The Japanese financial services firm, Nomura in the last week of April 2016 announced that India may surpass China in attracting Foreign Direct Investment (FDI) in 2016, in terms of percentage of its GDP.
The firm mentioned that the gap in inflows between the two nations has been narrowing due to ongoing reforms in India.
Key highlights of Nomura's research report
• The trend of rising inflows to India and moderating inflows to China began in 2013 and FDI inflows to India can surpass those into China in 2016. It is because India already has large investment commitments from MNCs in sectors like electronics, solar energy, auto, defence and railways.
• FDI inflows to India raised from 1.7 per cent of GDP in 2014 to 2.1 per cent in 2015. China had 2.3 per cent of GDP in 2015.
• These trends of rising inflows to India and moderating inflows to China are likely driven by a mix of pull and push factors, such as divergent growth outlooks, ongoing FDI liberalisation or economic reforms in India and rising labour costs in China.
• FDI inflows not only provide a stable source of financing the Current Account Deficit (CAD), but also bring in technical know-how, which can boost India's productivity growth in the near future.
About Nomura Group
Nomura is an Asia-based financial services group with an integrated global network spanning over 30 countries.
In October 2008, Nomura Holdings, Inc. acquired Lehman Brothers Holdings's investment banking and equities unit in Asia and Europe and kept on most of its employees.
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