FDI in India seen at $30 billion in 2009-10

India expects to receive foreign direct investment (FDI) to the tune of $30 billion in fiscal year 2009-10, compared to $27.5 billion estimated for 2008-2009.

Despite the global economic slump and severe credit crunch, the ministry of industries  is optimistic that there won't be any decline in foreign direct investment in India and anticipate a 9 per cent increase over 2008-09. Although the projected figure does not show a significant rise, under the present global scenario it is considered as a positive development.

India received FDI worth $24.57 billion in 2007-08 . In the first eleven months of the 2008-09, the country received FDI of $25.3 billion, 3.2 per cent higher than the corresponding period last year.

"There will be some investment which will be delayed but overall outlook is positive and optimistic," joint secretary in the Department of Industrial Policy and Promotion (DIPP), Gopal Krishna said in New Delhi yesterday.

"The fact of the matter is our share of world FDI inflows continues to grow," Gopal Krishna said. Despite the slowdown in economy, Indian share in the global FDI increased from 0.5 per cent to 2 per cent last year.

Though the ministry is optimistic, the FDI inflows in March plunged to $2.5 billion compared to $4.4 billion a year ago, a whopping 56 per cent drop.

The joint secretary said, including reinvestment by foreign entities, the FDI could reach $40 billion in 2009-10 against $37.5 billion, the likely figure for last year.

The reinvestment by MNCs operating in India is seen at $10 billion, the same as for 2008-09, which means the $2.5 billion rise in FDI expected during the current year will be primarily on account of fresh capital inflows.

Analysts see it as an encouraging sign and hope that the global investors would have a positive outlook on the country's strong fundamentals and fiscal stimulus measures taken by the government to overcome the crisis.

An industry survey indicated that despite the global economic meltdown, about 80 per cent of the US companies consider India to remain an attractive destination for investments over the next five years.

The past few years have seen significant increase in FDI into India driven by the long term growth prospects of the country's economy. The major investing countries included Mauritius, Singapore, the US, Britain, Netherlands, Japan, Germany, Cyprus, France and the UAE. The sectors services, computer, telecommunications, real estate, construction, automobile and power attracted maximum inflows.

For comparison, China's FDI for 2008 was $92.4 billion, registering a 23 per cent growth of over 2007.

Meanwhile, the finance ministry has raised questions on the new FDI rules, which could give domestic companies room to rework their structure for backdoor activities.

The commerce ministry, revised the FDI regulations in February with a view to make the policy more liberal and user-friendly, allowing up to 100 per cent FDI under automatic route in many sectors. (See: Government details revised FDI regulations)

Relating to this issue, Gopal Krishna said, ''the Finance Ministry has raised some generic issues... we should be able to answer those questions and address them properly.''