Actual FDI inflows less than approvals

Foreign direct investment (FDI) inflows into the country after 1991 have been below 50 per cent of the actual approvals. “The cumulative realisation rate of FDI actual inflows to total approvals, from August 1991 to March 2003, is still below 50 per cent,’’ according to a status report on FDI published by Phdcci recently.

From 1992 to 1997, only 20-30 per cent of the total FDI approved actually flowed into India, though the quantum of both foreign direct investment approvals and inflows increased steadily. In the year 1997, while the approved FDI was Rs 548.9 billion, only Rs 164.3 billion (29.9 per cent) actually flowed in. In the year 1998, due to political uncertainty, both approvals (Rs 308.1 billion) and inflows (Rs 133.4 billion) fell down considerably though the inflows as a percentage of approved investment went up to 43.3 per cent.

In the period 1998 to 2002, the approvals fluctuated up and down, but never reached the peak achieved in 1997. The realisation rate also has improved quite significantly during this period, especially in 2001 (71.7 per cent) and 2002 (191.1 per cent).