October 20, 2013

Introduction
Foreign investments provide a great impetus for growth to Indian economy. The continuous upsurge in
foreign direct investments (FDI), allowed across the industries and sectors, has proven that foreign
investors have faith in the resilience of Indian markets. A wise policy regime and positive business
environment have also played catalytic role to ensure the continuous inflow of foreign capital in the Indian
markets.
Various surveys and industry experts have revealed that India is amongst the top destinations for
investments across the globe. Certain facts and figures, pertaining to latest FDI developments, have been
discussed hereafter.

Key Statistics

India Inc witnessed a year-on-year (y-o-y) upsurge of 24.2 per cent in FDI to touch US$ 3.95 billion in
April-May 2013 as against US$ 3.18 billion during the same period in 2012, according to statistics released by
the Department of Industrial Policy and Promotion (DIPP).
During 2012-13, India attracted FDI worth US$ 22.42 billion. Hotels and tourism, pharmaceuticals, services,
chemicals and construction received the highest amount of FDI. The major contributors to the Indian FDI were
Singapore, Mauritius, the Netherlands and the US.

The Government of India has liberalised the FDI regime in about a dozen sectors, including telecom, power etc
and have also relaxed investment norms in multi-brand retailing.
Private equity (PE) and venture capital (VC) firms remained bullish about Indias consumer goods and

services sector. PE and VC investments increased by more than 46 per cent in the first half of FY14, with
consumer companies in retail, e-commerce, consumer packaged goods and quick service restaurants raising
US$ 609.39 million through 51 deals.
Meanwhile, Indian merger and acquisition (M&A) space witnessed substantial levels of deal activity in

the first nine months of 2013. There happened 377 deals amounting to US$ 23.9 billion, according to a survey
by tax advisory firm Grant Thornton.
India's foreign exchange (forex) reserves increased by US$ 1.51 billion to touch US$ 279.24 billion for
the week ended October 11, 2013, showed the data from the Resrve Bank of India (RBI)s Weekly Statistical
Supplement. India's foreign currency assets (FCA), the biggest component of the forex reserves, increased by
US$ 1.52 billion to US$ 250.85 billion for the week under review.

Important Developments

SCA, the Swedish company that deals in hygiene and forest products, will be setting up a
manufacturing plant in India with an investment of about Rs 145 crore (US$ 23.66 million). The plant is
expected to be operational by 2015. The global major has been attracted by Indias large population and low
penetration of hygiene products that could provide a major impetus to its growth plans.
DIPP is learnt to have granted approval to Hennes & Mauritz ABs Rs 700-crore (US$ 114.24 million)
investment proposal for the single-brand retail market. The proposal by the Swedish clothing giant will move to
the Foreign Investment Promotion Board (FIPB) for its nod.

This is second such proposal from Sweden and also the second largest. The Cabinet Committee on Economic
Affairs (CCEA) had cleared furniture-maker Ikeas Rs.10, 500 crore (US$ 1.71 billion) earlier in 2013.
Meanwhile, UK-based bank Williams & Glyns, which is a part of the Royal Bank of Scotland Group,
has inked Rs 2, 535 crore (US$ 413.71 million) deal with IBM and Infosys wherein the Indian IT majors will
build a new technology system for Williams & Glyns.

Policy Initiatives
The Government of India has liberalised the FDI regime in about a dozen sectors, including telecom,
power etc and have also relaxed investment norms in multi-brand retailing.
Furthermore, DIPP has proposed to have 100 per cent FDI in Indian railway sector pertaining to
infrastructure development-oriented projects. According to the proposal, foreign investors would be
allowed to hold 100 per cent stake in the special purpose vehicles (SPVs) formed to implement port
connectivity projects as well as railway lines that will connect mines and industrial hubs to the existing rail
network.
On the other hand, the Gujarat Government is contemplating to have a dedicated and exclusive industrial
zone for Japanese companies interested to invest in the State. The State Government has already
allocated the area for the project right next to Maruti Suzuki India Limited car plant near Hansalpur in
Mandal taluka of Ahmedabad district.
The process of developing the dedicated zone for medium and large size units has already been
commenced by Gujarat Industrial Development Corporation (GIDC), the nodal agency for the planned
industrial development in the state. They are expecting at least 25 companies to invest Rs 100 crore to
Rs 500 crore (US$ 16.32 81.6 million) each.
Meanwhile, the sources have revealed the Central Government has approved three FDI proposals
amounting to Rs. 38.09 crore (US$ 6.22 million) approximately, recently. The Indian Government has also
modified its FDI regime to hike foreign investment limit for the telecom sector and asset reconstruction
firms, besides relaxing norms for 13 other sectors. The limit for defence production companies was also
virtually raised to 100 per cent, subject to approval from the Cabinet Committee on Security (CCS).

Future Outlook
Foreign investments fuel Indian financial markets in a big way. Experts believe that India has fared really
well over the past few years and the similar macroeconomic trends would continue in 2013. This would
result in steady foreign flows that would enhance stock valuations, strengthen investment cycle, and
sustain consumption growth (especially at low-income levels). Moreover, portfolio fund flows are
anticipated to be higher in 2013 than those in 2012, on the back of Government reforms like passing bills
that would escalate foreign investment limits in insurance, having a uniform goods and services tax, and
reconciling subsidies.
Exchange Rate Used: INR 1 = US$ 0.01632 as on October 19, 2013

References: Media Reports, Press Releases, Press Information Bureau