New Delhi, Oct 16: Riding on the surge of global foreign direct investment (FDI) inflows in 2006, India too did well in the year, attracting investment of 16.88 billion dollars, nearly two and half times more than it received in 2005, a U N report said today.
China received FDI of 69.46 billion dollars last year, according to World Investment Report-2007 released by United Nations Conference on Trade and Development (UNCTAD) here.
But unlike China, India has been aggressive in acquiring overseas assets as indicated by outward flow of FDI which at about 9.68 billion dollars constituted five per cent of the country's gross fixed capital formation. Though in absolute numbers it was more in case of China at 16.13 billion dollars, yet it comprised only 1.9 per cent of the middle kingdom's gross fixed capital formation in 2006, the report, released by economist Masataka Fujita. UNCTAD's Chief of Investment Trends and Data Section, said.
Global FDI inflows soared in 2006 to reach 1,306 billion dollars- a growth of 38 per cent, and approached the record level of 1,411 billion dollars reached in 2000. The report said this rise was driven by increasing corporate profits worldwide and resulting higher stock prices that raised the value of cross-border mergers and acquisitions (M&As). It said reinvestment of earnings by corporates because of higher profits became an important component of inward FDI and accounted for almost 30 per cent of the total inflows worldwide in 2006. In developing countries it comprised almost 50 per cent, the report added.
India's inward FDI stocks in 2006 at 50.68 billion dollars comprised 5.7 per cent of its gross domestic product, while China's at 292.56 billion dollars constituted 11.1 per cent of its GDP.
But India's performance in terms of overseas investment on account of mergers and acquisitions, mostly by its corporate sector, compared favourly with China's.
India's outward FDI stocks at 12.96 billion dollars comprised 1.5 per cent of her GDP as compared with China's FDI stocks at 73.33 billion dollars which constituted 2.8 per cent of her GDP.
India achieved this landmark with a zero base in 1990 unlike China whose outward FDI stocks in that year at 4.45 billion dollars already comprised 1.2 per cent of its GDP.
In the global outward FDI performance index, India stood two notches above China at 56, the UNCTAD report said.
Describing acquistion of European steel company, Arcelor for 32 billion dollars by Mittal Steel group as the world's largest cross-border M&A transaction in 2006, the report said '' it was largest deal ever made by a company with origins in a developing country.'' Mittal Steel is a company of Indian origin headquartered in the Netherlands.
The report, however, did not record Tata's takeover of Corus Group for 9.5 billion dollars in 2006 as the payment was not completed in that year.