The Hindu : Business : It is destination India for FDI, says Kamal Nath

Online edition of India's National Newspaper
Friday, Nov 26, 2004

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Business

It is destination India for FDI, says Kamal Nath

By Our Special Correspondent

NEW DELHI, NOV. 25. India's lure as a destination for foreign investors appears to have improved considerably as foreign direct investment (FDI) flows have risen by nearly 70 per cent to $2.38 billion in the first six months of the current financial year from $1.41 billion in the same period last year.

Investment climate

Disclosing this here today, the Union Commerce and Industry Minister, Kamal Nath, said, "Now it is destination India unlike China in the past.'' Highlighting the improvement in the investment climate, he said more liberalisation measures could be expected in the coming weeks. This could include allowing FDI into the "branded and dedicated retail segment'' in an attempt to boost investment in employment generating sectors.

He told reporters that the FDI policy could not be static and areas where employment generating potential was higher were under consideration like the branded and dedicated retail segment. The Government would not, however, consider sectors where the existing employment scenario would get `distressed' such as in the retail segment of department stores. Besides, he said the Government was considering further simplifying procedures to facilitate enhanced inflow of FDI into the country.

Press Note 18

Regarding the fate of Press Note 18, which makes it mandatory for foreign joint venture partners to take clearance from Indian partners for fresh investment, he said the Government might come out with new policy guidelines shortly. He said a differential policy would be followed for companies which already had joint ventures and which were entering into fresh ones.

He said the iron ore exports policy was also being reviewed as there were demands that high grade iron ore should not be allowed to be exported as it was needed within the country. He noted that iron ore exports were a contentious issue as while it generated a lot of employment, it also clogged the ports.

Mr. Kamal Nath pointed out that the FDI data for April-September covered on the equity component of investments. Other FDI components such as reinvested earnings and other capital would be included at the end of the financial year. "After incorporating these components into FDI statistics, it is expected that the inflows would go up further by around 65 to 70 per cent,'' he said.

Strong indicators

He said the aim was to achieve a cumulative FDI of $5 billion during 2004-05. The total investment in the last fiscal was $2.8 billion, an amount almost covered in the first half of this financial year itself. In this context, he noted that the country was witnessing strong economic indicators like 24 per cent export growth and buoyant FDI inflows despite strengthening of the rupee and hardening of crude oil prices.

Giving details of the States attracting the highest FDI, he said Delhi emerged as the number one State attracting $481 million in April-September, followed by Maharashtra, Karnataka, Andhra Pradesh and Gujarat. While Gujarat retained its position among the top five FDI destinations, Tamil Nadu has been replaced by Andhra Pradesh which attracted FDI equivalent to $138 million claiming 6.94 per cent of the total inflows. Karnataka has slipped from the number two position to the third slot with $148 million (7.47 per cent) while Maharashtra at number two attracted $422 million, accounting for 21.26 percent of the total inflows.

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