Inflows of foreign direct investment (FDI) into India have witnessed a quantum leap during the current financial year and are expected to be more than double the inflows recorded last year.   This was indicated by Shri Kamal Nath, Union Minister of Commerce & industry, while presiding over the meeting of Parliamentary Consultative Committee attached to his Ministry here last evening.   FDI equity inflows during the current year (April-November 2006) had been US $ 7.2 billion – the highest ever received in equity capital since the commencement of economic liberalisation in India, he said adding that monthly inflows this fiscal crossed US $ 1 billion on 3 occasions viz., in July, October and November 2006. 

Shri Kamal Nath also referred to the higher credit rating assigned to India by Standard and Poor’s recently and said that raising of India’s rating to investment grade – both at institutional and FDI levels – should lead to even greater inflows into India.   Emphasising that the higher inflows as well as the new credit rating reflected growing investor confidence in India, the Minister said that FDI inflows by the end of this fiscal would reach US $ 12 billion, implying an unprecedented 120% growth over the previous year.  

Members who attended the meeting were:  S/Shri Ramakrishan Badiga, Ram Singh Kaswan, Sudhangshu Seal, J.M. Aaron Rashid, Sharad Joshi, M. Rajasekara Murthi and Abu Asim Azmi. Dr. Ajay Dua, Secretary, Department of Industrial Policy & Promotion (DIPP); and Shri G.K. Pillai, Commerce Secretary, were also present

In a presentation made on the occasion, the following points were highlighted:

·        In A.T. Kearney’s FDI Confidence Index, India’s rank as a FDI investment destination has improved from No. 15 in 2003 to No. 2 in 2006.

·        As per J.P. Morgan, the return on equity on investments made in India is the highest in Asia at 18%.

·        Services sector has become the top sector in attracting FDI in April-November 2006. 

In response to a suggestion from members, Shri Kamal Nath agreed to set up an Expert Committee to look into the sectors into which FDI was flowing and its impact on the rural economy.  The purpose of this exercise is to ensure equitable distribution of FDI and to bridge the rural-urban divide.  Members agreed with the Minister on the importance of FDI in the country’s economy in terms of not only generating economic activities and jobs, but equally in facilitating transfer of technology and managerial capabilities, thereby enhancing India’s global competitiveness. 

* * * * *

 

Back