In the last few years, India has been one of the favorite destinations of foreign investors who are looking for a safe investment destination with healthy returns. India’s position as an attractive investment destination strengthened since 2014, when a strong and decisive government came to power.
As per a report on Invest India website, total investment in India in last 6 years of Modi government is more than that of preceding 14 years. “Total FDI inflows in the country in the last 191/2 years (April 2000- September 2019) are $642 bn while the total FDI inflows received in the last 51/2 years (April 2014- September 2019) are $319 bn which amounts to nearly 50% of total FDI inflow in last 191/2 years,” reads the report.
Amid the Coronavirus pandemic, when China is receiving global backlash for instigating the worst public health crisis of modern history, India is emerging as favorite investment destination for American companies. According to Mukesh Aghi, President of the US-India Strategic and Partnership Forum (USISPF), American companies have investment 20 billion dollars in India in recent weeks alone.
Year to date investment in India by American companies is a whopping 40 billion dollars. Compared to total FDI of 60 billion dollars in last year, the country has received 40 billion dollars in the first 6 months of this year from United States alone. Although the exact data for investment from around the globe is not available, but total direct investment year to date has probably exceeded total investment in all 12 months of last year. India remains a very, very bullish market for the business community, Mukesh Aghi, said.
Earlier this week, Larry Kudlow, the White House Economic Advisor, has said that big investment from American giants like Facebook, Walmart, and Google shows that businesses are losing confidence in China and India is emerging as big competitor to Beijing.
“I think it (investment of US companies in India) is interesting. Just a moment on India. I have been to a couple of bilateral meetings with the (Indian) leaders. What (does) that tell you. People are losing trust in China and India becomes a big competitor,” said Kudlow.
Last year, the United States Secretary of State Mike Pompeo said that American investment worth trillions of dollars are waiting for India, while he addressed a gathering with India’s External Affairs Minister S Jaishankar. “One million Indian youth enter the job market, every month. There are trillions of dollars worth of American investments, sitting on the sidelines waiting to be put to work in the Indo-Pacific region,” he said.
As American businesses pull money out of Chinese market and the Chinese companies registered at American stock exchange amid US-China cold war, Indian companies are going to benefit most.
The investment worth trillions of dollars would be diverted to India as the option of Chinese market closes, and this would benefit Indian companies like Reliance Industries Limited which are willing to bet big on Indian consumers.
Mukesh Ambani had been able to make RIL debt free with around 20 billion dollars investment from around the world- primarily American companies- because for the global investors India is only large trustworthy market. Given the fact India remains a capital starved country with credit to GDP ratio at around 50 percent- compared to 165 of China and 135 of global average, investment from American companies would help Indian businesses to grow exponentially.