The global financial crisis has added new risks to the world economy, and the country is set to miss the $35 billion target for global foreign direct investment (FDI) inflows in the current year.
Commerce and Industry Minister Kamal Nath said on Thursday that India would receive $30 billion FDI inflows, falling short of the target by about 14 per cent. “We will be able to go to $30 billion,” he said on the sidelines of MindMine Summit-2009 organised by Hero Corporate Services here.
India registered 17 per cent increase in FDI inflows last year on the back of robust growth, improved investment environment and further opening up of several sectors. The liquidity crunch will pull down worldwide FDI flows by 10 per cent this year, although flows to the developing world would remain fairly stable.
On Wednesday the government had announced major changes in the FDI policy, simplifying the calculation of indirect and direct foreign investment. This would give more elbow room for Indian-promoted companies to raise more foreign funds.
The policy review has been on the works for the last few months amidst hopes of attracting FDI to $35 billion in the current financial year, much higher than last year’s $16 billion.
India is however still expected to remain a hotspot for global investors. A recent United Nations Conference on Trade and Development (Unctad) report said India is the second only to China as preferred destination for FDI, ahead of US, UK and Germany.