 1.31 trillion dollars due to weakening macroeconomic environment, slow growth in trade, GDP and employment.

The report said FDI inflows were likely to moderately grow in 2013 and 2014.

"FDI recovery is on a bumpy road. While FDI in developing countries remained resilient, more investment in sectors that can contribute to job creation and enhance local productive capacity is still badly needed. Therefore, promoting FDI for sustainable development remains a challenge,” said Secretary-General of Unctad, Supachai Panitchpakdi.

The Department of Industrial Policy and Promotion is slated to release its consolidated FDI policy on March 31.