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FOREIGN investment inflows into India grew 90% in the first eight months of the current fiscal year, indicating that the country continues to be an attractive destination for investors despite a fall in economic growth rates.

Foreign direct investment (FDI) inflows during the April-November period stood at Rs 85,700 crore compared with Rs 45,000 crore in the corresponding period of the previous fiscal, despite most of the developed world reeling under the impact of a global recession. According to the FDI data compiled by the commerce and industry ministry, investments from three Asian countries — Mauritius, Singapore and Japan — contributed more than 55% of the total inflows during the period.

Economists see nothing unusual in the situation. “Today, India and China are the warm spots in the global economy. We expect high growth in India as there is huge unmet demand. India is growing faster than the more mature economies of the world, and this is luring investors into India,” Boston Consultancy Group chairman Arun Maira said.

Mauritius remained the largest source of foreign investment, with the island nation contributing Rs 35,000 crore in FDI inflows during the April- November period, almost doubling its contribution from Rs 19,000 crore in the same period of the last fiscal.

Singapore replaced the US as the second-largest source of long-term investments into India. Singapore, which was placed fifth last year, saw its investments growing to Rs 8,500 crore during the period from Rs 3,500 crore in the same period last year.

Increased investment from Singapore came from the investment arms of the government: GIC and Temasek. Temasek Holdings Advisors India made a Rs 2,500-crore investment in Bharti Infratel while GIC affiliate Indivest Pte invested Rs 900 crore in Reid & Taylor, a clothing company promoted by S Kumars. Japanese investment into the country received a major boost when Daiichi Sankyo invested Rs 20,000 crore to pick up 63% stake in Ranbaxy.

However, the FDI figures captured by government statistics may not necessarily reflect the actual origin of investment. For instance, tax havens
like Mauritius are used by investors from across the world to invest in India.

While Mauritius remains the No. 1 source of such FDI routed into India, other tax havens are also catching up. European hub Cyprus is gaining ground as a favoured route for channelling FDI into the country. Investments from Cyprus doubled to Rs 4,486 crore in the April-November period this fiscal from Rs 2,000 crore in the same period last year.

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