Foreign Direct Investment (FDI) and international trade are becoming ever more closely linked to global supply chains. We can be certain that India will become a much more important player in both inward and outward FDI flows. Read more about:
New Zealand has a weak record of attracting investment from India. Official records show the stock of investment from India into New Zealand was valued at $105 million in 2010, an increase of around 95 percent from a very modest base in 2009. Indian companies are primarily investing in our ICT and coal resources, and there is interest in biotechnology and pharmaceutical products.
Leading Indian ICT companies such as HCL, Mahindra Satyam, and Tata Consulting Services have made strategic investments in New Zealand, which we would like to see grow given India’s known strengths in the ICT sector. For example, Tata Steel is operating from eight locations in New Zealand after the acquisition of Corus in 2007. Some companies have also shown interest in the use of New Zealand’s iron sands as an alternative to iron ore.
Investment by New Zealand companies in India is sparse but growing, and in the two years to 31 March 2010 doubled to $129 million. Outward investment primarily involves a few dynamic New Zealand manufacturing and services companies that identify India as a high growth market, including the likes of Rakon with their manufacturing and technology partner and Medtech Global’s R&D centre.
An FTA with a comprehensive, high-quality outcome on investment would provide a significant opportunity to advance the investment policy agenda. From New Zealand’s perspective, such an outcome would include disciplines and protections which affirm, amongst other things, the principle of non-discrimination and the ability to transfer payments and investment capital freely to and from India.
New Zealand has a double tax agreement with India, which was concluded in 1986 and updated in 1999 and has proven to be a useful component of the bilateral economic relationship. Discussions with India are currently in progress, with a view to a further update of certain administrative provisions.
New Zealand Trade and Enterprise will continue to be proactive in identifying both inward investment opportunities for Indian businesses and outward investment opportunities for New Zealand companies.