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India leads FDI race in South Asia: UN Report

According to the United Nations 2015 World Investment Report FDI inflows to South Asia rose to USD 41 billion in 2014.

June 26, 2015 / 08:59 PM IST

Global foreign direct investment (FDI) flows have dropped by 16 percent but flows coming into India have shown an increase - that's the interesting finding of the United Nation's World Investment Report 2015.

UN Conference on Trade and Development (UNCTAD) policy analyst and consultant Pramila Nazreth, however, tells CNBC-TV18 that the trend can't entirely be attributed to the Modi effect.

According to the United Nations 2015 World Investment Report FDI inflows to South Asia rose to USD 41 billion in 2014.

India drove that performance with FDI inflows surging 22 percent to about USD 34 billion during the year. The report says the trend of higher inflows into India is likely to continue in 2015 as economic recovery gains ground.

The UNCTAD says that in terms of sectoral composition, manufacturing is likely to gain a large chunk of FDI flows coming to the country as policy efforts to revitalise the industrial sector including the "Make in India" campaign bear fruit.

However, despite India being among the top 10 most promising destinations for FDI, inflows into the country are not as robust as those in some other Asian nations.

The report says that developing countries loose an estimated USD 100 billion in annual tax revenue because of funds being routed through offshore investment hubs, many of which end up being tax havens. The report says 30 percent of global FDI is routed through tax havens while 70 percent is directly invested into recipient countries.

first published: Jun 26, 2015 06:42 pm

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