Sharp decline in FDI into India from Cayman Islands, Cyprus during April-Sep
- December 4, 2023
- Posted by: OptimizeIAS Team
- Category: DPN Topics
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Sharp decline in FDI into India from Cayman Islands, Cyprus during April-Sep
Subject :Economy
Section: External sector
Context: Sharp decline in FDI into India from Cayman Islands, Cyprus during April-Sep
More about the news:
- Foreign direct investment (FDI) into India from the Cayman Islands and Cyprus witnessed a significant contraction during April-September of the current fiscal year, contributing to an overall 24% decline in FDI inflows, according to government data.
- FDI from the Cayman Islands decreased by 75% to $145 million during this period, while inflows from Cyprus contracted by over 95% to $35 million.
- Experts attribute this sharp decline to heightened scrutiny of applications.
- The overall decline in FDI is seen as influenced by factors such as increased interest rates due to high inflation in the US and other Western nations, along with geopolitical situations in Eastern Europe and West Asia.
- The recent removal of the Cayman Islands from the grey list by the Financial Action Task Force (FATF) in October may lead to positive FDI flow from the region in the future.
What is FATF:
- The Financial Action Task Force (FATF) is an inter-governmental body established in 1989 during the G7 Summit in Paris.
- The objectives of the FATF are to set standards and promote effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system.
- Its Secretariat is located at the Organisation for Economic Cooperation and Development (OECD) headquarters in Paris.
- FATF members include 39 countries, including the United States, India, China, Saudi Arabia, Britain, Germany, France, and the EU as such.
- India became a member of FATF in 2010.
- The FATF Plenary is the decision-making body of the FATF. It meets three times per year.
What are the two type of list of FATF:
- Grey List: Grey list is also called as “Jurisdictions under Increased Monitoring”. Countries that are considered safe haven for supporting terror funding and money laundering are put in the FATF grey list. This inclusion serves as a warning to the country that it may enter the blacklist.
- Black List: The black list is called as High-Risk Jurisdictions subject to a Call for Action. Countries known as Non-Cooperative Countries or Territories (NCCTs) are put in the blacklist. These countries support terror funding and money laundering activities. The FATF revises the blacklist regularly, adding or deleting entries. North Korea, Iran and Myanmar are in the black list.
What are the consequences of being on the FATF blacklist:
- No financial aid is given to them by the International Monetary Fund , the World Bank, the Asian Development Bank and the European Union
- They also face a number of international economic and financial restrictions and sanctions.