The Hindu : Satisfactory performance of foreign investors: FICCI survey

Online edition of India's National Newspaper
Friday, Apr 19, 2002

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Business

Satisfactory performance of foreign investors: FICCI survey

By Our Special Correspondent

NEW DELHI APRIL 18. The Federation of Indian Chambers of Commerce and Industry today asserted that the performance of foreign investors in India has been satisfactory with 61 per cent reporting profits or break-even (36 per cent making profits, 25 per cent break-even).

Releasing the FDI Survey 2002, the FICCI General Secretary, Amit Mitra, said 70 per cent of them said that their capacity utilisation was in the range of 50-75 per cent and this was fairly positive, considering most of them were new entrants, operating in an environment of economic slowdown.

The FDI Survey 2002 covered 385 respondents from across sectors including automobiles, engineering and machinery, energy, infrastructure, information technology, food and beverages, tourism, drugs and pharmaceuticals, consumer goods and electronics. The turnover of these respondents ranged from Rs. 10 crores to Rs. 850 crores.

Talking about their expansion plans for the near future are: on the cards for 51 per cent of respondents, which shows a deepening commitment to the Indian market. Ranking of States by investors regarding investment climate (using a weighted index calculation methodology) resulted in a somewhat different ranking from that of State rankings based on FDI approvals.

Andhra Pradesh is ranked sixth in terms of FDI approvals but third according to investor rankings. These perceptions are a powerful indicator as to which States can expect to receive higher FDI inflows in the near future. The case of Haryana too is also strikingly different. Ranking of other States more or less coincide with FDI approval rankings.

On policy issues, the survey revealed a marked improvement over the last year with 93 per cent saying handling of approvals at the Centre is good to average, and policy related issues such as funds flow mechanisms are effective.

Making a comparison to last year's FDI survey, Mr. Mitra and, Minakshi Roy, FICCI senior assistant secretary, said "there is a negative shift in the responses regarding market growth conditions and parameters related to regulatory frame work and ground level hassles at the state level.''

According to them, this negative shift has not yet adversely affected the actual performance of foreign investors or their future plans. But the ground level hassles and market conditions need to be remedied urgently in order to sustain and improve FDI inflows. A mixed strategy has been suggested as part of the action plan to remedy the situation and remove the pitfalls.

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