FDI: China got $61 bn in 2004; India $5 bn

A more liberal investment regime led to a 25 per cent jump in India's FDI inflows during 2004 to $5.33 billion but was still nowhere near that of China, which managed over $60 billion of foreign direct investments during the year, an UNCTAD report said.

India attracted a mere $5.33 billion of FDI in 2004 compared to $4.26 billion in 2003. China, on the other hand, managed to attract the same amount every month totalling $60.63 billion in 2004, the United Nations Conference on Trade and Development said in World Investment Report 2005.

Interestingly, however, outward FDI flows from India were higher at $2.22 billion compared to $1.80 billion by Chinese companies in 2004.

Inflows to India were encouraged by an improving economic situation and a more open FDI climate, UNCTAD said while pointing out that the country had revised upwards, foreign equity ceilings in aviation services, private banks, non-news publications and petroleum industry in 2004.

India accounted for the majority of foreign investments in South Asia. Total FDI inflows to South Asia climbed for the fourth consecutive year in 2004 to $7 billion compared to $5.33 billion a year ago.

The record FDI inflows in India were also nowhere near that in developed countries such as the US, UK and Russia.

The US attracted nearly $96 billion, UK received $78 billion, Luxembourg $57 billion, Brazil over $18 billion and Russia $11.6 billion of FDI in 2004.

UNCTAD said improved investment climate and privatisation of assets in Pakistan and Bangladesh contributed to higher FDI flows to these countries. FDI inflows to Pakistan jumped 78 per cent to $952 million in 2004 from $534 million a year ago. Bangladesh also recorded a 72 per cent rise to $460 million FDI in 2004.

East Asia received a whopping $105.037 billion, with China accounting for more than half of it at $60 billion. Hong Kong with $34 billion and South Korea with $7.6 billion came a distant second and third.

South-East Asia also managed much greater FDI compared to South Asia with total inward flows of $25.6 billion compared to $17.36 billion dollar in 2003.

However, barring Singapore, which received over $16 billion of foreign investment and Malaysia $4.6 billion, other countries in the region including Thailand, Vietnam and Indonesia were way behind India with each receiving less than $1.5 billion dollars of FDI.