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BANGALORE, Dec. 24

KARNATAKA has emerged as the fourth-favourite foreign direct investment (FDI) destination since India opened its doors to foreign capital for enterprises in 1991.

The State managed to attract Rs 21,945 crore till June 2002 as foreign direct investments and cleared 1,973 projects, according to data available with the Union Finance Ministry.

However, Karnataka lags at 7.8 per cent share in the national pie behind Maharashtra, Delhi and Tamil Nadu. The top five destinations, including Gujarat accounted for 52 per cent of the total FDI inflow while the remaining 48 per cent was thinly distributed over the rest of the States.

The Karnataka Government under its twin investment proposal clearing agencies, the High Level Committee and single-window agency Udyog Mitra expects to sustain the momentum in attracting investments. The Udyog Mitra itself sanctioned small and medium projects totalling Rs 2,000 crore in the April-June quarter of the current financial year, Government officials said here.

"We are hopeful of a sustained momentum in investment flow despite a general downturn in the economy," a Government official, who did not wish to be named, said. The Udyog Mitra cleared projects worth Rs 10,000 crore in the last financial year. Almost 60 per cent of the total cleared projects have started taking shape, he added.

Investment proposals in the automobiles, electronics, pharmaceuticals and food processing sectors currently dominate the list, the official said. Infrastructure for information technology seems to have taken a backseat as the sector is currently in doldrums trailing a cramped US market.

Since the equities market remains depressed, there is not much public money flowing into the market, the official said. Lenders are also shying away from financing heavy projects following fears of adding on bad-loans to their balance sheets.

Though the momentum of investment is sustained in the small and medium industries, there is hardly any upward tick in large investments in the State. It may be recalled that only 3.13 per cent of projects sanctioned in the Global Investors Meet in 2000 have been commissioned.

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