India overtakes China in FDI inflows first time in 20 years

China, India should handle disputes constructively: President Xi Jinping
Indian Prime Minister Narendra Modi (L) shakes hands with Chinese President Xi Jinping at the West Lake State Guest House ahead of G20 Summit in Hangzhou, Zhejiang province, China Reuters

India has overtaken larger rival China in terms of foreign Direct investment (FDI) inflow received this year, despite a global cooling down in FDI inflows.

It's the first time in 20 years that India has received more foreign direct investment than China, Dealogic data found, according to the Economic Times.

While India received more than $38 billion in FDI so far this year China lagged behind with $32 billion, data from the global M&A and capital markets data provider showed.

On Thursday commerce and industry minister Suresh Prabhu said India is bullish on getting $100 billion in foreign direct investment in the next two years.

"I have given a target. $100 billion of FDI should come from different sectors into India. It will not happen in one year. We have identified companies, sectors and countries and now we are going for road shows to attract investors," Prabhu told PTI.

While major M&A deals like the Walmart acquisition of Flipkart bumped up India's FDI nubmers, China was hit badly by the ongoing trade standoff with the US.

"India has had a busy M&A calendar in 2018 and we will continue to see good traction in inbound M&As ... Given India's demographics, the e-commerce story, the way India has leapfrogged the several stages of technological evolution, we expect a lot of activity in the technology and financial services space going forward," Kalpana Morparia, chief executive for South and Southeast Asia at JP Morgan Chase & Co, told ET.

While India has gone past China as the favourite emerging market destination for first world funds, the county is also looking to attract serious investment from the Asian region.

"For countries like Japan, South Korea, China and Russia, we are creating industrial clusters where they can invest and operate, Prabhu said. He added that China has agreed to set up industrial parks in India.

The minister highlighted that India's rank in the World Bank's doing business report has gone up to 77 from 130 earlier.

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