Corporates fear FDI may dip by $ 10 bn this year

New Delhi, Oct 5 (UNI) Global meltdown and slowdown could lead to dip of Foreign Direct Investment (FDI) in the country by at least 10 billion dollar this year, said findings by an industry chamber.

As against target of 35 billion dollars of FDI set by Commerce and Industry ministry, it could decline to 25-26 billion dollars, said a survey of 400 CEOs held by Associated Chambers of Commerce and Industry of India(ASSOCHAM).

The fear was expressed by as many as 350 CEOs.

Last year, India received FDI of 25 billion dollars against target of 30 billion dollars set by the ministry.

In January-June this year, the country received 22 billion dollars of FDI, Assocham said. But share of United States, epicentre of global financial meltdown, was a measly 1.3 billion dollars, that is just 6.11 of the receipt in the first six month of 2008, it added.

Even Singapore did better than the US, sending a flow of over two billion dollar to the Indian economy. However, the major part of FDI of nearly 44 per cent, at over nine billion dollars, was routed through Mauritius.

Accepting that US financial crisis will definitely have a cascading effect on the Indian economy, particularly on FDI's front, CEOs said that law and order situation has unfortunately become an added concern for the foreign investors.

Assocham said about 320 CEOs said foreign investors are also keeping their finger crossed in view of coming elections in four states, followed by national poll.

An overwhelming majority of CEOs also felt that inflationary pressures could further harden interest rates, leading to credit and cash crunch. This, they argued, will also discourage sentiments for FDI's flow towards India.

Adverse sentiments in stock market, bottlenecks on infrastructure, no initiatives on disinvestments, rising interest rates and volatility on economic front, largely because of adverse and serious impact of global slowdown and US financial crisis were cited as reasons for lower FDI, the findings said.

Meanwhile, Assocham President, Sajjan Jindal said high inflation could erode profitability of the Indian industries.

He said sentiments are extremely negative because of decline in industrial production, though agriculture has done better and is expected to do still better because of good monsoon.But he added agriculture alone will not enhance the country's gross domestic product.

As Many as 230 CEOs held that mining, refining, petrochemicals and petroleum as also cement and steel sectors have not been doing well despite demand in the market, the chamber said, adding this did not augur well for GDP.

According to 280 CEOs, stock market will continue to be slack as large number of investors have shifted their savings to traditional source of savings channels.

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