The Performance of India in attracting Foreign Direct Investment!
The Government of India has recently undertaken a comprehensive review of the FDI policy and associated procedure. Many nationalized measures have been undertaken, inter alia include, dispensing with the need of multiple approvals from government and/or regulatory agencies that exist in certain sectors and allowing FDI in new sectors.
India’s large market size and potential, the skilled labour force and low wage cost is the main key for all acting foreign investors.
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According to the UNCTAD report, China is performing much better than India for variety of reasons including opening up its economy in 1979 much earlier than India did in 1990’s and also Chinese overseas contributing much more than Indians.
About 80% of fortune, 500 companies have presence in China while 37% of these firms out source to India. In India, the sectors attracting FDI are:
Electrical equipment’s (including computer software and electronics) 17.4% Telecommunications 10.58%
Transport Industry 9.82%
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Service Sector 9.45%
Share of the top investing countries in India is
Mauritius 37.18%
USA 15.25%
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Japan 6.59%
India’s position in a UN Agency’s inward Foreign Direct Investment performance index has improved eight notches. The country’s rank on the index, which covers 141 countries for the 2006, stood at 113, as against 121 in 2005.
In addition, the country also improved its position by nine places in the outward FDI performance index from 65 in 2005 to 56 in 2006.
However, India’s rank in the UNCTAD’S FDI potential index, which takes into account 12 social and economic factors, fell by two positions to 85 during 2005 against 83 in 2004.
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Overseas Indians are fewer, more of professional group, unlike Chinese, after lack the family networks and connections and financial resources to invest in India.