FDI inflow-approval ratio improves in Jan-Mar

NEW DELHI, MAY 12: Actual inflow of foreign direct investment (FDI) as a percentage of approvals has shown a remarkable turn around in the...

NEW DELHI, MAY 12: Actual inflow of foreign direct investment (FDI) as a percentage of approvals has shown a remarkable turn around in the current year so far, with inflows touching 93.12 per cent of the total investment approved.

Projects in infrastructure sectors like power have taken a much longer time for financial closure due to poor financial health of state electricity boards. In fact, three of the eight "fast track" power projects cleared by the government as early as 1994 are yet to achieve financial closure.

Total FDI flow into the country between January 1991 and March 2000 was $ 20.19 billion against total approvals worth $ 60.76 billion, which works out to a poor 33.23 per cent.

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Inflow-approval rate has been languishing in the range of 20-30 per cent for most of early and mid 1990’s but started improving in the last couple of years. From a paltry 29.92 per cent in 1997, the inflow to approval rate increased to 43.29 per cent in 1998 and 59.46 per cent in 1999.

During 1999, FDI inflow increased to $ 4.02 billion compared to $ 3.38 billion in the previous year. However, the total approvals during last year fell to $ 6.57 billion from $ 7.8 billion a year ago. Last year’s FDI inflow of $ 4.02 billion was also the highest achieved in a single year after $ 4.58 billion achieved in 1997.

In 1991, the year in which the government set in motion the economic liberalisation, the inflow-approval ratio was a healthy 65.78 per cent though the total inflow was only $ 143.6 million. In rupee terms, the cumulative approval of FDI since 1991 stood at Rs 2,14,340 crore compared to total inflow of Rs 74,212 crore. The total number of foreign collaborations, includingtechnical, since 1991 stood at 17,320.