Quantum jump in FDI inflows into India: Kamal Nath

New Delhi, Feb 7 (UNI) Inflow of foreign direct investments (FDI) into India has witnessed a quantum leap during the current financial year, primarily due to the services sector, and is expected to be more than double than that recorded last year, according to Union Commerce and Industry Minister Kamal Nath.

Stating this, Mr Nath noted that FDI equity inflows during April-November 2006 had been 7.2 billion dollars -- the highest received in equity capital since the commencement of economic liberalisation in India. Monthly inflows this fiscal crossed one billion dollars on three occasions -- in July, October and November 2006.

The minister, who was presiding over the meeting of Parliamentary Consultative Committee of his ministry here last evening, referred to the higher credit rating assigned to the country recently by Standard and Poor's and said that raising of India's rating to investment grade, both at institutional and FDI levels, should lead to even greater inflows.

Emphasising that the higher inflows as well as the new credit rating reflected growing investor confidence in India, he said FDI inflows by the end of this fiscal would reach 12 billion dollars, implying an unprecedented 120 per cent growth over the previous year.

His presentation also noted that in the A T Kearney's FDI Confidence Index, India's rank as a FDI investment destination was up from the 15th slot in 2003 to the number 2 slot in 2006 and that, according to J P Morgan, the return on equity on investments made in the country is the highest in Asia at 18 per cent.

Responding to a suggestion from members, Mr Nath agreed to set up an expert committee to look into the sectors into which FDI was flowing and its impact on the rural economy. The purpose of this exercise is to ensure equitable distribution of FDI and to bridge the rural-urban divide.

Members agreed with the minister on the importance of FDI in the country's economy in terms of not only generating economic activities and jobs, but equally in facilitating transfer of technology and managerial capabilities, thereby enhancing India's global competitiveness.

Members who attended the meeting were Mr Ramakrishan Badiga, Mr Ram Singh Kaswan, Mr Sudhangshu Seal, Mr J M Aaron Rashid, Mr Sharad Joshi, Mr M Rajasekara Murthi and Mr Abu Asim Azmi. Department of Industrial Policy and Promotion (DIPP) Secretary Ajay Dua and Commerce Secretary G K Pillai were also present.

UNI