Answering a question in the Lok Sabha on FDI inflow, the minister said that FDI in chemicals sector had dropped from Rs 1,064 crore in 1998-99, to Rs 475.62 crore in 1999-2000. A general world-wide slowdown in the chemical sector, and surplus capacity are possible reasons for a declining trend, the minister said.

He added that the measures taken by the government to attract more FDI in the country might lead to a heavier inflow of foreign investment in the chemicals sector.

The decision to delicense manufacture of chemicals except for a few hazardous ones will act as an incentive for foreign players.

The government has made access to automatic route easier for FDI. Time-frame for consideration of FDI proposals has also been reduced. The government will now take thirty days instead of six weeks for communicating its decision on investment approval.

Requirement of foreign-owned Indian holding companies to obtain prior and specific approval of the foreign investment promotion board for down stream investment in priority activities has also been dispensed with subject to specific conditions, the minister pointed out.

Bais added that setting up of the Foreign Investment Implementation Authority to provide a single point interface between foreign investors and the government machinery both at the Central and the state-level will also help in attracting more foreign investments in the chemicals sector.