The United Nations Conference on Trade and Development has released its World Investment Report 2019. The 222-page report reveals that global flows of foreign direct investment (FDI) came at $1.3 trillion in 2018, falling 13% in their third consecutive year of decline. India was the tenth largest recipient of FDI during the year, its inflows rising 6% to $42.3 billion, although its rank fell by a spot. It maintained its record of attracting 70% to 80% of the FDI that comes to south Asia.

Amidst all the claims and counters, a heartening statistic is of India, not traditionally in the top 20 outward investor countries, was also considered as among the top 10 most important sources of FDI for 2019 to 2021. This is indeed a welcome development even as FDI inflows into India are far from meeting its current and future needs. A large market with high import duties, tax incentives, relaxed labour laws, ease of doing business and easy repatriation of money have often been the levers countries have used to attract FDI.

The US and Europe have traditionally leveraged the might of their enterprises and technology to dictate terms to others while pouring in billions of dollars. China joined the bandwagon a decade ago, using its cash-rich state and private enterprises to gain a foothold in Africa, and now elsewhere, to keep its own energy- and raw material-hungry factories also going. Its Belt and Road Initiative -- an ambitious programme to connect Asia with Africa and Europe via land and maritime networks – is part of that even as most term it a debt trap for countries joining it. China’s machismo has its roots in the country clocking more than 10% economic growth for several years.

India is far from acquiring the money and the muscle to play big as yet on the global outward FDI platform. But a beginning has been made. The emphasis should now be to play both strategic and monetary cards, even technology, wherever possible. It already has in S. Jaishankar, a minister of external affairs, who as a career diplomat, understands the geo-strategic importance of FDI. India can use its expertise in space, heavy engineering and software as barter for a favourable treatment for its investments in foreign countries. Countries in Asia, Africa and Latin America could be candidates for this.

An active interplay of trade, defence, finance and external affairs arms of the Indian aide with its counterparts in other countries will be needed for this. India can showcase how its software companies have created jobs in Europe and US, countries that set very stiff norms for foreign companies to operate. It may be recalled how the UK-based Corus approached a smaller Tata Steel for a reverse merger. There was a little bit of soft power — an asset in abundance here but rarely used — also at play there. International commerce isn’t a one-way street. This then also calls upon the Indian government to open its own door also a little more. India’s aviation and mining sectors are crying for investment. At a time when Indian corporate are squeezed for funds, opening these sectors to more FDI may just be the best thing to do. A global play is an ever evolving game of chess — tactics and strategy go hand in hand.

Close