Govt sets 62% higher FDI target at $26 b

NEW DELHI: India has set a foreign direct investment (FDI) target of $26 billion for 2007-08, envisaging a 62% increase over the previous year’s inflows of $16 billion. In 2005-06, India’s FDI inflows were several times lower at $5.5 billion.

Speaking to reporters here on Wednesday, department of industrial policy & promotion (DIPP) secretary Ajay Dua said: “The goal for the current year has been stepped up to $26 billion in equity (foreign investment) and $4 billion in retained earnings of foreign firms.”

The secretary pointed out that a bulk of FDI was expected in sectors like auto, auto components, semi-conductor, electronic hardware, information technology and business process outsourcing. According to an estimate of a government-appointed panel, India needs $1.5 trillion in investments to scale up factory capacities, improve infrastructure and boost farm output in the next 5 years to sustain 8-10% economic growth.

“As a proportion of gross domestic product, FDI inflows are under 2.5%. We have a long way to go,” Mr Dua said. Infrastructure projects like power plants, roads, sea ports and airports will need $320 billion in investments between now and 2012. Total investment in infrastructure projects is still below 4% of GDP, Mr Dua said. He pointed out that India has to double the figure to sustain high growth.