''FDI flow into India less because of its strong industrial/IT base'

By Staff
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Google Oneindia News

Mumbai, Mar 19 (UNI) Flow of Foreign Direct Investment (FDI) to India is less because of is strong industrial and a highly skilled Information Technology (IT) base, which is low capital intensive sector, as compared to China, where focus is on manufacturing sector in view of abundant raw materials and low cost manpower resulting in more foreign investors going there, according to analysts and industry experts.

Participating in a session on ''India's economic policy: strength, weakness and prospects for the future'' at the 16th Asia Society Corporate conference here, they said India alongwith China could become the world's largest consumer market considering the huge surplus with the middle class people on a sustainable period for the next 15-20 years, though currently, US is the largest consumer buyer globally.

These observations were part of the discussions as to why China attracts about USD 60 billion annually as against India's USD 10-12 bllion.

"China invests about 50 per cent of its GDP in the manufacturing activities and has already achieved a surplus capacity to dump their products worldover", said Clyde Prestwiz, President of Economic Strategy Institute, USA.

On the other hand, India already has an industrial base with different kind of economic model and can not be compared with China's appetite for FDI. In fact, in the words of Chinese Commerce Minister Bo Xilai, China does not enjoy cutting endge in the manufacturing sector and the country will have to learn the best practices in the area from others including India.

However, Mr Prestowiz pointed out that India needs huge investments for development of its infrastracture projects such as roads, airports and power sector.

Mr Surjit Bhalla, CEO of Oxus Investments, said, the emergence of middle class in India and Chia with huge purchasing power could drive drive the global economy in future where American and European firms find their business more attractive. In 1980s, China's one per cent of population and India's three per cent were able to shop their needs in overseas markets while the percentage has currently now jumped to 50 and 33 per cent respectively.

On India, Mr Bhalla said, the country needs huge investments in areas of healtcare, education and entertainment in order to attract global investors, mainly from the US.

"The focus should be on efficiency and not on production capacity", he observed.

UNI GC KD AG1825

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