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India retains world’s highest FDI recipient crown: Report

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As per “fDi Report 2017”, compiled by fDi intelligence, a division of the Financial Times, India has retained its position as world’s top greenfield Foreign Direct Investment (FDI) destination for the second consecutive year. Attracting $62.3 billion FDI inflows in 2016, India remained much ahead of China and the US.

Highlights of “fDi Report 2017”:

  • FDI inflows in India during 2016 increased by 2% to USD 62.3 billion, deployed across 809 projects.
  • In 2016, global FDI flows gravitated to destinations experiencing the strongest economic growth, whereas destinations going through recession/ slow down saw major decline in FDI inflows.
  • Global FDI flows in 2016 stood at USD 776.2 billion marking 6% growth. It is the highest level since 2011.FDI
  • Employment generation on account of FDI increased by 5% to 02 million.
  • Despite the growth in value, the number of FDI projects across the world declined by 3 % 12,644.
  • Attracting $59 billion FDI inflows, China surpassed US and became the second biggest country for FDI by capital investment. US attracted $48 billion FDI inflows.
  • Globally, real estate emerged as the best sector attracting $157.5 billion FDI in 2016, marking an increase of 58%.
  • Coal and natural gas projects witnessed an inflow of $121 billion, followed by alternate and renewable energy at $77 billion.

What is Greenfield Investment?

Greenfield investment is a form of foreign direct investment wherein a parent company builds its operations in a foreign country right from the scratch i.e. construction of new production facilities, establishing new distribution hubs, setting up offices and hiring staff.

  • It is different from brown field investment, where parent company purchases or leases existing business setup.
  • Greenfield investment carries more risk and cost as compared to brown field investment.
  • However, for the host country, Greenfield investment is more beneficial, as it generates additional employment opportunities as well as business opportunities for domestic vendors and suppliers.