India sees encouraging signs in FDI inflows

Friday, 28 February 2003, 08:00 Hrs
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While lagging behind countries like China, Hong Kong and Singapore, India sees encouraging signs in increased inflow of foreign direct investment (FDI) despite a drop in global investment flows.

NEW DELHI: "India, though way behind China in attracting FDI inflows, has marginally improved its share in total FDI inflows of developing economies of Asia from 2.7 percent in 1996 to 3.3 percent in 2001," the annual pre-budget Economic Survey 2002-03 tabled in Parliament Thursday said.

"A sharp rise in volume of FDI inflows in the Indian economy in 2001-02 (of around $3.9 million) shows its attractiveness as an investment destination," the report said.

In the aftermath of the East Asian economic crisis in 1997-98, there has been a drop in overall net private capital inflows to the emerging markets including in Asia.

"The reduction in FDI inflows in the Indian economy after 1997-98 therefore is reflective of the overall depressed trends of private capital flows in emerging markets, including developing Asia (with the exception of China)," the report said.

Against this backdrop, "the spurt in FDI inflows in India in 2001-02 is remarkable for several reasons," the survey said.

Of the total $94.36 billion investment flow to Asian countries during 2001, India received $3.4 billion in FDI, China attracted $46.85 billion, Singapore $8.6 billion and Thailand $3.76 billion.

Though a major part of fiscal 2001-02 was characterised by global slowdown, "India received higher FDI inflows notwithstanding the rigidities in global financial markets," the survey stated.

This is despite the Gujarat earthquake and the terrorist attack on Parliament, apart from the calamitous developments in the aftermath of 9/11.

"The ability of the economy to overcome these shocks and attract FDI points to the increasing attractiveness of India's country specific attributes (strong macro-economic fundamentals, expanding market and large pool of human resources)," the survey pointed out.

In an attempt to attract more investments, India is studying an expert committee's recommendations to further liberalise the entry norms and lift curbs on investment in some sectors.

FDI inflows during April-October 2002 are estimated to be $1.98 billion, as against $2.05 billion during the same period in 2001.
Source: IANS

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