News: Surge in FDI to India from Asia likely

(BL 28/05/2006) Kolkata - Outlining the Government's new approach to FDI policy, to be anchored on simplified procedures aided by e-governance and a favourable regulatory environment, Ajay Dua, Department of Industrial Policy & Promotion (DIPP), Ministry of Commerce, said here on Saturday that the next surge in FDI, especially by way of equity, was expected from Taiwan, South Korea and Japan.

He said preparatory work by C-DAC had already started on a new e-Biz project (being executed by the industry ministry), for an online one-window approval system, and was expected to be completed by March 2007. Being taken up on a pilot basis, it will involve the four State Governments of Maharashtra, Uttar Pradesh, Haryana and Andhra Pradesh.

Big names such as Microsoft and Reliance Infocomm are associated with the pilot project. The new system is expected to facilitate a paperless environment for any one wanting to do business in India, including domestic companies.

FDI projections: The projected FDI inflow during the current financial year is expected to be around $12 billion. He said going by the FDI proposals received, investors abroad were now looking at India seriously, though concerns over infrastructure development still remain.

Speaking at an interactive session on "India's FDI policy - Present and future", organised by the Bengal National Chamber of Commerce and Industry, Dr Dua said while Taiwanese entrepreneurs, dubbed as aggressive investors, were expected to invest in computer hardware, the Koreans were looking at manufacturing in a big way.

He said total FDI into the country as on March 31, 2006, was around $8.15 billion, a "whopping" 60 per cent increase over the $5.3 billion in 2004-05. The bulk of the investments during 2005-06 were in the form of equity ($5.5 billion), to facilitate manufacturing and creation of more jobs, he pointed out. Some 70 per cent of the investments is said to have gone into manufacturing activities.

Viewing the FDI inflow as a sustainable process, Dr Dua said these were aimed at the large Indian domestic market with growing purchasing power. He, however, admitted that not too much of FDI was going into infrastructure, unlike in China where infrastructure had attracted huge FDI.

Regulatory environment: Describing the current regulatory environment for FDI as an evolving one, he said multiple stage approvals had now been done away with totally, and licences put on the automatic route. While 100 per cent FDI is allowed in civil aviation for Greenfield airports, and 74 per cent for existing ones, 100 per cent FDI is permitted for manufacturing, and also the road construction sector.