India needs to gear up for more FDI

New Delhi, Oct 17 (UNI) China though is the largest recipient of FDI with its inward flow at 72,406 million dollars and outward inflow at 11,306 million dollars, India is still trying to catch up with China with an expection of touching inward flow of 12 billion dollars and outward flow of 2 to 3 billion dollars in the FY 2006-2007.

According to the World Investment Report 2006, India's inward flow is restricted to certain sectors of FDI -- telecom, garments, IT, mining-- unlike China's FDI shifting towards more advanced technologies from the manufacturing sector. India's FDI inward flow stands at 6,598 million dollars and outward inflow stands at 1,364 million dollars.

''India's economy is a small economy as comparative to China and the poor infrastruture is the reason behind India's lagging in terms of FDI'', UNCTAD India Programme Coordinator Veena Jha told reporters here.

But even with not so commendable FDI flow in the country, India is way ahead of Pakistan, the inward inflow of Pakistan stands at 2,183 million dollar and outward stands at 44 million dollars, it said.

While on the other hand, the inward flow of developing countries stands at 3,34,285 million dollars and the outward flow stands at 1,17,463 million dollars.

Asia's newly industrialising economies, Hong kong, Republic of Korea, Singapore and Taiwan province are the main sources of FDI from developing countries despite a significant decline in their total outflows in 2005, the report said.

FDI is likely to continue its upward trend in South-East Asia, especially in relatively low cost countries. With a strengthing of government support and some large mergers and acquisition (M&A) deals expected, the surge in upward FDI from China is likely to continue.

The report said that with the increase in growth rate, efficient market, the FDI inflows to India has been gaining momentum in recent years and the country's propects for attractive FDI are promising.

Meanwhile the rise in China's foreign currency reserves stimulated a rapid growth in outward FDI from the country. Outward FDI from South, East and South East Asia still focuses on services but a growing share of capital outflows from the region has been targeting manufacturing and natural resources.

After China, the second and third recipient of FDI are Hong kong and Singapore with 36 billion dollars and 20 billion dollars respectively.

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