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G. Srinivasan

Official sources told Business Line that "the impressive growth" of 86.25 per cent during the first half of 2002 was net of ADRs/GDRs and this record increase has supervened at a time when global FDI flows have waned considerably due to the c ontinued uncertainty in the global economy.

NEW DELHI, Aug. 13

AMID the gloom cast by the long shadow of the drought on the economy, there is palpably salutary news on the investment front with the country's inflow of foreign direct investment (FDI) in the first half of the calendar year (January to June 2002) setting a new record in recent years at $2.51 billion, as against $1.35 billion in the comparable months of 2001.

Official sources told Business Line here that "the impressive growth" of 86.25 per cent during the first half of 2002 was net of ADRs/GDRs and this record increase has supervened at a time when global FDI flows have waned considerably due to the continued uncertainty in the global economy and halting pace of world economic recovery in general and the economy of the US in particular during the period under review.

A particularly noteworthy feature is that FDI inflows amounting to $504.5 million (net of ADRs/GDRs) were received during June 2002, as against $166.4 million in June 2001, registering a growth of 203 per cent. While the number of cases for foreign investment approved by the Foreign Investment Promotion Board (FIPB) in June 2001 was 84 for FDI approval of Rs 514.62 crore in June 2001, the number of cases approved in June 2001was 44 but the amount of FDI approved was to the tune of Rs 704.51 crore, the sources added.

Even on financial year basis, a total FDI inflow of $1.30 billion (net of ADRs/GDRs) was received during the first quarter of 2002-03 (April to June) as against $0.63 billion (net of ADRs/GDRs) in corresponding quarter of 2001-02, registering a 106 per cent growth. The sources said that with the index of industrial production (IIP) for the first quarter showing a distinctly positive four per cent growth after a prolonged spell of lackadaisical performance, the relatively robust FDI performance is adding to the plus points of the economy even as the inaugural year of the Tenth Plan (2002-07) is subject to the vagaries of the truant monsoon.

They said that FDI inflows have by and large shown a consistent growth since 1991 when the Indian economy was opened up. The policies put in place by the Government particularly in terms of a liberal FDI policy, investment promotion efforts and investment facilitation in recent years have resulted in FDI inflows amounting to $4.06 billion (excluding ADRs/GDRs) in the last fiscal year, the highest ever recorded in a year, as against $2.46 billion in 2000-01.

The sources recalled that in 1991, when the industrial policy was liberalised, 35 high priority industries were opened to FDI on the automatic route. Subsequently, as a result of progressive liberalisation, FDI up to 100 per cent has been permitted in most sectors on the automatic route.

While there is no formal list of priority industries any longer, FDI in manufacturing, infrastructure, information technology and food processing industries is being specifically encouraged. They said that the opening up of new sectors for FDI such as integrated township development, defence industry, mass rapid transport system and print media have all helped in altering foreign investors' perception that the Government was serious in its recognition that FDI is a critical input for accelerated economic growth of compassing eight per cent GDP in the Tenth Plan (2002-07).

The sources maintained that an important feature in the country's FDI policy is that it is the established companies which originally came here that continued to pump in more investment for expansion, modernisation and third country exports, testifying to the fact that the investment regime in India encourages them to take a long-term view of the economy.

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