IMF says FDI flow below potential

By agencies   |   Thursday, 22 September 2005, 07:00 Hrs
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WASHINGTON: The International Monetary Fund has said that though interest of foreign investors in India is gaining, foreign direct investment flows are still below potential.

Releasing its latest report on Global Financial Stability, the IMF said that in Asia, India, China, Indonesia, Malaysia and Vietnam attracted more FDI last year and will continue to be attractive this year too.

It said that India has received much attention for its success as an outsourcing destination and is attracting large financial inflows (in 2004, it accounted for one-fourth of the portfolio flows to emerging Asia).

It however cautioned that FDI has been affected in India by a difficult investment climate as well as due to restrictions on FDI in certain sectors. And the growing inadequacy of India’s infrastructure constitutes a major obstacle to private investment and export potential.

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