FDI Inflow in India in 2015

India has emerged as the most favored destination for foreign direct investment (FDI) in 2015 so
far, outpacing China and the US, London-based business daily Financial Times (FT) said in a
report on 29th Sep2015.
FDI inflows into India during January-June stood at $31 billion, ahead of Chinas $28 billion and
the USs $27 billion, said the FT report under the headline India grabs investment league pole
position.
Separately, India also jumped 16 notches to 55 among 140 countries in the World Economic
Forums Global Competitiveness Index that ranks countries on the basis of parameters such as
institutions, macroeconomic environment, education, market size and infrastructure among
others.
According to data from FDI Markets, an FT data service, FDI inflow into India grew 47% to $24
billion in 2014, a year when many other major FDI destinations posted declines. This could
shape up to be an even better year for investment into India, FT said.
India is tracking well ahead of where it was at this time last year: it has more than double its
mid-year investment levels, attracting $30 billion by the end of June 2015 compared to $12
billion in the first half of last year, it said.
A ranking of top destinations for greenfield investment (measured by estimated capital
expenditure) in the first half of 2015 shows India at number one, having attracted roughly $3
billion more than China and $4 billion more than the US, FT added.
The report came on a day Indias Foreign Investment Promotion Board, the nodal authority that
scrutinises overseas investment proposals, cleared 18 proposals worth about Rs 5,000 crore.
It also followed Prime Minister Narendra Modis meetings these last few days with top global
CEOs in the US where he made a strong pitch to turn India into an investment hotspot.

The governments push for manufacturing comes at a time many global companies are searching
for an alternative to China as costs and risks there rise. India has also become the worlds fastest
growing major economy ahead of China, where recent shocks have sent ripples across the world.
Last year, the government launched the Make in India initiative vowing to remove bureaucratic
sloth, make the country more investor-friendly and rectify processes that has kept the country
almost at the bottom ranked 142 of World Banks ease of doing business index.
Source: HT 30th Sep 2015

$ 31 Billion FDI Inflow: How authentic it is?????

In the January-June period, India has surpassed US and China as the biggest Foreign Direct
Investment (FDI) destination, garnering $31 billion investments compared with $28 billion
attracted by China and $27 billion by the US. In the first half of 2014, India had received $12
billion worth FDIs, thus more than doubling the kitty in this year first half.
These details are revealed in a report published by the UK-based Financial Times (FT), which, as
the PTI report says, was circulated by the finance ministry to the media.
Its not entirely clear how the FT arrived at the $31 billion figure. The papers compilation
possibly includes the estimated investments and the domestic capital expenditure commitments
by foreign companies operating in India. Even then, there is a huge difference between the data
put out by the DIPP and the Reserve Bank of India (RBI) on FDI and what has been reported by
FT.
According to data on the Indian governments DIPP website, the total FDI investments India
received in January-June period of 2015 was $19.4 billion and in the whole of 2014, the country
received $28.8 billion. In 2013, India received $22 billion FDI and $22.8 billion in 2012.

According to the RBI data, India received $18.9 billion in the first half of 2015 and $26.4 in
2014 and $25.6 in 2013.
Nevertheless, if one believes that there is merit in the FT numbers, this is big good news for
India. But, if indeed India has emerged as the top FDI destination, in terms of investments in
green field projects (measured by estimated capital expenditure), a major reason for that is the
ongoing slowdown that has gripped rest of the world, primarily China. Remember, in the whole
of last year (2014), China received FDIs worth $75 billion, while US received $51 billion.
On the positive side, it would mean that the world is finding India as an important alternative,
when others arent doing well, thanks to the strong economic fundamentals of the country and its
huge untapped potential. This is indeed good news. The numbers are certainly a booster dose to
the Narendra Modi-government, which is facing investor-pessimism.
Notably, according to the FT report, this comes at a time when FDI into emerging markets is
showing a declining trend with 97 of 154 countries typically classed as emerging markets
experiencing declines in capital expenditure on greenfield investment projects in the first six
months of this year compared with the same time period last year.
Also, this comes close on the heels of a world economic forum report showing that India moved
16 positions up in the global competitiveness index to the 55th position on account of
improvement in the countrys macroeconomic environment and a slight improvement in the
infrastructure sector.
If indeed the country has caught global investors attention, the next big question is can the
country sustain the performance seen in the first half, going ahead also, especially when global
economy comes out of the woods? Its possible if the Modi government manages to use the
current phase to set the economy on the high growth path and address the basic structural issues.
These include sorting out the problems in taxation, repairing the critically damaged banking
sector and ensuring ease of doing business by facilitating enabling factors (land, water,
electricity, necessary clearances etc) to begin a business in India. While global slowdown is a
blessing in disguise for India, to cash in on the opportunity, the country needs to fast track its
reform agenda, besides improving the infrastructure sector.

On Tuesday, the RBI made a big move by affecting more than 50 basis points (bps) rate cut,
which will eventually help bring down the cost of money in the financial system, both in the
bank lending market and in the money markets. Already, the countrys largest lender, State Bank
of India, has taken the first move by announcing a 40 bps cut in its minimum lending rates,
taking its base rate to 9.3 per cent now.
RBI governor Raghuram Rajans growth supportive move needs to be reciprocated by the
government. Rajan had cautioned that the government too needs to do its part. ...Monetary
policy has to be accommodative to the extent possible, given its inflation goals, while
recognizing that continuing policy implementation, structural reforms and corporate actions
leading to higher productivity will be the primary impetus for sustainable growth, Rajan said.
India is certainly catching the attention of global investors, especially in the backdrop of a severe
(and likely to be prolonged) global slowdown phase. If India has already managed to attract
foreign investments, it is good news for the country, which needs at least $ 1 trillion investments
to develop its roads, railways, ports and airports under the current five-year plan.

Trans Pacific Partnership

On October 4, 2015, Ministers of the 12 Trans-Pacific Partnership (TPP) countries Australia,
Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore,
United States, and Vietnam announced conclusion of their negotiations. The result is a highstandard, ambitious, comprehensive, and balanced agreement that will promote economic
growth; support the creation and retention of jobs; enhance innovation, productivity and
competitiveness; raise living standards; reduce poverty in our countries; and promote
transparency, good governance, and enhanced labor and environmental protections.
KEY FEATURES
Five defining features make the Trans-Pacific Partnership a landmark 21 st-century agreement,
setting a new standard for global trade while taking up next-generation issues. These features
include:

Comprehensive market access. The TPP eliminates or reduces tariff and non-tariff
barriers across substantially all trade in goods and services and covers the full spectrum
of trade, including goods and services trade and investment, so as to create new
opportunities

and

benefits

for

our

businesses,

workers,

and

consumers.

Regional approach to commitments. The TPP facilitates the development of production

and supply chains, and seamless trade, enhancing efficiency and supporting our goal of
creating and supporting jobs, raising living standards, enhancing conservation efforts, and
facilitating

cross-border

integration,

as

well

as

opening

domestic

markets.

Addressing new trade challenges. The TPP promotes innovation, productivity, and
competitiveness by addressing new issues, including the development of the digital
economy, and the role of state-owned enterprises in the global economy.

Inclusive trade. The TPP includes new elements that seek to ensure that economies at all
levels of development and businesses of all sizes can benefit from trade. It includes
commitments to help small- and medium-sized businesses understand the Agreement,
take advantage of its opportunities, and bring their unique challenges to the attention of
the TPP governments. It also includes specific commitments on development and trade
capacity building, to ensure that all Parties are able to meet the commitments in the
Agreement

and

take

full

advantage

of

its

benefits.

Platform for regional integration. The TPP is intended as a platform for regional
economic integration and designed to include additional economies across the AsiaPacific region.

SCOPE

The TPP includes 30 chapters covering trade and trade-related issues, beginning with
trade in goods and continuing through customs and trade facilitation; sanitary and

phytosanitary measures; technical barriers to trade; trade remedies; investment; services;

electronic

commerce;

government

procurement;

intellectual

property;

labour;

environment; horizontal chapters meant to ensure that TPP fulfils its potential for
development, competitiveness, and inclusiveness; dispute settlement, exceptions, and
institutional

provisions.

In addition to updating traditional approaches to issues covered by previous free trade

agreements (FTAs), the TPP incorporates new and emerging trade issues and crosscutting issues. These include issues related to the Internet and the digital economy, the
participation of state-owned enterprises in international trade and investment, the ability
of small businesses to take advantage of trade agreements, and other topics.

TPP unites a diverse group of countries diverse by geography, language and history,
size, and levels of development. All TPP countries recognize that diversity is a unique
asset, but also one which requires close cooperation, capacity-building for the lesserdeveloped TPP countries, and in some cases special transitional periods and mechanisms
which offer some TPP partners additional time, where warranted, to develop capacity to
implement new obligations.

Compulsory Licensing
The Supreme Court on December 12 ,2014 dismissed Bayer Corp's appeal against a Bombay
High Court decision, which in July refused to revoke a compulsory licence issued to India's
Natco Pharma to sell a version of the German drug major's kidney-cancer drug Nexavar.
The case has been keenly watched by several other foreign pharmaceutical companies as well,
because the implications of the outcome on their patented drugs that activists claim aren't
affordable to most people. India's stand is that it needs to ensure the rights of its citizens to get
access to new drugs at affordable prices.
A bench, comprising Justices Ranjan Gogoi and RF Nariman, dismissed the company's appeal on
the ground that three for a had already ruled against the company's claim and that it had not
shown any fresh research and development expense figures to warrant court interference.

The top court's decision means Hyderabad-based Natco can continue selling a copy of the drug,
despite Bayer holding the patent. The local company's version of sorafenib, the chemical name of
the drug, costs just a fraction of the original product's price.
Compulsory licensing is a provision under the Trade Related Intellectual Property Rights
agreement where a government allows a company to manufacture and sell patented drugs
without the consent of the innovator company.
Natco was the first company to get a compulsory licence in India, in 2012 to manufacture and
sell the blockbuster drug. Bayer approached the Intellectual Property Appellate Board against the
decision of the Controller General of Patents, but didn't get a favourable order. The appellate
body had said a stay on the patent office's decision would "jeopardise the interest of the public
who need the drug" that Bayer says improves the quality of life. The high court said it saw no
reason to interfere with that ruling.
In the Supreme Court, Bayer claimed the compulsory licensing was violative of its intellectual
property and had sought redress in the top court.
When the case came up for hearing on Friday, the Supreme Court asked Bayer about the cost of
developing the drug and why it had not submitted the details on R&D expenses involved in
developing the drug to the Controller. The company had recovered all the money spent on
developing the drug in the first year itself, the top court noted, citing records produced before the
drug controller.
Even though Bayer tried to argue that there was a substantial question of law involved, the top
court dismissed its appeal. Health activists said it was an important development as this may be
the first case in the developing world wherein a compulsory licence was granted by a quasijudicial body and not overturned by a top court.
The patent office's decision had created a furore across multinational drug makers. According to
them, compulsory licensing would weaken patents and discourage pharma companies from
investing in drug discovery.

RCEP
According to South Korea's Ministry of Trade, Industry and Energy, countries participating in the
regional free trade deal will this week discuss guidelines for market liberalization and draw up a
list of products to be liberalized for each country. Other trade issues, including economic
cooperation, legal systems, trade barriers and e-commerce will also be on the agenda.
"We are not sure what the outcome will be at this stage, but we hope there will be good progress.
Expectations are high. This is an important and critical round as we will be reporting to the
leaders at the ASEAN Summit next month," a Malaysian official attending the Busan meeting
told the country's English newspaper The Star on Monday.

In a nutshell: The RCEP was conceived in 2013 and is being negotiated between the 10 member
states of the Association of Southeast Asian Nations (ASEAN) plus regional trading partners
including Australia, China, India, Japan, New Zealand and South Korea.
ASEAN is a regional organization established on August 8, 1967, that comprises Indonesia,
Malaysia, Philippines, Singapore, Thailand, Brunei, Vietnam, Laos, Myanmar and Cambodia.
The RCEP aims to establish deeper economic cooperation between ASEAN and its regional
trading partners, with a focus on trade in goods, services and investment. If signed, the regional
free trade agreement will create an economic bloc with a combined population of 3.4 billion and

trade volume of $10.6 billion, accounting for nearly 30 percent of the world's trade, according to
a statement released by South Korea's trade ministry this week.
China has been seen as the key driver of the regional trade pact, which is viewed as an
alternative to the U.S.-led TPP agreement, from which the world's second-biggest economy was
excluded.
Within the RCEP, seven countries - Australia, Japan, Malaysia, New Zealand, Singapore,
Vietnam and Brunei - are part of the 12-nation TPP deal.
Hurdles to a deal: By most accounts, a deal is not likely to be signed this week due to a
combination of technical difficulties and domestic politics.
"RCEP's agenda includes discussions about intellectual property rights (IPRs), e-commerce, etc.
Do all RCEP members have the same IPRs or e-commerce environment? I don't think so. Then
how can we develop rules which are compatible or applicable to all members? That's a technical
challenge," NTU's Pitakdumrongkit noted.
"Secondly, in every international agreement, each participating nation inevitably faces the
tension between a temptation to achieve joint cooperation where mutual gains can be reaped, and
a temptation to serve particular national interests. RCEP members are facing this same tension,"
she added.
Asia Trade Centre's Elms notes that a "lack of enthusiasm" for trade liberalization in countries
such as India and Indonesia is "creating headaches for the more ambitiously-minded countries in
the grouping."