FDI inflow may double in 2007
By TNN |
Highlights
NEW DELHI: Inflows of foreign direct investment (FDI) into India have increased significantly during the current financial year, according to the minister of commerce and industry Kamal Nath.
The inflows are likely to be more than double the amount recorded in 2006, said Mr Nath while presiding over the meeting of the parliamentary consultative committee on Tuesday.
FDI equity inflows during April 2006 to November 2006 were $7.2 billion, which is the highest ever for equity capital since economic liberalisation. Mr Nath said that monthly inflows this fiscal crossed $1 billion during July, October and November 2006.
The higher inflows as well as the new credit rating reflected growing investor confidence in India, the minister added. According to him, FDI inflows by the end of this fiscal would reach $12 billion. This means an unparalleled growth of 120% over the previous year.
A presentation made on the occasion highlighted the fact that in the A T Kearney���s FDI confidence index India���s rank as a FDI investment destination has improved from number 15 in 2003 to number 2 in 2006. According to the leading financial firm J P Morgan, the return on equity on investments made in India is the highest in Asia at 18%. Services sector has become the top sector in attracting FDI during April-November 2006.
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In response to a suggestion made by the members of the committee, Mr Nath agreed to set up an expert committee to look into the sectors into which FDI was flowing and its impact on the rural economy. The committee will study sectors where FDI has been allowed by the government and has a direct or indirect impact on the rural economy. Its findings would help ensure fair dispersal of FDI and thereby a reduction in the rural-urban divide, the minister said. The committee members agreed with the minister on the importance of FDI in the country���s economy in terms of not only generating economic activities and jobs, but equally in facilitating transfer of technology and managerial capabilities, which helps enhance India���s global competitiveness.
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