North emerges foreign investors' favourite

New Delhi, Sep 4 (UNI) If the increase in the FDI inflows is an indication, Punjab, Haryana, Himachal Pradesh and Chandigarh saw the best of the enhanced interest shown by foreign investors, followed by Gujarat and West Bengal.

An Assocham Eco Pulse (AEP) analysis released here today showed North as the favourite destination for foreign investment.

Surprisingly, Maharashtra, Delhi and its adjoining areas of UP and Haryana like Gurgaon, Noida and Greater Noida saw a negative annual compound growth of FDI inflows between April 2001 to March 2006, the AEP study said.

The analysis, done on the basis of RBI figures, pointed out that Punjab, Haryana and Chandigarh witnessed a net growth of 183 per cent in FDI inflows between April 2001 and March 2006.

The region saw a huge pick-up in FDI flows from a mere Rs 5.93 crore in 2001 to Rs 843.89 crore in 2002-03. But the inflows plunged in the following two years at Rs 76.71 crore and 13.49 crore, before rising again sharply to Rs 378.16 crore. The compounded growth worked out at 183 per cent.

On the reverse side of FDI chart, Maharashtra and Delhi saw a compound drop of four per cent each for the five-year period under the AEP study review.

From a high of Rs 5137.34 crore in 2001-02, the investments in the Maharashtra region dropped sharply to Rs 2366.4 crore in 2002-03 and again fell to Rs 1355.31 crore in the following year.

However, there was a smart pick-up to Rs 3183.13 crore in 2004-05 and to Rs 4290.17 crore in 2005-06, it could not make up for the drop in the previous two years having a negative impact on the overall compounded growth rate.

However, the status of FDI flows in Maharashtra is expected to grow in the current fiscal as the General Motors has proposed to set up a plant involving the investment of 300 million dollars.

Likewise, inflows in the Delhi and adjoining areas fell from a high of Rs 5,460.16 crore in 2001-02 to Rs 3062.22 crore in 2002-03 and again dropped to Rs 2123.46 crore in the subsequent year.

Here again the pick up to Rs 3717.53 crore in 2004-05 and Rs 4564.93 crore in 2005-06 could not recover the earlier drop leaving the compounded growth to the negative side of four per cent.

''A sharp rise in FDI inflows to the Chandigarh, Punjab, Haryana and HP has been a pleasant surprise. In fact, the region has been the centre of attraction for new investment not only from the foreign companies, but also domestic business houses. For instance, Reliance Industries has announced mega investments in both Haryana and Punjab,'' Assocham President Anil K Agarwal said.

Gujarat has shown a consistent growth year after year between 2001-06 and has seen a compounded increase of 57 per cent in FDI in the five-year period. With an inflow of Rs 108.66 crore in 2001-02, it reached to a figure of Rs 666.36 crore in 2005-06.

Still having a low base of FDI, the Madhya Pradesh and Chhatisgarh region also threw up a handsome growth of 35 per cent. In 2001-02 the region recorded FDI inflow of Rs 12.87 crore which dipped to Rs. 5.83 crore next year, but in 2003-04 it increased to Rs 34.85 crore then to Rs 69.25 crore in 2004-05 and in the last fiscal it touched a figure of Rs 42.55 crore.

The Indian economy, as a whole has registered the growth of 37 per cent over the financial year 2004-05, recording the cumulative inflows of 7.7 billion dollars in 2005-06. FDI inflows in the economy during the April-July 2006 is of around 1.74 billion dollars recording the growth of 47 per cent over the inflows during the corresponding four months of the last year.

Major new investments are expected during this year. Honda is planning to invest 200 million dollars to expand its Noida facility to produce new brands and car models.

Mitsubishi plans to spend 370 million dollars to expand its Haldia petrochemicals facility. While Global Communication Service Holding has committed 278 million dollars and Citi Consumers would invest 120 million dollars, Flextronics has plans to pump 40 million dollars.

Japan automobile manufactures Nissan and Suzuki of Japan have announced a total investment of 700-800 million dollars over the next three years.

The ten sectors that attracted highest amount of FDI were electrical equipments (including computer software and electronics), telecom, financial and non-financial services, transportation, fuels, chemicals, food processing, drugs and pharmaceuticals, cement and metallurgical industry. The top ten investing countries in India were Mauritius, US, Japan, Netherlands, UK, Germany, Singapore, France, South Korea and Switzerland.

UNI PV RA KN1811