"The numbers clearly show how the bogey raised by some people that the fresh investment was going outside the country, was without any foundation…If at all, the investments have declined both in the domestic economy as also the international markets… it is because of the prolonged global slowdown which has overwhelming hit most parts of the world," said Rana Kapoor Assocham President.
Even in terms of pure equity play, the FDI by Indians abroad was much less in the first half of this financial year at USD 1.78 billion than USD 2.91 billion in the same period a year ago. However, the reinvested earnings were almost the same USD 594 million versus USD 595 million.
The net FDI by Indians in the world in the full of financial year 2012-13 were rather robust at USD 7.13 billion. However, going by the H1 trends, it looks implausible that this year, the money going abroad as FDI could exceed USD two billion.
"Though because of the financial stress in most parts of the world, the assets are going rather cheap, the propensity to buy them is also less along with the increasing risk aversion. Besides, very few companies in India are cash-surplus as a vast number of them find themselves highly debt-leveraged," the study noted.
The study further pointed out, the bogey of investment flying abroad as the projects are stuck in the country because of a number of corruption scandals or environmental clearances is fallacious since the investment scenario all around the world is rather subdued.
"With demand slowdown and excess capacity, not much of fresh large investments are taking place in new manufacturing facilities. It is rather going into the Brownfield's as some of the stressed assets are getting bought and sought, although in absolute numbers, even here the activity is rather subdued," the Assocham study contended.
Though the government has taken a number of steps to fast-track the stalled projects, the scepticism is still there among some industrialists and economists about the state of the so-called policy paralysis.
"While, we do agree that there are several policy and governance issues which need to be sorted out, those cannot be the only reasons for the overall subdued investment climate. There are a large number of global factors at play, which, though could have been better handled, if the governance issues were not there," added the Assocham Chief.