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Thursday, Jan 29, 2004

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FDI inflow slowed during last fiscal: RBI report

Our Bureau

Mumbai , Jan. 28

INFLOWS of foreign direct investment have slowed down in 2002-03 in tune with the global scenario while Indian investments overseas in recent years have increased significantly reflecting the global outreach of Indian companies, according to the Reserve Bank of India.

While the cumulative FDI in the country has been over $30 billion over the period 1990-91 to 2002-03, the actual investment outflows during the financial year 2002-03 alone were placed at $654 million, as compared with outflows of $469 million during 2001-02, according to RBI's report on Currency and Finance, 2002-03. In fact, during April-November 2003, outflows amounted to $702 million.

The report observes that although both India and China received large flows in the 1990s, FDI flows to China are ten times of that in respect of India.

China is more attractive than India in terms of the macroeconomic environment, market opportunities and policy orientation towards FDI, while India scored better on the political environment, taxes and financing, said the report, citing a recent business environment survey. "It is important to note that India and China focussed on different types of FDI and pursued different strategies for industrial development. India encouraged FDI only in higher technology activities, whereas China favoured export-oriented FDI concentrated in manufacturing sector,'' highlighted the report.

Meanwhile, the cumulative FII investment in India is close to $19 billion and account for over 10 per cent of the total market capitalisation of the Indian stock market. India received cross-border portfolio investment to the tune of $2.2 billion per year between 1992-93 and 2002-03, on an annual average basis. The contribution of FIIs was close to $1.2 billion, on an average.

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