For the first time in twenty years India received more foreign direct investment than China in 2018, according to a report. India attracted $38 billion in FDI, higher than China’s $32 billion this year due to stable fundamentals, a bankruptcy code and new opportunities in sunrise sectors.
China has historically been the favourite destination for global funds. But this year India saw 235 deals amounting to $37.7 billion, highest ever for the country, beating China, the business daily Economic Times reported citing data from Dealogic, a global M&A and capital markets data provider.
The trade war between China and the US is seen as a major reason for the FDI slowdown to China.
“India has had a busy M&A calendar in 2018 and we will continue to see good traction in inbound M&As,” the publication quoted Kalpana Morparia, chief executive for South and Southeast Asia at JP Morgan Chase & Co as saying. “Given India’s demographics, the e-commerce story, the way India has leapfrogged the several stages of technological revolution, we expect a lot of activity in the technology and financial services space going forward,” Morparia added.
Global investors typically focus on India despite short-term uncertainty over the political climate, be it state or federal elections, Sonjoy Chatterjee, chairman, Goldman Sachs in India told ET.
The biggest deal that drove FDI flows to India this year is Walmart’s $16 billion buyout of Flipkart. Experts believe technology-driven consumer retail and financial services spaces are likely to see substantial M&A activity in the near future.
Other than e-commerce, asset divestment happening because of the new bankruptcy framework is also attracting foreign investors with deep pockets to deploy funds in the country, mainly in the manufacturing sector, the business daily said.