Fdi Comparison B/W India and China
UNDOUBTEDLY, China's track record in attracting foreign direct investment (FDI) is far superior to that of India. In fact, India has been considered an "underachiever" in attracting FDI. However, within this otherwise firm conviction about unmatched Chinese superiority in attracting FDI inflows vis-à-vis India, there has occasionally been some scepticism about what all China includes while compiling its FDI figures and consequently about the actual intensity of the FDI gap between China and India as suggested by the official statistics of the respective countries. On the other hand, it has been pointed out in the FDI literature that Indian FDI is hugely under-reported because of non-conformity of India's method of measuring FDI to the international standards.
As a rough approximation, we make the necessary adjustments in China's FDI statistics, that is, by excluding data under several heads that China includes in its FDI, but do not strictly fall under the purview of FDI. These heads include: The round-tripping of funds from Hong Kong, Taiwan, and Macao into mainland China; inter-company debt transactions; short and long-term loans; financial leasing; trade credits; grants; bonds; non-cash acquisition of equity (tangible and intangible components such as technology fee, brand name, etc.); investment made by foreign venture capital investors; earnings data of indirectly-held FDI enterprises; control premium; non-competition fee; and imported equipment. Having excluded data under these heads, net FDI inflows into China reduce from roughly $40.7 billion to $20.3 billion in 2000.
On the other hand, India's adoption of a somewhat broader method of FDI computation would raise its net annual FDI inflow figures, as reported in the Reserve Bank of India's official balance of payment statistics, from around $3.2 billion to about $8.1 billion in 2000. While the alignment of the Indian FDI with the international norm narrows down the gap between FDI in China and India,
As a rough approximation, we make the necessary adjustments in China's FDI statistics, that is, by excluding data under several heads that China includes in its FDI, but do not strictly fall under the purview of FDI. These heads include: The round-tripping of funds from Hong Kong, Taiwan, and Macao into mainland China; inter-company debt transactions; short and long-term loans; financial leasing; trade credits; grants; bonds; non-cash acquisition of equity (tangible and intangible components such as technology fee, brand name, etc.); investment made by foreign venture capital investors; earnings data of indirectly-held FDI enterprises; control premium; non-competition fee; and imported equipment. Having excluded data under these heads, net FDI inflows into China reduce from roughly $40.7 billion to $20.3 billion in 2000.
On the other hand, India's adoption of a somewhat broader method of FDI computation would raise its net annual FDI inflow figures, as reported in the Reserve Bank of India's official balance of payment statistics, from around $3.2 billion to about $8.1 billion in 2000. While the alignment of the Indian FDI with the international norm narrows down the gap between FDI in China and India,