The Hindu : Business : FDI flows may rise to $15 billion

Online edition of India's National Newspaper
Friday, Feb 04, 2005

Business

Business

FDI flows may rise to $15 billion

By Our Special Correspondent

NEW DELHI, FEB. 3. India is expected to reap a bonanza in foreign direct investment inflows with as much as $15 billion expected during 2004-05, according to Industry Ministry officials. This is nearly three times higher than the $5.6 billion of FDI flowing into the country last year. Of the higher amount projected for this year, a substantial amount is likely to come in the infrastructure sector.

Officials told reporters that as much as $5 billion was expected to come from South Korea alone.

The expectation of more buoyancy in FDI inflows came only a day after the Government announced a hike in the FDI cap in the telecom sector. This has already been raised from 40 to 49 per cent civil aviation sector while proposals are being considered for increasing the FDI cap in the insurance sector from 26 to 49 per cent. In case these projections prove correct, it would be the first time that FDI inflows rise to double digits though the target of $10 billion annually was set several years ago.

The Commerce and Industry Minister, Kamal Nath, who has just returned after attending the World Economic Forum meeting at Davos also stressed that India was now finally on the radar of foreign investors. He said there was considerable interest in India among multinationals with companies such as Merck which had left the country now considering a re-entry initially by setting up a research division. Besides, with the new patent regime coming into effect, he said other pharma companies were making plans for investment in the research and development sector. In this context, he pointed out that $60 billion worth of drugs will get "off patent'' over the next three years, providing a big opportunity for higher investments in this sector.

On the World Trade Organisation (WTO) talks, he said that a mini-ministerial held at Davos would be followed by another mini-ministerial in China in July.

The WTO Director-General was expected to submit a note on issues for discussions and resolution at this meeting. Besides, the first draft for the Hong Kong WTO Ministerial in December was expected to be finalised by August.

In an informal chat with newspersons, the Minister said with negotiations intensifying, the Doha Development Round could be concluded in 2006. He said modalities for agriculture and non-agriculture market access were likely to be finalised by Hong Kong Ministerial.

As for the meeting of the Group of 20 developing countries being held on March 18 and 19 here, he said the group was likely to formulate its strategy on agriculture besides exchanging views on other contentious issues of market access on non-agricultural products and services.

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