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FDI doubles contribution to total investments in India

Gradual delicensing of sectors and ease in doing business for global companies has led to FDI more than doubling its share in the total investments in India.

business Updated: Jan 07, 2008 14:00 IST

Gradual delicensing of sectors and ease in doing business for global companies has led to FDI more than doubling its share in the total investments in India between 2003-04 and 2006-07 with inflows recording a five-fold rise in the last three years.

"As a percentage of total investment, this (share of foreign direct investment) has gone from 2.55 per cent in 2003-04 to 6.42 per cent in 2006-07," a year-end review of the Department of Industrial Policy and Promotion (DIPP) has showed.

It said after receiving FDI of 15.7 billion dollars in the last fiscal, an ambitious target of 30 billion dollars had been set for 2007-08. Till August this fiscal, inflows of 6.44 billion dollars were recorded with the maximum funds coming through tax haven Mauritius.

Reflecting the growing interest of foreign investors into the country, share of FDI in India's Gross Domestic Product has also gone up from a mere 0.77 per cent to 2.31 per cent in the last financial year.

"Due to progressive delicensing, only a handful of sectors remain within the ambit of compulsory licensing on account of safety, security and environmental concern," the review showed.

The sectors that are in the licensing regime are distillation and brewing of alcoholic drinks, cigars and cigarettes and manufactured tobacco substitutes, electronics aerospace and defence equipment and all types of industrial explosives.

India has also improved in the World Bank's ranking of Doing Business 2008 to 120 in 2008 from 138 in 2006, the review report said.