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Record 40% growth in FDI inflows in Jan-Sep 2001

Foreign direct investments accelerated to 40 per cent in dollar terms for the first nine months of this calendar year with the United States continuing to account for the largest inflow.

The FDI inflows for January-September 2001 amounted to $3.6 billion, up from $2.6 billion during the corresponding period last year.

In rupee terms, FDI inflows were valued at Rs 163.06 billion during January-September 2001, an increase of 46.71 per cent over Rs 111.15 billion recorded during 2000.

The largest inflows are from the US, followed by Mauritius, Germany, Japan, the UK and the Netherlands.

The top five states in India attracting FDIs are Maharashtra (with a share of 17.07 per cent of the total FDI approved), Delhi (12.28 per cent), Tamil Nadu (8.35 per cent), Karnataka (7.80 per cent) and Gujarat (6.45 per cent).

The year also witnessed some major policy initiatives by the government to further ease the country's FDI regime. These include:

• Permitting FDI upto 100 per cent with prior approval of the government for development of integrated townships, including housing, commercial premises, hotels, resorts, city and regional-level urban infrastructure facilities in all metros,

• FDI upto 100 per cent on the automatic route for mass rapid transport systems in all metro cities, including associated commercial development of real estate,

• Placing on the automatic route FDI upto 100 per cent in drugs and pharmaceuticals (with some exceptions), and

• Opening up of the defence industry sector upto 100 per cent for domestic private sector participation with FDI permitted up to 26 per cent, both subject to licensing.

The government had also during the year allowed on automatic route:

• FDI upto 100 per cent in all manufacturing activities in special economic zones except for some activities,

• FDI upto 74 per cent for telecom services such as Internet services providers with gateways, radio paging and end-to-end bandwidth subject to licensing and security requirements, and

• Several initiatives relating to the non-banking financial companies.

Some of the major FDI policy initiatives taken during the year 2000 including the easing of norms for payment of royalty have contributed to the recent upward trend in FDI inflows.

On the industrial front, the Department of Industrial Policy and Promotion, in a major initiative to improve the competitiveness of the Indian industry, has worked out the modalities for carrying out studies to upgrade competitiveness of the Indian paper, cement and capital goods industries.

The Central Pulp and Paper Research Institute, Saharanpur, which has been asked to carry out a study in respect of the paper industry, has approached McKinsey, Accenture and Jakko Poyry for studies on the pulp and paper industry.

The National Council for Cement and Building Materials is negotiating for a similar study with Pricewaterhousecoopers, KPMG, Arthur Anderson and Boston Consultancy.

The Central Manufacturing Technology Institute have already finalised with the Pricewaterhousecoopers to do a study on the global competitiveness of the Indian electrical and machine tools industry which will focus on the capital goods sector.

Another important sector being taken up for competitiveness study is the leather industry, which is a major foreign exchange earner for the country. These studies are expected to be finalised shortly and the recommendations will be shared with the industry as a major step towards helping the industry become internationally competitive in the post-qr era.

Although the rate of growth of the Indian industry during the year had been low due to the general economic slowdown, there are signs that the growth rate is picking up, with the CMIE estimating that the country's industrial growth rate in the second half of the current fiscal (October 2001-March 2002) is likely to be 4.6 per cent which is twice the growth rate of 2.3 per cent in the first half of the year.

The government made several policy interventions during the year to improve the industrial environment, including reduction in bank rate and CRR (cash reserve ratio) by half percentage point by the RBI to further ease liquidity in the system; and announcement of incentives for improvement in roads, power, telecommunications and ports which should increase the aggregate demand.

As a result of the various measures, consumer durables, electricity, cement and steel sectors have shown buoyancy in recent months.

Growth in non-oil imports during October 2001 also signals improvement in demand. With the various policy interventions by the government and a better monsoon leading to increase in the rural demand, it is expected that industrial production will improve in the coming months.

As part of the drive to modernise the patent administration in India, fully modernised patent offices have been operationalised in Delhi and Chennai by Commerce and Industry Minister Murasoli Maran.

Similar initiatives have been taken for modernisation of patent offices in Kolkata and Mumbai.

A geographical indication registry have also been put in place in Chennai.

Modernisation of trademarks and design offices are nearing completion. A new logo and identity has been created for the Indian intellectual property offices, reflecting their growing importance and catalysing IP awareness in the country.

UNI

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