India has emerged as the top recipient of foreign direct investment (FDI) from within the Commonwealth and is the second-most lucrative source of investment within the 53-member organisation after the UK, according to a new trade review.
The trade review released in the lead up to the Commonwealth Heads of Government Meeting (CHOGM) next week.
'Commonwealth Trade Review 2018: Strengthening the Commonwealth Advantage', compiled by the Commonwealth Secretariat, also found that India has moved into the top five providers of intra-Commonwealth services trade, surpassing Canada, and alongside Australia, Singapore and the UK.
"Between 2005 and 2016, India remained the top recipient of greenfield FDI from the Commonwealth, more than doubling the amount it received over 10 years...India is the leading country for attracting greenfield FDI, not only from the Commonwealth but also from the world. In 2015, it overtook China for the first time as the biggest destination for greenfield FDI," the report notes.
Green-field investments occur when a parent company or government begins a new venture by constructing new facilities in a country outside of where the firm is headquartered.
The trade review found that intra-Commonwealth exports of goods and services stood at USD 560 billion in 2016 and this trade, as a proportion of global trade, is rising and is now 20 per cent of Commonwealth countries' total trade with the world.
"This underlines the growing significance of Commonwealth markets for many member countries. With world trade growth forecast to rebound in 2017-18, the Commonwealth appears on track to achieve USD 700 billion in intra-Commonwealth trade in goods and services by 2020, while proactive policy measures can trigger even greater gains," the report notes.
Intra-Commonwealth trade is projected to reach USD 700 billion by 2020, driven in large part by India's economic growth.
According to the findings, the "dramatic rise" in the increased prominence of intra-Commonwealth investment is driven by India, a country which also presents enormous potential across economic sectors from the application of digital technologies.
The 2015 'Commonwealth Trade Review' had found that Commonwealth countries, on average, tend to trade around 20 per cent more and generate 10 per cent more investment with each other than with non-member countries.
The 2018 review was undertaken to explore how Commonwealth members, individually and collectively, can strengthen this Commonwealth advantage in two ways: by harnessing new technologies, especially digitisation, to trigger new trade and investment opportunities; and by strengthening certain aspects of their domestic trade governance regime to reduce trade costs further.
"Trade and investment flows among our members are strong and continue to grow. Despite the unexpected contraction in world trade since our 2015 Trade Review, intra-Commonwealth trade in goods and services, and productive greenfield' investment, is growing fast and projected to exceed USD 1 trillion by 2020," said Baroness Patricia Scotland, Commonwealth Secretary-General.
The review will feed into the Commonwealth Business Forum deliberations among business leaders and policy-makers from across the member countries, scheduled in London between April 16-18.
Among the Indian business leaders expected to participate include Rakesh Bharti Mittal, President Designate, Confederation of Indian Industry (CII) and Vice-Chairman, Bharti Enterprises, for a panel on global economic growth; Ajay Piramal, Chairman, Piramal Group, for a panel on business trust; and Ravi Parthasarathy, Chairman, Infrastructure Leasing & Financial Services Limited, for a panel on Smart Cities.
The business forum, alongside parallel Youth, Women's and People's forums, will mark a precursor to the Commonwealth Heads of Government Meeting (CHOGM) in London and Windsor on April 19-20, to be attended by Prime Minister Narendra Modi.