Right from the 35th position in 2011, China emerged as the 17th largest investor in India in 2016, as in one of the most-paced source of Foreign Direct Investment (FDI) into the country.
As of 2011, the sum total of the Chinese investments in the country was about 100 million USD. In 2016, it grew to an unprecedented amount of a record 1 billion USD. This being said, the Indian and Chinese statistics differ on aggregate figures.
Between April 2000 and December 2016, the FDI that flowed in from China to India was 1.6 billion USD, as estimated by The Department of Industrial Policy and Promotion (DIPP). However, the industry analysts and media reports estimated the FDI inflow to be well above 2 billion USD.
Link Legal India Law Services, legal consultants to the members of China Council for the Promotion of International Trade (CCPIT) stated, ‘actual Chinese investments in India are almost thrice as much as the Indian statistics state’.
What Indian statisticians fail to capture is that a majority of Chinese FDI comes in from places like Hong Kong, not mainland China. Shi Yaobin, China’s Vice-minister of Finance stated that China has aggregately invested 4.6 billion USD in India, whereas India, on the other hand, invested just about 650 million USD in China.
Sectors attracting FDI from China
While the automobile industry attracts a major chunk of Chinese FDI with 60% of FDI equity inflow, metallurgical industry, electrical equipments, industrial equipments and power attract 14%, 4%, 4% and 3% respectively. According to Rise and Coexist, Chinese Report, February 2017, seven smartphone manufacturers plan to launch factories in India.
Despite being India’s largest trading partner, the second largest economy in the world, the FDI inflow to India is only 0.5% of its total share of global investments. This is less than Japan and U.S.A, who invest 7.7% and 6.13% of their total FDI in India.
In 2016, China invested 45 billion USD in America alone and its global outbound investments were well over 170 billion USD and spreading across 164 countries. When viewed against such massive investments, China’s FDI into India seems rather low-lying.
Despite a number of political disagreements, Chinese investments in India continue to increase and there is little to no drop in the activities and interest of Chinese companies in India. Neither are the Indian establishments keen on placing any roadblocks onto the existing trade relation.
With an increasing global competitiveness, India is now a hot investment opportunity. With its economy is rising faster than China itself, more and more Chinese firms are showing greater confidence in its economy.
Top Notch Logistics are China import agents in Delhi, assisting in importing from China as well as shipping, inspection, purchasing and custom clearance.
By Fahad A. Khan