Foreign Direct Investment India- the money stops here!

Introduction

There is no doubt about the fact that there has been a worldwide stir about foreign direct investment India. India’s growth rate of 8% certainly owes a lot to foreign equity capital and foreign direct investment. If you have been reading about sensex crashing from time to time you do also read about foreign investors coming more and more to this hot destination called India, don’t you?

Here are the highlights of the latest trend figures to take your breath away as far as FDI in India is concerned.

• Increase in total FDI: 46.8%


• Rise in foreign equity: 36%


• Reinvested foreign earnings and other capital: $3.2 billion


• Total FDI earnings (inward) in Apr-Jan 2005-06: $5.7 billion


• Total FDI earnings (outward) increase: 2000-01: $757 million
  2004-05: $2.4 billion

ASSOCHAM projection

In the backdrop of this flourishing Indian economy The Associated Chambers of Commerce and Industry of India (ASSOCHAM) has projected India to double its GDP reaching a phenomenal USD 1100 billion from present USD 550 billion by 2010. Why do you think so? Well statistics also say that an average Indian will be growing richer as per capita income rises from USD 600 per annum to USD 1200 per annum by 2010.

The GDP investments will likewise increase from current 5% to 35% by 2010. No wonder India has tremendous potential to attract USD 50 billion FDI in the next 5 years. With so much of visibility of MNCs, JVs, foreign investors etc it is little contradictory to say that the current flow of foreign direct investment India has been only 0.8% of GDP, compared to other nations of south-east Asia like Malaysia and Thailand with a FDI flow of 3% of GDP. Hence with more liberalization and opening of other sectors of the economy like the latest relaxation in FDI policies in real estate or direct foreign investment in real estate India etc, FDI will increase by at least 1.6% of GDP in the next 5 years.

Indian Government has a key role to play as far as investment laws are concerned. In this regard it is noteworthy to highlight some of the positive reforms that have brought a positive growth in the Indian economy in terms of GDP growth.

1. Govt. has removed 10% voting limit in banks.
   
2. Higher ceiling in FDI in airport revamp ventures and real estate investment.


3. Revisit foreign shareholding norms in telecom is welcome change.


4. Removal of unwarranted restrictions on hindrances to foreign investments has exceptionally increased FDI in India.


5. Govt. of India has already allowed FDI up to 51% with prior government approval in the retail trade of "single brand" products and according to Mr. Kamal Nath, Commerce and Industry Minister, India is on phase 2 of FDI in retail sector.

Conclusion

A country can only grow if the Govt. policies allow more participation and is able to attract more and more foreign direct investment in India. Today, India provides highest returns on FDI than any other country in the world. India is poised for further growth in manufacturing, infrastructure, automobiles, auto components, food processing sectors, real estate development etc. In this context it is also worth mentioning that savings rate has also increased from 23% to 31% over the last year to this year. India therefore stands to win in the next 5 years.

About Author - Rands Joseph
is an associated editor to the website http://www.indianground.com. Indianground is dedicated to explain all your related queries for real estate India and India properties, with the latest news updates. Your feedback and comments will be highly appreciated at "propertyinindia@gmail.com".