Saturday, November 22, 2008

Singapore second largest FDI source in India

The Economic Times, 22 Nov 2008

Singapore has become the second largest source of foreign direct investment (FDI) into India, surpassing the US and the UK. Tax-haven Mauritius continues to lead the charts. Until July this year, the US was the second largest source followed by the UK.

FDI from Singapore soared by $1 billion in July and August this year whereas long-term investment flow from the US and the UK was $300 million and $50 million, respectively. In the FY 2006-07, FDI from Singapore was $570 million, much below the US and the UK, as FDI from these two countries were $856 million and $1,878 million, respectively.

One of the reasons for the surge in foreign investment from Singapore could be linked to inflows from the two sovereign wealth funds, GIC and Temasek. The duo have been active private equity (PE) investors in the country in the recent past, with Temasek emerging as one of the top PE firms.

For instance, Temasek and GIC together announced deals worth $3.4 billion in India during calendar year 2007. This was about 18% of the total PE deals struck last year.

Cumulative FDI inflow between April 2000-01 and August 2008-09 is recored at $6.07 billion from Singapore, second to Mauritius ($31 billion), according to a data compiled by the department of industrial policy and promotion (Dipp). FDI inflows from the US and the UK for the period is $5.68 billion and $4.84 billion, respectively.

Up to June, Singapore, as a FDI source country, constituted 7.8% of cumulative FDI inflows since 2000. Now, according to the latest data, Singapore has contributed 8.3% of the cumulative inflows. In the first half of the fiscal, FDI grew to $17.21 billion against $7.25 billion a year ago.