FDI: The top 10 nations investing in India

Foreign direct investments have become the major economic driver of globalisation in recent times.

The most profound effect has been seen in developing countries, where yearly foreign direct investment flows have increased from an average of less than $10 billion in the 1970s to a yearly average of less than $20 billion the 1980s.

From 1998 to 1999 itself, FDI grew from $179 billion to $208 billion and now comprise a large portion of global FDI.

FDI or foreign investment refers to the net inflows of investment to buy a lasting management interest (10 per cent or more of voting stock) in an enterprise operating in an economy other than that of the investor.

A Department of Industrial Policy and Promotion fact sheet mentioned India's top 10 FDI generating countries.

All the figures are for April 2010 to March 2011.

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Topping the list of India's foreign direct investment ranking is this small island.

India has a Double Taxation Avoidance Treaty with Mauritius, under which the corporates registered there can choose to pay taxes in the island nation.

Experts said companies prefer to route their investment through the famous Mauritius route because of as low as three per cent effective rate of corporate tax on the foreign companies incorporated there.

The tax levied is no more than 3 per cent.

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Rank 2: Singapore
Investment: Rs 58,090 crore ($13,070 million)

Singapore invests its funds in telecommunications, services (usually offshoring), power, oil refinery, food processing, and electrical equipment.

Singaporeans also have interest on transportation.

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Rank 3: United States of America
Investment: Rs 42,898 crore ($9,529 million)

Most of the US companies or investments are placed in the areas of telecommunications, services (usually offshoring), power, oil refinery, food processing, and electrical equipment.

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Rank 4: The United Kingdom
Investment: Rs 29,451 crore ($6,643 million)

Besides long standing British companies in India such as ICI, Glaxo, GEC, Rolls Royce, British Aerospace, SmithKline Beecham, British Petroleum, British Airways , British American Tobacco, and Cadbury, the new major players include British Gas, National Power, National Grid, British Telecom, Shell International Petroleum Co., United Distillers, Trafalgar House, and other British Construction companies.

All British oil majors are present in the Indian oil sector.

Opening of the roads and ports sector in India has opened immense opportunities for construction and maritime equipment manufacturers.

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Rank 5: The Netherlands
Investment: Rs 25,799 crore ($5,739 million)

The Dutch investments in India are in the agro industries, logistics, water management, information technology, health, financial services and renewable energy.

The focus of the Netherlands' investment would be in sectors that are in demand in India and in which the Dutch have world-class technology.

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Rank 6: Japan
Investment: Rs 25,001 crore ($5,511 million)

Major Japanese FDI projects in India include Maruti Suzuki, Toyota, MCC PTA, Nissan Motors, Honda Siel Cars, Asahi India Glass, Sony India, Canon India etc.

In October 2010, Prime Minister Manmohan Singh and his Japanese counterpart, Naoto Kan, signed a number of agreements to strengthen the much-awaited Japan-India economic and security ties.

They sowed the seeds of extending their ongoing cooperation in the development of infrastructure in India to the southern parts.

Rank 7: Cyprus
Investment: Rs 22,702 crore ($4,982 million)

The Cypriot economy is prosperous and has diversified in recent years.

According to the latest International Monetary Fund estimates, its per capita gross domestic product at $28,381 is just above the average of the European Union.

Cyprus has been sought as a base for several offshore businesses for its highly developed infrastructure.

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Rank 8: Germany
Investment: Rs 13,607 crore  ($3,051 million)

German companies like BMW, Volkswagen, Bosch, Deutsche Bank, Siemens and Boehringer - have pledged millions of euros in the country in recent times.

A report released recently by Public Interest Research Group has, however, critically examined investments by the German corporations into India, during the post-liberalisation period, 1991-96.

The report entitled 'The Reality of Foreign Investments: German Investments in India (1991-96) looks into trends and patterns of investments from Germany to India.

According to the report, there are three major reasons for German corporations to invest in India -- availability of cheap labour coupled with toothless labor legislation's; India's huge domestic markets of goods and services; and India's lax environmental and public health regulations with their ineffective implementation by the state machinery.

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Rank 9: France
Investment: Rs 11,244 crore ($2,484 million)

Investments by French companies in India are expected to touch Euro 10 billion (around Rs 60,000 crore) by 2012, and would be focused on automobile, energy and environment sectors among others, said a recent Business Standard report.

Jean Leviol, minister counsellor for economic, trade and financial affairs at the French Embassy in India, told BS  that there were about 750 permanent French establishments in India, employing nearly 2,00,000 Indians, a fifth of them as engineers in French IT companies.

The number was around 50,000 in 2005.

These investments were mainly driven by IT majors and pharmaceutical companies.

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Rank 10: United Arab Emirates
Investment: Rs 8,683 crore ($1,910 million)

The United Arab Emirates has emerged as the country's largest trading partner in term of total trade exchange recently, said a recent media report.

"The UAE is India's largest trading partner in terms of India's total trade exchange in the first half of the current year," the Emirates News Agency said, citing a report by the analysis and trade information department at the ministry of foreign trade.

Non-oil trade exchange between the UAE and India grew by 57 per cent to reach USD 20.4 billion in the first half of 2010, according to the report by the analysis and trade information department at the ministry of foreign trade (moft) quoted by the agency.