Review of literature on FDI in India on retail sector

BEIJING: China's foreign direct investment inflows rose 5.8 percent in the first 10 months of 2013 from a year ago, extending gains since March and underlining a reviving appetite from global investors as the world's second-largest economy gained traction.

The Commerce Ministry said on Tuesday that China drew $97 billion in foreign direct investment between January and October, with October's inflow up 1.2 percent on year earlier at $8.4 billion. FDI from the top 10 Asian economies, including Hong Kong, Japan and Singapore, rose 7.2 per cent to $83.6 billion for the ten months.

"We can see that foreign investment from Asian countries, the European Union and the US all kept relatively fast growth in the first 10 months," Commerce Ministry spokesman Shen Danyang told a regular monthly briefing.

Investment from the European Union rose 22.3 percent year-on-year in the first 10 months, while inflows from the United States rose 12.4 percent FDI is an important gauge of the health of the external economy, to which China's vast factory sector is oriented, but it is a small contributor to overall capital flows compared with exports, which were worth about $2 trillion in 2012.

FDI inflows in China have maintained steady growth every year since the country joined the World Trade Organisation in 2001. Inflows reached a record high of $116 billion in 2011 before dipping slightly to $111.7 billion in 2012.

China's outbound direct investment from non-financial firms between January and October totalled $69.5 billion, up 20 per cent from a year earlier.

The ministry said about 90 per cent of the total outbound investment went to five industries: commercial services, mining, wholesale and retail, manufacturing and construction.

China's outward investment in the real estate sector rose 95 per cent to $1.7 billion, while investment outflows into construction surged 426 percent during. Curbs on realty foreign direct investment below 50% may stay

NEW DELHI: The government may reject the urban development ministry's proposal to scrap all restrictions on foreign direct investment below 50% in real estate on the grounds that there can be no exemptions on rules such as minimum area norms.

The suggestion was included in recommendations drawn up by the Department of Industrial Policy and Promotion, part of the Ministry of Commerce and Industry, in order to encourage overseas investment in real estate, which has been hit by a weak .. The ministry had also suggested that minimum carpet area be used in place of the prevailing measure of built-up area. "Foreign investment up to 49% should be free from condition to attract foreign capital providers, which do not have long-term interest in construction assets," the urban development ministry had said in July.

"This will also enable real estate players to raise foreign capital at competitive rates and reduce dependency on the already strained domestic financial The recommendations are likely to be considered by the Cabinet soon, said an official. Apart from suggesting a cut in the minimum land area required for developing housing plots to 5 hectares from 10 hectares, the proposals said the requirement for apartment complexes should be lowered to a minimum total carpet area of 20,000 sq metres from 50,000 sq metres of built-up area.

The FII/FDI cap in the sector is currently capped at 49 per cent. At present, FIIs hold 23 per cent in the exchange while foreign corporate bodies hold 10.5 per cent, taking the overall foreign holding to 33.5 per cent in the country's only listed commodities exchange.

"After an enabling resolution of fungibility of increasing foreign investment passed today at the AGM, we will seek the RBI approval and are hopeful that the regulator will clear out application to raise stake," MCX acting-chairman RM Premkumar told reporters on the sidelines of the company's 11th annual general meeting here.

"We see great opportunities in FII hiking stake in the company," Premkumar added.

The exchange intends to make a sub-limit of 23 per cent interchangeable with 26 per cent FDI for secondary market compliance under the portfolio investment scheme.

The move is significant as recently the government relaxed norms for foreign direct investment in commodity exchanges where commodity exchanges need not seek government approval for up to 49 per cent ownership by foreign investors. Meanwhile, the MCX AGM turned out to be a low key affair as protesters kept themselves away due to heavy police security.

Commenting on recent fall in share price of MCX, Premkumar said the company has no plans to buyback shares.

The share price has fallen sharply owing to payment crisis in the group company the National Spot Exchange (NSEL). "The zero-debt MCX has strong fundamentals and has 87 per cent market share. The share price has come down due to falling volume due to CTT levied in July this year and unfortunate public perception of any perceived linkage with NSEL," he said.

Premkumar, who is the regulator FMC-nominated acting chairman, clarified that there is absolutely no linkages, financial or otherwise with NSEL, which is totally different company. We see no crisis as the exchange security systems are audited on continuous basis, whether it is collateral or fixed deposits etc," he said.