New Delhi, March 16: The percentage of actual inflow of foreign direct investment (FDI) to total approvals is exceptionally low as only 23.4 per cent ($2.4 billion) of the total FDI approved ($10.3 billion) actually flowed into India during 1996, according to an analysis carried out by the PHD Chamber of Commerce and Industry (PHDCCI).In the first 11 months of 1997, while the approved FDI was $14.6 billion, only $3.2 billion (21.9 per cent) actually flowed. Though some time lag between approvals and actual inflows is understandable, but the actual inflows persistently did not exceed a fifth or at best of fourth, the analysis said.
Among the various factors attributed to this disparity, the prominent being the ambiguities in policy, lack of unanimity between the central and state governments and the inevitable delays in administrative decision making, especially at the state level, the PHDCCI said.
Looking at the industrial composition of FDI in India since 1991, it is observed that the bulk of FDI hasbeen in the priority/core sector.
Engineering accounts for the maximum share in the total investment, followed by chemicals and allied products, food and dairy products, finance and electronics and electrical equipment.
Other sectors account for a relatively small percentage of total FDI inflows. On approval basis, telecommunications and fuels (power, oil refinery and others) account for nearly 50 per cent of the total, it said.
The geographical composition of FDI in terms of originating country, shows that the United States is the largest investor in India (Mauritius is being primarily used as a offshore financial centre). The NRI flow is still significant though it has come down in percentage terms from 37.03 per cent ($217 million) of the total in 1993-94 to 29.09 per cent ($639 million) in 1996-97.
The analysis said that though policy-wise the attitude towards transnational corporations has radically changed, still there is an element of caution particularly with regard to their entry in the coreinfrastructure sector (excluding telecommunications) and apprehensions over their growing importance in the consumer goods sector, especially consumer non-durables.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
