See FDI flowing out of China, into India: Noted economist Nouriel Roubini

Noted Iranian-American economist Nouriel Roubini expects foreign direct investment (FDI) flowing out of China and coming to India. Roubini also said that friendshoring is a huge opportunity for the country as it emerges as a replacement for global capital flowing out of China. 

Roubini, professor emeritus at Stern School of Business, New York, spoke to ETNOW on the country's growth potential and opportunities due to capital moving out of China.

Besides lauding India's policies like GST that have unified Indian market and reduced friction and reduced logistics cost, he said the country is on the right track in creating physical infrastructure to capture share of global capital flowing out of China.

Speaking about India's economic growth, Roubini said the country has the potential to grow at more than 7 per cent if it continues on the economic reforms path.

The rise in global uncertainty in the wake of Russia's invasion of Ukraine, FDI equity inflows in the manufacturing sector in the first half of the current financial year (April-September) fell below its corresponding level in the first half of 2021-22.

The monetary tightening at the global level has further restricted the FDI equity inflows, the Economic Survey tabled last month noted.

FDI equity inflows into India shrank by 14 per cent to $26.9 billion during the April-September this fiscal, the data of the Department for Promotion of Industry and Internal Trade (DPIIT) stated.

Total FDI inflows, which include equity inflows, re-invested earnings and other capital, dipped to $39 billion during the first six months of the current fiscal year as against $42.86 billion in the same period a year ago.

During the first half of this financial year, Singapore emerged as the top investor. It was followed by Mauritius, the UAE, the USA, the Netherlands and Japan.

The computer software and hardware sector witnessed the highest inflows during the first six months of this financial year. It was followed by services, trading, chemicals, automobile and construction (infrastructure) activities.

The country has recorded its highest-ever FDI inflows of $84.84 billion in 2021-22.

A decline in foreign investments could put pressure on India's balance of payments and may also impact the value of the rupee.

With agency inputs