Lok Sabha Question No. 1033 (UNSTARRED), answered on 2015-12-04
Subject: Foreign Investment
Ministry: FINANCE
Asked by: MIDHUN REDDY, JAYSHREEBEN  PATEL, GOPAL CHINAYYA SHETTY, MALLIKARJUN  KHARGE

## MINISTRY OF FINANCE DEPARTMENT OF ECONOMIC AFFAIRS

## LOK SABHA

UNSTARRED QUESTION NO\_ 1033

TO BE ANSWERED ON DECEMBER 4, 2015

## "FOREIGN INVESTMENT" QUESTION

1033: SHRI P\_ V. MIDHUN REDDY, SMT. JAYASHREBEN PATEL, SHRI GOPAL SHETTY, SHRI MALLIKARJUN KHARGE

## Will the Minister of FINANCE be please to state:

- (a) The details of foreign investment including Foreign Portfolio Investment (FPI) made in the country during each of the last three years and the current year, country-wise;
- (b) Whether India's ranking has improved on the global competitive Index; if so the details thereof along with the factors attributed to this improved ranking of the country;
- (c) Whether   foreign   investment  particularly FPI has slowed down the current year; if so, the details thereof and the reasons therefor; and during
- (d) The steps taken by the Government to boost foreign investment?

## ANSWER MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI JAYANT SINHA)

(a) to (d) The Foreign Investment Policy is reviewed on an ongoing basis, with a view to make it more investor   friendly: Significant   changes have   been made in the Foreign Investment regime; from time to time, to ensure that India remains an increasingly attractive investment destination. Policy

Year-wise statistics of FDI and FPI inflow for last three years country-wise:

(Amount in Rs. in Cr)

| Country            | 2012-13   | 2012-13   | 2013-14   | 2013-14   | 2014-15   | 2014-15   | 2015-16 (upto 2015)   | 2015-16 (upto 2015)   |
|--------------------|-----------|-----------|-----------|-----------|-----------|-----------|-----------------------|-----------------------|
| Country            | FDI*      | FPI       | FDI*      | FPI       | FDI*      | FPI       | FDI*                  | FPI                   |
| Mauritius          | 51,654    | 10,147    | 29,360    |           | 55,172    | 26,955    | 23,490                |                       |
| Singapore          | 12,594    | 46,434    | 625 35,E  |           | 41,350    | 66,898    | 43,096                |                       |
| U.K                | 5,797     | 14,065    | 20,426    | 3,927     | 8,769     |           | 2,287                 |                       |
| Japan              | 12,243    |           | 10,550    |           | 12,752    | 11,887    | 5,219                 | 12,463                |
|                    | 3,033     | 44,950    | 4,807     | 72,250    | 11,150    | 1,02,123  | 5,435                 | 56,027                |
| From AlI Countries | 1,21,907  | 1,63,348  | 1,47,518  | 62,286    | 1,89,107  | 2,56,213  | 1,06,693              | 72,970                |

Some of the common factors that influence FPIs investment; inter alia, includes the following:

- 1) Country of the concerned jurisdiction; rating
- 2) Prevailing financial market conditions;
- 3) Anticipated future returns out of the proposed investment;
- 4) Market infrastructure in the concerned jurisdiction;
- 5)  Liquidity and volatility in the markets of the concerned jurisdiction;
- 6)   Regulatory regime prevailing in the concerned jurisdiction;

The Government has taken various measures to improve Foreign Investment; which inter alia, includes:

- (b) Government has allowed the FDI limit upto 49% in respect of Pension fund set up under the provisions of Pension PFRDA Act; 2013.
- (c) The FDI has been   simplified by  introducing   composite cap to include all forms of investment i.e. FPI, NRI, QFI, FVCI, Policy foreign
- (d) Partly Paid Shares and Warrants are treated as an eligible   financial instruments for foreign investment under FDI Policy.
- (e) The procedure and other norms for has been simplified and a riskbased approach towards KYC has been adopted. entry
- FPIs have been permitted to invest in Government and Corporate Debt without purchasing debt limits till the overall investment reaches 90%.
- (g) FPIs have been permitted to invest in Credit Enhanced INR Bounds upto an equivalent of USS 5 billion within the overall Corporate Bond limit of USS 51 billion.
- (h) Sub limit for FPI investment in Commercial Papers has been reduced from of USS 5 billion to USS 2 billion within the Corporate debt limit of USS 51 billion.
- Debt limits for investment by FPIs in Central Government securities were increased to INR 1,29,900 crore from the existing limit of 1,24,432 crore and this limit shall further be increased to INR 1,35,400 crore on January 01, 2016.

All the efforts have yielded results, which has improved India's ranking: India now stood at rank 130 as per World Bank Report 2016