Island nation Mauritius dislodged Singapore to emerge as the top source of foreign direct investment (FDI) into India in 2016-17.
The foreign inflow from Mauritius in 2016 -17 stood at USD 15.72 billion whereas that of Singapore read USD 8.71 billion, showed data of the department of industrial policy and promotion (DIPP).
Mauritius Prime Minister Pravind Kumar Jugnauth, who was in India, stated that a comprehensive economic cooperation pact with India is being negotiated that will boost bilateral trade and investments.
The drop in FDI from Singapore last fiscal may be on account of revision of the tax treaty with an aim to check round-tripping of funds, according to experts. The revised treaty came into force from February this year.
Although Singapore, which was numero uno in 2015-16, has slid to the second slot, foreign capital from that country into India is on the upswing. The FDI inflow of USD 13.7 billion in 2015-16 was the highest ever received from Singapore since 2006-07.
Taken together, Mauritius and Singapore account for 50% of total capital inflows into the country. An official said a series of steps to liberalise the FDI policy and to improve ease of doing business have helped attract more and more foreign investors.
During the last three years, India has relaxed norms in as many as 21 sectors covering 87 areas. In 2016-17, the total FDI in India grew by 9% to USD 43.5 billion.
Other nations from where foreign inflows recorded healthy growth last fiscal include Japan, the Netherlands, the US, Germany, France and the United Arab Emirates (UAE) during the last financial year.
Foreign investments are crucial for India, which needs around USD 1 trillion (about INR 6.4 lakh crore) to overhaul its infrastructure such as ports, airports and highways to push growth. It helps improve the country’s balance of payments situation and strengthen the rupee value against other global currencies, especially the US dollar.