India retains 3rd spot on Unctad list of investment destinations

NEW DELHI: India has retained its position as the third most preferred investment destination behind the US and China and could attract higher foreign direct investment (FDI) in 2016 even as global flows are expected to fall sharply, according to multilateral agency Unctad.

"Global FDI flows are expected to drop to between $1.5 and $1.6 trillion in 2016, a fall of 10% to 15% from 2015, before recovering in 2017 and 2018," Unctad said in its latest 'Global Investment Trends Monitor'.

India has moved up a notch to rank sixth most promising source of investment. In 2016, FDI inflows to BRICS countries could increase 10% on average to $270–290 billion, the Unctad report estimates.

"India continues to take steps to open up its economy to foreign investors, and this is expected to foster FDI. The momentum created by the huge increase in announced greenfield investments, including in manufacturing, is likely to carry through into realised FDI in 2016 and beyond," the report said.

ET VIEW

Economic prosperity holds the key

Domestic demand largely drives India’s growth. This, in turn, is powered by the growing middle class, young consumers and rising disposable incomes. While consumption has been rising, investment has been flagging, which could hurt the recovery process. The government needs to massively increase infrastructure investment. This calls for freeing the banks of bad loan so that they can start lending fresh for the economy to grow. Sustained economic prosperity coming from higher GDP growth will increase the propensity of the middle-class to spend more.