Foreign direct investment (FDI) proposals to the tune of $7.2 billion were cleared during January-September while actual inflows amounted to $3.1 billion so far. This was disclosed by T R Prasad, secretary, department of industrial policy and promotion, ministry of industry, at the India Economic Summit.
According to Prasad, total FDI approvals since 1991 amount to around $52 billion while actual inflows stood at $15 billion, a success rate of 29 per cent. However, this figure shoots up to 35 per cent if adjusted for the following factors: unsuccessful telecom bidders, mutually exclusive power projects and projects with long gestation periods.
One requirement for bidding for telecom licenses was having an FIPB approval. "But we cannot expect the investments to come in from those corporates which haven't been able to get a licence," an industry ministry official clarified. "And the inflows to approvals ratio would be that much better if such shell approvals were not taken into account."
Second, the states do not have escrow capacity to take on all the power sector players that have come with investment plans. "Hence, the potential investment by surplus players should not be taken into account for calculating total approvals," the official added.
Third, long-gestation projects in the areas like gas and petroleum do not start off immediately, but could take between 5-7 years to take off. These projects do not get capitalised immediately. Hence, they too could be factored out of the FDI inflows-approvals equation, officials suggest.
According to Prasad, the success rate for FDI inflows from NRI approvals is around 93 per cent, Prasad added. While NRI approvals stood at $2.42 billion, the actual inflows have been to the tune of $2.26 billion.
Prasad also highlighted the major initiatives undertaken by the present government. One, 100 per cent FDI has been permitted through the automatic route in power, and is being extended to other infrastructure sectors like roads, bridges and ports. Besides, 100 per cent FDI has been permitted in most sectors through the approval route, major exceptions being telecom, airlines, banking, insurance and real estate. Two, India has acceded to the Patent Co-operation Treaty under the Paris Convention.
Three, the government has brought out a special package for the information technology (IT) sector and major recommendations have been approved and implemented. Besides, a special group has been constituted for telecommunications.
Four, all major legal statutes are being reviewed to bring them in alignment with global practices.
Five, the government has approved Rs 449 crore for VRS for 10, 688 workers in eight PSUs under department of heavy industry which have been identified for closure.
