MNCs repatriate $10.7 b FDI thru sale of Indian assets

MNCs repatriate $10.7 b FDI thru sale of Indian assets

MNCs repatriated FDIs worth US$10.7 billion (about Rs 60,000 crore) by sale of their Indian assets in 2011, amid problems like slowing economic growth, rising business costs and regulatory uncertainties, global financial giant Nomura said in a research report.

The funds pulled back by multi-national companies (MNCs) during 2011 marked a significant jump from US$7.2 billion in 2010 and just US$3.1 billion in 2009, the report said.

“Global deleveraging may have forced companies to sell their Indian assets and repatriate funds to their home country,” it said.

“At the same time, domestic push factors such as slowing potential growth, the high cost of doing business and regulatory uncertainty have weakened the investment climate, likely causing this erosion. This is not a good sign,” it added.

The report said FDI into India has risen exponentially since 2000, but over the last three years some of this money is being repatriated.

“After keeping their investments broadly intact until 2008, MNCs repatriated US$3.1 billion in 2009, US$7.2 billion in 2010 and a peak of US$10.7 billion in 2011,” it said.

The report said it expects services and real estate sectors have probably seen the maximum outflow. In 2011, India attracted FDI worth US$27.57 billion, higher than US$21 billion in 2010.

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