Fdi Tapers To New Low In 2001

Foreign direct investment (FDI) into the country in calendar 2001 hit a new low and is threatening to be lower than that registered in the previous two years.

As per provisional data collated by the government, during the first eleven months of the year (January-November 2001), FDI inflows stood at $3,712.70 million compared to $4,498.07 million registered in 2000 and $4,016.1 million registered in 1999. Data for December is not available yet. But a dramatic turnaround seems unlikely given the political instability in the region in the aftermath of the December 13 terrorist attacks on Parliament.

The government has not linked the drop to the 9/11 syndrome. Officials said FDI inflow in the later months has, in fact, witnessed a steady increase if figures of the previous months of the year are taken into account.

Inflows during September, October and November 2001 is estimated at $395 million, $204 million and $316 million (provisional), respectively, against the highs of $806 million registered in August 2001 and $444 million in June.

A dismal achievement in attracting foreign investors remains despite efforts to further liberalise the FDI policies by lifting sectoral caps, putting more sectors under the automatic (RBI route) and permitting investment in new sectors. Analysts tracking FDI, blame lacklustre state-level reforms for the poor performance, and of course the global turmoil.

According to the Reserve Bank of India (RBI), India attracted $3,396 million worth of foreign investment between January and October 2001. Of this, $2,739 million came as direct investment comprising FDI inflow through the Foreign Investment Promotion Board route ($1701 million), the automatic Reserve Bank of India approvals ($725 million), as investments by non-resident Indians ($46 million) and for acquisition of shares as per FEMA Act ($367 million). American depository receipts and global depository receipts contributed $612 million, while $45 million came as investment by off-shore funds.

RBI officials said they were yet to collate data for November and December -- "There is a time lag of at least two months", they said.

The ministerial note, on the other hand, provides estimates till November 2001. Till November, the government had approved 1,775 cases of FDI envisaging $5,448 million against a total 1,550 cases approved in the entire of 2000, envisaging FDI of $7,638.2 million.