47% growth in FDI inflows: Kamal Nath

NEW DELHI: India attracted foreign direct investment (FDI) to the tune of $1.74 billion duirng April-July 2006, registering a 47% growth over the inflow during the corresponding four months of the previous year. This is a substantial rise compared to $1.18 billion FDI received by the country during April-July 2005.

Out of the total FDI inflows, equity capital during the month of June amounted to $534 million, an increase of 102% as compared to $264 million the previous year, commerce and industry minister Kamal Nath said on Friday.

Most of this FDI flow is first mile investment, which is likely to increase. The minister also said that multi-nationals like General Motors, Suzuki, Nissan, Honda and Mitsubishi have committed to invest in India in the near future.

General Motors has signed an agreement with Maharashtra government to make an investment of $ 300 million and the company will set up a plant spread across 300 acres on the Pune-Mumbai highway.

Nissan and Suzuki have also entered into a joint venture with a plan to invest $700-800 million for setting up a manufacturing base for passenger cars and mini vans at Manesar. The two will use it as a base to export about 0.34 million ‘A’ segment passenger vehicles to Europe.

Similarly, Honda has committed investment of $200 million to expand its facility in Noida to produce new brands and models of cars. Mitsubishi also plans to spend $ 370 million on the expansion of its petro-chemicals facility at Haldea.

Global Communication Service holding has committed $ 278 million, Citi Consumers has committed $ 120 million and Flextronics plans to invest $ 40 million, he added.

The government is keen to promote FDI in the manufacturing sector so as to increase the share of manufacturing to 24-25% of GDP.

The minister said that continuous rationalisation and liberalisation of the FDI policy and simplification of procedures has attributed to steady increase in FDI flows in the country. India is also trying to attract investments from Taiwan, Korea and Singapore, which are looking for sites here to set up manufacturing facilities.

FDI as a whole has shown a growth in investments by 37% over 2004-05, recording cumulative inflows of $ 7.7 billion in 2005-06. Of this, cumulative inflow into equity capital segment was $ 5.5 billion showing a growth of 72% over 2004-05.

The sectors that have attracted large amount of FDI include electronic equipment, telecom, transport, fuel, food processing, drugs & pharma and metallurgy.

The top 10 investing countries continue to remain Mauritius, the US, Japan, Netherlands, UK, Germany, Singapore, France, South Korea and Switzerland.