20 October, 2020

Chronic Optimism

Nothing deters foreign investors in India, not even Gujarat or war

illustration by Jayachandran
Chronic Optimism
In September last year, the United Nations Conference on Trade and Development (UNCTAD) shot off a press release predicting that world foreign direct investment (FDI) flows were likely to decline 40 per cent in 2001. And this, noted the release, had nothing to do with the events of September 11. It went on to add that FDI flows to developing countries in Asia would decline by 6 per cent.

Maybe UNCTAD got it wrong, maybe investors don't pay much heed to predictions and estimates—at least as far as India is concerned. According to the commerce ministry, FDI inflows to India shot up by 66 per cent in 2001-02 to $4.1 billion. But why? That is the question puzzling many. What prompted investors to rush money into India? Especially during a general slowdown in the global economy, while war clouds gathered over the subcontinent and despite incidents such as Gujarat. "It shows the high investor confidence in India," says Tapan Bhaumik, senior advisor, CII. "With policies being liberalised, more and more people are coming into India. What is happening is that the good experiences...


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