FDI flows in India may drop this fiscal

By SiliconIndia   |   Tuesday, 25 November 2003, 08:00 Hrs
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NEW DELHI: Despite India emerging as a favourite destination for Foreign Direct Investment, inflows into the country may see a dip this fiscal as compared to last year, according to global consultancy firm A T Kearney.

A T Kearney Inc Managing Director (US) Paul A Laudicina told UNI that many factors, including domestic, would be responsible for the decline from last year's $ 3.4 billion.

''Globally too FDI flows are expected to be flat at last fiscal's $ 651 billion level mainly because of excessive caution on the part of investors.

''After the September 11 attacks on the US, nearly one third of global investors view security concerns and terrorism among the most critical risks to their firms as well as operations,'' Laudicina said.

To drive his point, he pointed out to the inflows this year.

''In the first quarter of this fiscal, only $ 350 million came in as FDI against $ 1.65 billion in the same period last year.

''Though FDI picked up in July and touched $ 180 million as compared to $ 150 million in July '02, but overall I think the bad start is going to weigh heavily on the total inflows in FY 04,'' he said.

In its FDI Confidence Index for 2003, A T Kearney had raised India's position by nine points to number six. ''However, this elevation does not mean that inflows would be increasing immediately as the corporates we surveyed said they would making these investments over the next three years.

''The slowdown we are witnessing now are also because of decisions on investment taken about two years back when India was low down the priority list of foreign investors,'' Laudicina said.

On the domestic front, he listed difficult bureaucracy and slowdown of reforms among the top two problems impeding FDI growth.

''Also, poor infrastructure was one of the reasons listed by corporates for shying away from making investments in India,'' he said.

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