Cumulative FDI equity flows into India reached $114.4 billion during the last two financial years of 2015-16 and 2016-17, according to the latest report by global accounting firm KPMG. This is about 40% higher than the $81.8 billion recorded in the preceding three years, from 2011-12 to 2013-14. UAE investors announced $2.5 billion worth of investments in India in a single month—October 2017—including $1 billion investment by Abu Dhabi Investment Authority (ADIA), $1 billion by NRI-Emirati Investor’s Group and a further $462 million investment by Lulu Group in Andhra Pradesh.

The report was prepared for the first India-UAE Partnership Summit (IUPS) held in Dubai last week. Cumulative FDI into India reached $498.9 billion in 17 years from April 2000 to June 2017, according to the Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce. “In the financial year 2016-17, the country received the highest-ever FDI flow worth $43.5 billion,” KPMG said. “India also witnessed an increase in private equity/venture capital investments led by its growing start-up segment. Between January and September 2017, India received $17.6 billion of private equity/venture capital spread across 402 deals,” it said.

The ADB said the infrastructure sector in India requires $5.2 trillion worth of investments to sustain the economic growth and lend support to several government flagship programmes. “The infrastructure sector is one of the key drivers of the Indian economy. India’s infrastructure market, currently the third-largest in Asia, is anticipated to reach $6.6 trillion by 2025, constituting 12.5% of the Asia- Pacific region. As of 2016, the sector contributes nearly 8% to India’s GDP,” said the report.

Roadways and highways are key to the development of the infrastructure sector as they offer the required base for intra and inter-state connectivity. The government has been trying to provide the necessary impetus to boost the sector. In the federal budget 2017–18, the government has allocated $9.8 billion for national highways (an increase of 11% from the previous year). The states are expected to provide an additional $1.2 billion for road development. In addition, the government has also announced the construction of 2,000km of coastal connectivity roads. The country is witnessing increased investments in the sector on the back of reforms and higher budgetary allocation by the government, greater funding support from international lending institutions and several MoUs being signed with several countries. In the federal budget 2017–18, the total capital and development expenditure of railways has been estimated at $20 billion, which includes $8.4 billion provided by the government.

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