Six sectors account for 30 p.c. of FDI

By Our Special Correspondent

NEW DELHI, MAY 2. Out of a total foreign direct investment (FDI) of Rs. 85,615 crores in the post-liberalisation period up to October 2000, barely six sectors transport, electrical equipment, chemicals, telecommunications, services sectors and fuels accounted for bulk of the investments at Rs. 25,168 crores, representing 30 per cent of the total amount.

An analysis on FDI trends carried out by the Associated Chambers of Commerce and Industry of India (ASSOCHAM) reveals that the largest recipient of FDI was the transport industry that received Rs. 6,236 crores from August 1991 to October 2000 followed by electrical equipment Rs. 5,755 crores, chemicals Rs. 4,406 crores, telecommunications Rs. 4,333 crores, services sector Rs. 4,225 crores and fuels Rs. 4,112 crores.

The other sectors that received FDI of over Rs. 500 crores in the post-liberalisation period were food processing industry at Rs. 2,569 crores, paper and pulp including paper products Rs.1,126 crores, mechanical and engineering items Rs. 878 crores, textiles Rs. 837 crores, trading Rs. 784 crores, metallurgical industries Rs. 695 crores and glass Rs. 659 crores.

However, several sectors registered declining inflows of FDI in the last three years including boilers and steam generating plants from Rs. 6.29 crores in 1998 to Rs. 29 lakhs in 1999 and nil in 2000 (up to October); prime movers other than electrical from Rs. 9.45 crores to Rs. 6.26 crores and machine tools from Rs. 25.60 crores to Rs. 9.99 crores.

In this context, the Assocham has suggested that the macro- economic scenario should be made more conducive to attract foreign investment on a continuous basis. It has called for speedy implementation of projects and removal of post-investment problems faced by investors. Steady improvement in GDP, lower levels of inflation, stable exchange rate and a well-regulated capital market would help reduce the risk perception of investing in India.

There is also a need to upgrade the country's infrastructure with the focus being on efficient transport, communications and financial systems. Except for a small negative list, all others sectors should be under the 100 per cent automatic approval route and various laws relating to companies, foreign exchange, insurance and labour should be amended to facilitate a more conducive environment for foreign investment.

The Foreign Investment Implementation Authority (FIIA), which consists of representatives of Central and State governments, should be beefed up with representation from industry as well. The FIIA should also be armed with sufficient authority and powers to act as the sole body to implement all FDI projects once approval has been granted, the Assocham has said.

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Section  : Business
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