A review
of India’s Foreign Direct Investment (FDI) policy is currently under
way and the results of this review will be announced by June-July
2007. This was stated by Dr Ajay Dua, Secretary, Department of
Industrial Policy and Promotion (DIPP), Ministry of Commerce and
Industry, in a presentation on “Investment Scenario in India” at the
Plenary Session on “GCC-India Investment Opportunities” at the 3rd
meeting of the India-GCC Industrial Forum in Mumbai today. The
results of the review would be in the direction of liberalisation,
as was the case with similar policy reviews in the past, he
indicated.
In a
detailed presentation, Dr Dua outlined the growing attraction of
India as an investment destination and identified the following as
the six sectors with potential – automobiles and auto ancillaries;
information technology (IT) and IT – enabled services;
pharmaceuticals; biotechnology; food processing; and
telecommunications. He mentioned in this context that FDI had
started coming into the telecom sector in India in a big way now.
In all these sectors, the basis for optimism about future growth
stemmed from India’s cost competitiveness, supplied side strengths
including a large intellectual capital base and the expanding
domestic market, he said.
He
emphasised that India had deliberately followed a process of
calibrated liberalization of its FDI regime – from the pre-1991
policy when FDI was allowed selectively upto 40% and thereafter, in
1991 upto 51% under the automatic route for 35 priority sectors to
the year 1997 when it was decided first to allow upto 74/51/50% in
111 sectors under the automatic route and 100% in some sectors. In
2000, upto 100% was allowed under the automatic route in all sectors
except a negative list, while more sectors have been opened, equity
caps raised and conditions relaxed in the post-2000 phase, he said,
underlining that there were no restrictions on FDI in the
manufacturing sector where upto 100% FDI had been allowed.
According to RBI data, FDI equity inflows into India upto January
2007 amounted to US$ 16.4 billion. With the addition of reinvested
earnings, the total FDI inflows were US$ 19 billion in 2006-07.
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