Date:08/01/2008 URL: http://www.thehindu.com/2008/01/08/stories/2008010856541700.htm

Business

Upswing in FDI inflows on progressive delicensing

Special Correspondent

Maximum funds come through Mauritius

Five sectors remain within compulsory licensing
DIPP fixes $30 b target for 2007-08

NEW DELHI: Progressive delicensing of various sectors and procedural simplifications have helped India register phenomenal upswing in foreign direct investment (FDI) inflows. “FDI inflows have gone up from $2.2 billion in 2003-04 to $15.7 billion in 2006-07. Accordingly, a target of $30 billion has been fixed for 2007-08,” says the year-end review of the Department of Industrial Policy and Promotion (DIPP).

World Bank’s ranking

Stating that India has also improved in the World Bank’s ranking of “Doing Business 2008” to 120 in 2008 from 138 in 2006, the report said FDI had increased just from 0.77 per cent of gross domestic product (GDP) in 2003-04 to 2.31 per cent in 2006-07. Similarly, as a percentage of total investment, this had gone up from 2.55 per cent in 2003-04 to 6.42 per cent in 2006-07. Till August this fiscal, inflows of $6.44 billion were recorded with the maximum funds coming through tax haven Mauritius.

Due to progressive delicensing, only a handful of five sectors now remain within the ambit of compulsory licensing, and that on account of safety, security and environmental concerns. These are distillation and brewing of alcoholic drinks; cigars and cigarettes of tobacco and manufactured tobacco substitutes; electronics aerospace and defence equipment; industrial explosives, including detonating fuses, safety fuses, gun powder, nitrocellulose and matches; and specified hazardous chemicals. In 1991, 839 items were under reservation for the SSI sector. After progressive liberalisation now only 114 items were left reserved for the SSI sector. In the last three years, 561 items had been de-reserved from the SSI sector, it said.

Intellectual property

On the intellectual property rights front, Patent Rules aimed at making the system simple, transparent and effective were notified in May 2006. As an impact of the modernisation programme is evident, the number of patent applications increased from less than 13,000 in 2003-04 to about 29,000 in 2006-07. Significantly, the grant of patents increased four-fold from 1,911 in 2004-05 to 7,539 in 2006-07. E-filing facility for patents and trademarks was inaugurated in July 2007, it added.