India can absorb 60 billion Dollars FDI every year: Official

Bangalore, Jan 17: With its burgeoning investment needs, mainly in infrastructure and power sectors, India can accommodate an annual 60 billion Dollars of Foreign Direct Investment (FDI) in the next few years, Dr Ajay Dua, Secretary, Department of Industrial Policy and Promotion, said today.

Speaking to foreign delegates at a luncheon session on 'Investing in India', organised as part of the CII Partnership Summit which began here today, he said that despite the saving rates going up in the country, India needed much more FDI in infrastructure and power sectors.

''Poor infrastructure is holding two per cent of GDP growth every year and we need huge investments in this sector. In power sector, the growing needs will call for big ticket investments. We need to add 80,000 MW of power in the next five years, to the existing installed capacity of 1.2 lakh MW,'' he said.

Mr Dua said the country was getting increasing FDIs during the last few years, with last year alone accounting for 60 per cent hike in the foreign-based equity inflow. During the first eight months of the current fiscal, it had gone up to 116 per cent at 5.5 billion Dollars when compared to the corresponding period last year. ''We are positive to achieve up to 12 billion Dollars of FDI by the year-end,'' he added.

Stating that the youth of the country was its biggest asset, he said it boasted of 40 per cent of its population at less than 25 years of age. The young and qualified workforce would go up to 263 million by 2050 , much higher than China's 90 million and 11 million of that of the United States. While other countries would see a decline in workforce, India would have a big advantage in this area.

''The growing workforce and buoyant economy will propel India to become the third biggest economy by 2025. We will overtake countries like Italy and France by 2020, Germany by 2023 and Japan by 2025,'' the official predicted.

Mr Dua said the expanding export base was one of the key drivers of India's growing economy. Out of the GDP, which was put at around 800 billion Dollars, export base constituted 250 billion Dollars and it was growing. India was becoming a centre for producing components for re-exports and this should be recognised by exporters, he felt. Noting that automobile and auto auxiliary industry was experiencing one of the fastest growth rates in the world, he said the sector grew by 16 per cent during the last five years, the highest in the world. Auto exports was growing at 45 per cent and this trend would continue, he added.

Listing out the other growth sectors, Mr Dua said the Information Technology sector had become a world model, accounting for nearly five per cent of the GDP from two per cent a few years ago.

Likewise, the pharmacy industry also had an exponential growth.

Though it accounted for eight billion Dollars at present, exports had touched 30 per cent of the total production. The exports were not just to third world countries, but also to developed markets like the US and the EU as medium companies were getting quick market access. Hence, a number of MNCs had either come to India or were finalising their entry.

Apart from being a research base, the country had also emerged as a major base for clinical trials. The domestic market was expected to grow from the present eight billion Dollars to 25 billion Dollars during the next three years. Biotechnology and food processing were the other sectors growing at a fast pace and held huge potential for FDI, he added.

UNI