Foreign Direct Investment (FDI) inflows into India touched a level of $4.9 billion in the first quarter of the current financial year (2007-08), largely led by British telecom major Vodafone’s $801 million injection into the country’s growing telecoms market.
Inflows during April to June in the current year jumped 185 per cent against $ 1.7 billion in the corresponding period of the previous year.
During January-June 2007, inflows rose 216 per cent compared to $ 3.6 billion in the corresponding period last year.
Commerce and industry minister Kamal Nath said that the government's review of the FDI policy would be ready in the next two to three weeks and labour-intensive sectors would receive priority. <b1>
“Our FDI policy is perhaps one of the most liberal in the world. India remains a favourite FDI destination despite what is going on in the stock market," he said, referring to the crash triggered by home loan defaults in the US.
“We are in the process of streamlining the policy and looking at how FDI can be looked at to generate more employment," Nath said.
Nath said the current year’s FDI inflows were a huge jump. “The most important thing is that these are largely first-mile investments and are obviously going to grow in geometric proportions,” he said.
The Delhi region received the maximum inflows of $1.3 billion, accounting for 36 per cent of the total FDI up to May 2007. If Mumbai, Bangalore and Chennai were added to the list of regions, they accounted for two-thirds of the total inflows into the country.
Vodafone topped the list of big-ticket foreign investments in India. Matsushita Electric Works of Japan followed it with $342 million.
Nath said the country had received $ 15.7 billion FDI in 2006-07 as compared with $ 5.5 billion a year ago. “If reinvested earnings and other capital inflows are included, total inflows in 2006-07 add up to $ 19.5 billion compared with $7.7 billion in 2005-06,” he said. Nath has in the past said that India could get an estimated $25 to 30 billion of FDI in 2007-08.
Mauritius continued to remain as the biggest source of FDI for India, largely because of its tax breaks that helps companies from elsewhere route their funds through the island, followed by Japan, Cyprus, the US and Singapore.
Services, telecom, electrical equipment, real estate and transportation were the five major sectors that received a majority of FDI in India this year.